Intelsat said Guggenheim has been hired to assess financing options for its US$14.6bn debt pile as it posted preliminary Q4 results that saw its stock plunge 9.6%.
Intelsat (NYSE:I) said Guggenheim has been hired to assess financing options for its US$14.6bn debt pile as it posted preliminary Q4 results that saw its stock plunge 9.6%.
The shares, which have been gradually falling since the fleet operator priced its IPO at US$18 in April 2013, closed at US$2.72 on 22 February, down from its US$3.01 closing price on 19 February.
Intelsat said preliminary 2015 revenue fell to US$2.35bn, 4.9% down on the previous year. Adjusted 2015 EBITDA was US$1.85bn, compared with US$1.96bn for 2014.
The operator also revealed it expects to incur a non-cash impairment charge that will “result in a substantial reduction” of its US$6.8bn goodwill and other intangible assets.
It said Guggenheim has been mandated “in connection with various financing and balance sheet initiatives, including, among other things, evaluating the level of secured debt and balance sheet management opportunities”.
Speaking on an earnings call on 22 February, Intelsat’s recently appointed CFO Jacques Kerrest (pictured) would not be drawn on when its work with Guggenheim may lead to a change in its capital structure, and he also declined to comment on possible asset sales.
Kerrest, a former CFO of British communications giant Virgin Media, joined on 29 January from DPC Data, where he served as president and led the company’s efforts in providing disclosure-related data products and specialised information services to the US municipal bond market.
SatelliteFinance understands that Intelsat hired Goldman Sachs last year to test the market appetite for some of its assets, as it looked to address its debt pile, but without compromising its status as a top four operator. Intelsat has steadfastly declined to comment on any asset sale activities.
In Q4 Intelsat said it repurchased US$25m of 6.75% senior notes due 2018, recognising a gain on early extinguishment of debt of US$7.1m.
On the call Kerrest said it was “fair” to say the company was not contemplating any additional debt repurchases until Guggenheim’s review was complete.
Chief executive Steve Spengler was upbeat on Intelsat’s long term prospects in a company statement, saying that over time the growth opportunities the operator has “should eclipse the challenging environment” it is experiencing at present.
He said the launch of the first next-generation HTS EpicNG satellite in January signalled a “new era” for Intelsat, which has said the Epic project is targeting an US$3bn incremental revenue opportunity by 2020.
“While ongoing headwinds will continue to impact our business in 2016, the launches of Intelsat 29e, Intelsat 31, Intelsat 36, and Intelsat 33e during this period will position us for a return to growth,” Spengler said.
“Our backlog continues to provide the visibility into future revenue and cash flows that allows us to invest in our fleet and pursue our long-term business strategy. Year-end 2015 backlog of US$9.4bn was four times annual revenue.”
