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(Reuters) – A group of Intelsat SA shareholders will argue on Wednesday for the appointment of an independent reviewer to investigate potential areas of value it says the bankrupt satellite operator has overlooked.
Intelsat, which is about six weeks away from a hearing on its draft reorganization plan, says the request is a last-ditch attempt to gain leverage from shareholders who should see little or nothing under the plan. The equity group, on the other hand, claims that Intelsat has completely ignored valuable net operating losses and potential causes of action that it believes could provide clawbacks to shareholders.
The satellite operator, represented by Kirkland & Ellis, filed for bankruptcy in Virginia in May 2020, saying it needed to restructure as it prepared to transfer some of its C-band spectrum to the Federal Commission on communications from the United States, which planned to use the spectrum to build a 5G network. In return, Intelsat receives approximately $ 4.9 billion from the FCC.
The stake group, which represents retail holders of around 2% of Intelsat’s capital, says the restructuring was designed to benefit Intelsat’s subsidiaries at the expense of the ultimate parent company whose shares they own. A reviewer is needed to probe the full value of the company’s assets because it has so far been “ignored or devalued without explanation” in the plan, the group said in court papers.
Institutional shareholders, including Cyrus Capital Partners and Appaloosa, are not part of the group seeking a reviewer.
Under the proposed plan, Intelsat’s debt pile would be reduced from $ 15 billion to about $ 7 billion. A hearing on the plan, which has the backing of about 75% of the company’s debt holders, is set for November 8 before U.S. bankruptcy judge Keith Phillips.
The equity group will present its motion for a reviewer Wednesday before Phillips. Represented by Foley & Lardner and Kirby McInerney, he says the plan ignores what it says are billions of dollars in net operating losses that belong directly to Intelsat, rather than to its subsidiaries, and should be preserved for them. interest holders of the company.
Shareholders also argue that there could be significant claims against the management and board of directors of Intelsat under Luxembourg law regarding the loss of billions of dollars in market value just prior to filing for bankruptcy.
Intelsat, meanwhile, says the investment group was given the opportunity to request relevant documents to answer some of its questions but did not make the requests and offered no example of information. that he asked about these assets that he did not receive.
“At this point in the case, the petition is an abuse of process that would serve no more than delay, obstruction and additional expense,” Intelsat said in its objection to the motion.
The group made several unsuccessful attempts to gain recognition as an official bankruptcy committee.
The case is In re Intelsat SA, US Bankruptcy Court, Eastern District of Virginia, No. 20-32299.
For Intelsat: Edward Sassower, Steven Serajeddini and Aparna Yenamandra of Kirkland & Ellis; and Michael Condyles, Peter Barrett, Jeremy Williams and Brian Richardson of Kutak Rock
For the Equity Group: Harold Kaplan, Mark Hebbeln and Susan Poll Klaessy of Foley & Lardner; and David Kovel of Kirby McInerney
One year after bankruptcy, Intelsat faces efforts by its creditors to take control of restructuring
Reporting by Maria Chutchian