Speedcast International Limited

Voluntary Restructuring Process: Speedcast International Limited (ASX: SDA) is a satellite network service provider that offers a unified solution to critical communications needs.

FY19 Financial Highlights: During the twelve months ended 31 December 2019, unaudited revenue of the company went up by 18% US$722.3 million. This revenue is inclusive of the revenue from acquisitions made in 2018. In the same time span, EBITDA before significant Items stood at US$121.8 million and statutory unaudited NPAT loss was US$459.8 million. As on 31 December 2019, total cash on the balance sheet was US$58.4 million, with a total debt balance of US$713.4 million.

FY19 Key Highlights (Source: Company Report) 

Impact of COVID-19: COVID-19 has had a substantial impact on the cruise industry, which is anticipated to continue in the near-term. With cruise being a key market segment for Speedcast, downturn from the economic uncertainties has negatively affected the earnings. 

Speedcast to Recapitalize through Chapter 11: SDA has announced to recapitalize its balance sheet, through a voluntary process under chapter 11 of the US Bankruptcy Code. The company expects to honor customer and employee commitments and pay suppliers in the normal course of business for all goods and services. It has received a commitment for up to $90 million in Debtor-in-Possession Financing which, combined with the existing funds will support the ordinary course of business operations. These decisive actions will allow SDA to overcome the near-term headwinds it is facing as a result of pressures on its customers’ businesses. The company has planned to reduce its debt and gain access to new sources of liquidity. Post the filing, the US Bankruptcy Court made an interim order imposing certain restrictions on trading in the Company’s shares, particularly on proposed transactions by a “Substantial Stockholders” who owned ~4.75% of all shares.

ASIC Relief: SDA has been granted relief by ASIC from certain reporting obligations under the Corporations Act wherein it does not have to report to members of the Company under section 314, send reports to a member of the Company, and lodge reports with ASIC. The orders apply until the earlier of 22 January 2021 or the date on which a disclosure document is lodged with ASIC. 

US Bankruptcy Court order - Notice of Filing Deadline: The United States Bankruptcy Court has given an order establishing certain deadlines for the filing of proofs of claim with respect to the voluntary restructuring process under chapter 11 of the United States Bankruptcy Code. The deadline or the “General Bar Date,” is scheduled on 6 August 2020 for all the creditors. 

Stock Performance: As per ASX, the stock of SDA gave a negative return of 58.09% in the past six months and a negative return of 20.6% in the past three months (as at 31 January 2020). The stock is suspended from trading as per the orders from the US Bankruptcy Court and was last traded at $0.790.

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