Proposed Plan of Reorganization Has Support of Centerbridge and Official Committee of Unsecured Creditors
Speedcast today announced that it has received a US$395 million equity commitment from Centerbridge Partners, L.P. and its affiliates, one of its largest lenders. The commitment would support a plan of reorganization, which has the support of both Centerbridge and the Company’s Official Committee of Unsecured Creditors.
Centerbridge’s proposed US$395 million equity investment provides the opportunity for Speedcast’s existing secured lenders to participate in the equity commitment on a fully pro-rata basis to support Speedcast’s emergence from its reorganization under Chapter 11 of the US Bankruptcy Code. During the completion of the Chapter 11 process and under the new ownership structure, Speedcast remains focused on supporting the connectivity needs of its customers and fully intends to continue its global operations uninterrupted.
The proposed plan would enable the Company, under the leadership of both Peter Shaper, Speedcast’s Chief Executive Officer, and Joe Spytek, Speedcast’s President and Chief Commercial Officer, to continue to execute on the transformation plan to refocus the business, which they initiated earlier this year after joining the organization in executive leadership roles. Both Shaper and Spytek have extensive background in the communications and service provider sectors, each previously serving as chief executives for leading remote communications businesses.
Centerbridge has also committed to providing, if needed, debtor-in-possession (DIP) financing of up to US$220 million on favorable economic terms. The Centerbridge DIP financing, if drawn, would be utilized to refinance the Company’s existing DIP financing, to fund the Company’s Chapter 11 plan process, and to ensure the Company can continue to meet its financial commitments while it works toward confirmation of the plan of reorganization.
The plan will provide for cash payments to holders of secured claims. A number of the company’s trade creditors are critical to its future, and the plan will provide to those relevant trade creditors, a partial cash payment for those unsecured claims. Unsecured creditors generally will share in recoveries from a litigation trust, noting there is no certainty that any action would be undertaken or payment made from this trust. The plan does not contemplate any recovery for existing shareholders, and existing shareholders would no longer have an equity interest in the reorganized Speedcast Group.
Completion of the equity investment is subject to confirmation of the plan of reorganisation and a number of other conditions, including various regulatory approvals and waivers.
Speedcast announced its decision to recapitalize its business through voluntary Chapter 11 proceedings on April 23, 2020. More information about Speedcast’s Chapter 11 case can be found at http://www.kccllc.net/speedcast.
Speedcast is advised by Weil, Gotshal & Manges LLP as global legal counsel and Herbert Smith Freehills as co-counsel. Michael Healy of FTI Consulting, Inc. is Speedcast’s Chief Restructuring Officer, and FTI Consulting, Inc. is Speedcast’s financial and operational advisor. Moelis Australia Advisory Pty Ltd and Moelis & Company LLC are Speedcast’s investment bankers. KCC is Speedcast’s claims and noticing agent. Centerbridge is advised by Wachtell, Lipton, Rosen & Katz. The Committee is advised by Hogan Lovells US LLP and Husch Blackwell LLP as legal counsel and Berkeley Research Group, LLC as financial advisor.