Intelsat SA is seeking bankruptcy court approval of a replacement debtor-in-possession, or DIP, facility that upon the company's emergence from Chapter 11 would convert to an exit facility in the total amount of $7.875 billion, according to a Dec. 13 motion filed in the case.
The DIP-to-exit facility would consist of a $500 million revolver that would be fully syndicated by bank arrangers; a $1 billion superpriority term loan A of which $500 million would be syndicated and $500 million would be purchased by backstop parties; a $3.375 billion first-lien term loan B facility, of which $2.875 billion would be syndicated and $500 million would be purchased by backstop parties; and $3 billion of senior secured notes that would be fully backstopped by the backstop parties.
The proceeds of the financing would be used to fund distributions under the company's proposed reorganization plan, including the payment of outstanding prepetition secured debt, to refinance the company's existing $1.5 billion DIP facility, to finance the company's ongoing efforts related to the clearing of the C-band spectrum, and to fund operations following emergence from Chapter 11.
The bank arrangers for the facility are Barclays, Credit Suisse Loan Funding, Deutsche Bank Securities, Goldman Sachs Lending Partners and JPMorgan Securities.
The backstop parties, whose names are not disclosed in the court filings, are certain current noteholders of the company who are members of either of the unofficial committees in the company's Chapter 11 case known as the Jackson Holdings Crossover Group and the Consenting HoldCo Creditors, respectively.
According to a term sheet filed in the case, the revolver would have a term of five years and bear interest at L+175, with a 0% Libor floor, subject to reduction based on the company's total leverage ratio.
The TLA would have a term of one year and is to be repaid from the proceeds of the $4.87 billion of accelerated relocation payments, or ARPs, which the company expects to receive from the Federal Communications Commission in connection with the company's clearing of the C-band spectrum in support of the build-out of 5G wireless infrastructure in the U.S. If the payments are not received within one year, the maturity date may be extended for an additional six months.
Interest under the TLA would be L+275, with a 0% Libor floor.
The TLB would have a term of seven years. Following repayment of the TLA, the company must use the next $250 million of ARPs, and 50% of the ARPs thereafter, to repay the TLB.
Interest would be L+425, with a 0.5% Libor floor.
For each of the revolver, the TLA and TLB, the loan documentation would include customary Libor successor provisions providing for Term secured overnight financing rate with Sofr credit spread adjustments of 0.10% for a one-month interest period, 0.15% for a three-month interest period, and 0.25% for a six-month interest period, with a Sofr + Sofr credit spread adjustment floor of 0.50%.
According to the term sheet, if the facilities close after Dec. 31, the reference rate in lieu of Libor shall be a Term Sofr-based rate plus credit spread adjustments.
With respect to the new secured notes, the issuer would be Intelsat Jackson Holdings. The notes would have an eight-year term and pay interest of 6.5%.
The term loan facilities and new notes would be guaranteed by the reorganized company that will issue the new equity under the company's reorganized plan, along with parent entities Intelsat Holdings SA, Intelsat Investments SA, Intelsat (Luxembourg) SA, Intelsat Envision Holdings LLC and Intelsat Connect Finance SA.
According to the court docket, a hearing to approve the replacement DIP is set for Jan. 11, 2022.
Meanwhile, the company's reorganization plan confirmation hearing, which has been taking place in Richmond, Va., is set to resume Dec. 15.
The company said it "ran a robust financing marketing process" that "was in addition to, and as a check on, the backstop commitment submitted by the backstop parties as contemplated by the [reorganization] plan."
The company said it had reached out to seven direct lenders and eight banks, and between late September and October, the company received financing proposals from three of the direct lenders and all eight of the banks.
"Ultimately," the company said, "after a robust negotiation process that lasted several months, including sixteen negotiation rounds and the circulation of five side-by-side grids to eight potential financing arrangers who all engaged in the process through the very end, five entities [the aforementioned Barclays, Credit Suisse, Deutsche Bank, Goldman Sachs and JPMorgan] were selected as the bank financing arrangers to provide the DIP-to-exit financing."
The company further explained that those arrangers were selected "because of their ability to underwrite a financing package on favorable economic terms that will provide the debtors with flexibility to pursue their business plan."
The company further said the backstop parties were selected because it was able to negotiate favorable terms and because the parties were able to provide transaction certainty.
