ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
"Debtor-in-Possession" Credit Facility
As previously disclosed, on May 13, 2020 (the "Petition Date"), Intelsat S.A.
(the "Company") and certain of its subsidiaries (such subsidiaries, each a
"Debtor," and together with the Company, the "Debtors") commenced voluntary
cases (the "Chapter 11 Cases") under Chapter 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
Eastern District of Virginia (the "Bankruptcy Court").
On June 9, 2020, the Company's subsidiary and a Debtor, Intelsat Jackson
Holdings S.A. ("Intelsat Jackson"), received approval from the Bankruptcy Court
to enter into a multiple draw super-priority senior secured debtor-in-possession
term loan facility (the "Original DIP Facility") in an aggregate principal
amount of $1.0 billion on the terms and conditions as set forth in the DIP
credit agreement (the "Original DIP Credit Agreement"), and on June 17, 2020,
Intelsat Jackson and certain of its subsidiaries as guarantors (together with
Intelsat Jackson, the "DIP Debtors") entered into the final Original DIP Credit
Agreement.
On September 14, 2021, Intelsat Jackson, received approval from the Bankruptcy
Court (the "DIP Order") to enter into a multiple draw super-priority senior
secured debtor-in-possession term loan facility (the "DIP Facility") in an
aggregate principal amount of $1.5 billion on the terms and conditions as set
forth in the credit agreement for the DIP Facility (the "DIP Credit Agreement"),
and on September 14, 2021, Intelsat Jackson and certain of the DIP Debtors
entered into the final DIP Credit Agreement.
The DIP Facility will provide $1.25 billion in new money at the closing date for
Intelsat Jackson to, among other things, refinance the Original DIP Facility
and, the ability for Intelsat Jackson, at its sole discretion, to make an
incremental $250 million draw. Drawn amounts under the DIP Facility bear
interest at either (1) 3.75% per annum plus a base rate of the highest of
(a) the Federal Funds Effective Rate plus 1/2 of 1.00%, (b) the Prime Rate as in
effect on such day and (c) the LIBOR Rate for a one-month Interest Period on
such day (or if such day is not a Business Day (as defined in the DIP Credit
Agreement), the immediately preceding Business Day), plus 1.00% or (2) 4.75%
plus the LIBOR Rate. Undrawn amounts under the DIP Facility shall be subject to
a ticking fee of 3.6% of the amount of commitments of the DIP Lenders from the
entry of the DIP Order until such commitments have terminated, which ticking fee
shall be payable on the last day of each fiscal quarter prior to the date such
commitments have been terminated and on the date of such termination. During the
continuance of a payment event of default, overdue amounts under the DIP
Facility will bear interest at an additional 2% per annum above the interest
rate otherwise applicable.
The proceeds of the DIP Facility will be used (i) for the payment of working
capital of the DIP Debtors in the ordinary course of business, (ii) for C-band
relocation costs, (iii) for investment and other general corporate purposes,
(iv) for the payment of the costs and expenses of administering the Chapter 11
Cases, (v) to make the adequate protection payments and (vi) for the repayment
of obligations under the Original DIP Credit Agreement.
The maturity date of the DIP Facility is July 13, 2022, subject to the Debtors
ability to extend for regulatory purposes.
Under the DIP Facility, the lenders party thereto (the "DIP Lenders") and Credit
Suisse AG, Cayman Islands Branch, as collateral agent, subject to the Carve Out
(defined below) and the terms of the DIP Order, at all times: (i) will be
entitled to joint and several super-priority administrative expense claim status
in the Chapter 11 Cases; (ii) have a first priority lien on substantially all
assets of the DIP Debtors; (iii) have a junior lien on any assets of the DIP
Debtors subject to a valid, perfected and non-avoidable lien as of the Petition
Date, other than such liens securing the obligations under the Credit Agreement,
dated as of January 12, 2011 (as amended, amended and restated, supplemented or
otherwise modified from time to time, the "Credit Agreement"), among Intelsat
Jackson, as borrower, Intelsat Connect Finance S.A., as holdings and successor
to Intelsat (Luxembourg) S.A., the lenders party thereto from time to time, Bank
of America, N.A., as administrative agent, and the other agent parties party
thereto; and (iv) have a first priority pledge of 100% of the stock and other
equity interests in each of Intelsat Jackson's direct and indirect subsidiaries.
The DIP Debtors' obligations to the DIP Lenders and the liens and superpriority
claims are subject in each case to a carve out (the "Carve Out") that accounts
for certain administrative, court and legal fees payable in connection with the
Chapter 11 Cases.
The DIP Credit Agreement also includes certain customary representations and
warranties, affirmative covenants and events of default, including, but not
limited to, payment defaults, breaches of representations and warranties,
covenant defaults, certain events under the Employee Retirement Income Security
Act of 1974 and change of control. Certain bankruptcy-related events are also
events of default, including, but not limited to, the dismissal by the
Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the
Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code and certain
other events related to the impairment of the DIP Lenders' rights or liens
granted under the DIP Credit Agreement.
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The foregoing description of the DIP Credit Agreement does not purport to be
complete and is qualified in its entirety by reference to the full text of the
DIP Credit Agreement, which is attached as Exhibit 10.1 hereto and incorporated
by reference herein.
ITEM 2.03. CREATION OF A DIRECT FINANCIAL OBLIGATION OR OBLIGATION UNDER AN OFF
BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
The information set forth in Item 1.01 regarding the DIP Facility and DIP Credit
Agreement is incorporated by reference into this Item 2.03.
ITEM 8.01. OTHER EVENTS.
Additional Information about the Chapter 11 Cases
Court filings and information about the Chapter 11 Cases, including the DIP
Facility, can be found at a website maintained by the Company's claim agent
Stretto at https://cases.stretto.com/intelsat, by calling 855-489-1434
(toll-free), or by sending an email to intelsatinquiries@stretto.com. The
documents and other information available via website or elsewhere are not part
of this Current Report and shall not be deemed incorporated herein.
The information being furnished in this Item 8.01 shall not be deemed "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended,
or otherwise subject to the liabilities of that section.
Cautionary Note Regarding the Company's Securities
The Company cautions that trading in the Company's securities during the
pendency of the Chapter 11 Cases is highly speculative and poses substantial
risks. Trading prices for the Company's securities may bear little or no
relationship to the actual recovery, if any, by holders of the Company's
securities in the Chapter 11 Cases. The Company expects that holders of the
Company's common shares could experience a significant or complete loss on their
investment, depending on the outcome of the Chapter 11 Cases.
Forward-Looking Statements
This Current Report on Form 8-K contains "forward-looking statements" related to
future events. Forward-looking statements contain words such as "expect,"
"anticipate," "could," "should," "intend," "plan," "believe," "seek," "see,"
"may," "will," "would," or "target." Forward-looking statements are based on
management's current expectations, beliefs, assumptions and estimates and may
include, for example, statements regarding the Chapter 11 Cases, the DIP
Facility, the Company's ability to consummate and complete a plan of
reorganization and its ability to continue operating in the ordinary course
while the Chapter 11 Cases are pending. These statements are subject to
significant risks, uncertainties, and assumptions that are difficult to predict
and could cause actual results to differ materially and adversely from those
expressed or implied in the forward-looking statements, including risks and
uncertainties regarding the Company's ability to successfully complete a
restructuring under Chapter 11, including: consummation of a plan of
reorganization; potential adverse effects of the Chapter 11 Cases on the
Company's liquidity and results of operations; the Company's ability to obtain
timely approval by the Bankruptcy Court with respect to the motions filed in the
Chapter 11 Cases; objections to the Company's recapitalization process or other
pleadings filed that could protract the Chapter 11 Cases; employee attrition and
the Company's ability to retain senior management and other key personnel due to
the distractions and uncertainties; the Company's ability to comply with the
conditions and restrictions imposed by the terms and conditions of the DIP
Facility and other financing arrangements and the risk that these conditions may
not be satisfied for various reasons, including for reasons outside of the
Company's control; the Company's ability to maintain relationships with
suppliers, customers, employees and other third parties and regulatory
authorities as a result of the Chapter 11 Cases; the effects of the Chapter 11
Cases on the Company and on the interests of various constituents, including
holders of the Company's common stock; the Bankruptcy Court's rulings in the
Chapter 11 Cases, including the approvals of the terms and conditions of any
plan of reorganization, and the outcome of the Chapter 11 Cases generally; the
length of time that the Company will operate under Chapter 11 protection and the
continued availability of operating capital during the pendency of the Chapter
11 Cases; risks associated with third-party motions in the Chapter 11 Cases,
which may interfere with the Company's ability to consummate a plan of
reorganization or an alternative restructuring; increased administrative and
legal costs related to the Chapter 11 process; potential delays in the Chapter
11 process due to the effects of the COVID-19 virus; interference with the
Company's ability to interact with its regulators, including the U.S. Federal
Communications Commission (the "FCC") and compliance with FCC orders; and other
litigation and inherent risks involved in a bankruptcy process.
Forward-looking statements are also subject to the risk factors and cautionary
language described from time to time in the reports the Company files with the
SEC, including those in the Company's most recent Annual Report on Form 10-K and
any updates thereto in the Company's Quarterly Reports on Form 10-Q and Current
Reports on Form 8-K. These risks and uncertainties may cause actual future
results to be materially different than those expressed in such forward-looking
statements. The Company has no obligation to update or revise these
forward-looking statements and does not undertake to do so.
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ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(d) Exhibits
Exhibit No. Description
10.1 Superpriority Secured Debtor In Possession Credit Agreement,
dated as of September 14, 2021, by and among Intelsat Jackson, as
borrower, the guarantor parties thereto, Credit Suisse AG, as
administrative agent and collateral agent, and the lender parties
thereto.
104 Cover Page Interactive Data File - the cover page XBRL tags are
embedded within the Inline XBRL document.
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