On July 15th, it was reported that SES Americom was arguing with Intelsat’s bankruptcy court that Intelsat should pay $1.8 billion to SES because of a “contract violation” over the pair’s C-band Alliance (CBA) agreement and the clearance of spectrum for 5G.
Following the news, satellite analyst Sami Kassab from investment bank Exane/BNPP issued a guidance note to clients, saying the bank understands that there was a legally-binding agreement in place between C-band members on how proceeds would be broken down between members and how the CBA would operate. SES claims Intelsat breached that agreement.
“Throughout the C band process, consensus (based on Intelsat rough guidance) assumed that Intelsat and SES would get the same share of C band proceeds (probably reflecting the perceived nature of the CBA agreement). However, the FCC ultimately awarded $897 million more to Intelsat than to SES in its final order. SES is claiming compensatory damage of $450 million (which is half the $897 million excess proceeds Intelsat is due to receive). In addition, SES is claiming punitive damage worth a typical 3x the compensatory damage claim (ie $1350 million),” stated the bank. “We note however that the total C band breakdown has been decided by the FCC and not by a satellite operator. The breakdown has been accepted by all operators. We believe this is likely to be the defense strategy Intelsat will adopt.”
The bank then added, “We do not expect any delays to the timing of C band clearing and payments from this legal development. SES reports on August 7th.
Adding to the legal miasma within the satellite industry, last week Australia-based Speedcast (in bankruptcy reconstruction) struck an agreement with Intelsat (in Chapter 11 bankruptcy) which will see Speedcast continue its relationship with Intelsat over the next 15 months and pay what it owes to Intelsat.
Speedcast owed Intelsat $45 million of old pre-bankruptcy invoices and will pay $24 million to cover obligations through June of this year.
Now London-based Inmarsat wants a similar deal and with outstanding invoices to Speedcast of almost $26 million. Inmarsat is the second-largest creditor for Speedcast.
Inmarsat filed a motion with Speedcast’s bankruptcy court and asked the court to order Speedcast to cough up $1.35 million in undisputed and outstanding invoices. The invoices have all been raised after Speedcast’s bankruptcy on April 23rd and cover 44 separate invoices.
Inmarsat says the company is concerned about its own financial position and told the court that, despite receiving some $90 million in ‘debtor in possession’ financial help, the Speedcast bills are piling up rapidly. Inmarsat stated that $2.74 million is owed and already past due for the second-half of July and at least $3.1 million for August.
The Inmarsat bills for Speedcast are varied in size ranging from a modest $75 from Inmarsat Canada to $703,698 due to Inmarsat Cyprus.
Reports by journalist Chris Forrester, filing at the Advanced Television infosite...
