ITEM 1.01. ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
“Debtor-in-Possession” Credit Facility
As previously disclosed, on May 13, 2020 (the “Petition Date”), Intelsat S.A. (the “Company”) and certain of its subsidiaries (such subsidiaries, each a “Debtor,” and together with the Company, the “Debtors”) commenced voluntary cases (the “Chapter 11 Cases”) under Chapter 11 of the United States Bankruptcy Code (the “Bankruptcy Code”) in the United States Bankruptcy Court for the Eastern District of Virginia (the “Bankruptcy Court”).
On June 9, 2020, the Company’s subsidiary and a Debtor, Intelsat Jackson Holdings S.A. (“Intelsat Jackson”), received approval from the Bankruptcy Court to enter into a multiple draw super-priority senior secured debtor-in-possession term loan facility (the “Original DIP Facility”) in an aggregate principal amount of $1.0 billion on the terms and conditions as set forth in the DIP credit agreement (the “Original DIP Credit Agreement”), and on June 17, 2020, Intelsat Jackson and certain of its subsidiaries as guarantors (together with Intelsat Jackson, the “DIP Debtors”) entered into the final Original DIP Credit Agreement.
On September 14, 2021, Intelsat Jackson, received approval from the Bankruptcy Court (the “DIP Order”) to enter into a multiple draw super-priority senior secured debtor-in-possession term loan facility (the “DIP Facility”) in an aggregate principal amount of $1.5 billion on the terms and conditions as set forth in the credit agreement for the DIP Facility (the “DIP Credit Agreement”), and on September 14, 2021, Intelsat Jackson and certain of the DIP Debtors entered into the final DIP Credit Agreement.
The DIP Facility will provide $1.25 billion in new money at the closing date for Intelsat Jackson to, among other things, refinance the Original DIP Facility and, the ability for Intelsat Jackson, at its sole discretion, to make an incremental $250 million draw. Drawn amounts under the DIP Facility bear interest at either (1) 3.75% per annum plus a base rate of the highest of (a) the Federal Funds Effective Rate plus 1⁄2 of 1.00%, (b) the Prime Rate as in effect on such day and (c) the LIBOR Rate for a one-month Interest Period on such day (or if such day is not a Business Day (as defined in the DIP Credit Agreement), the immediately preceding Business Day), plus 1.00% or (2) 4.75% plus the LIBOR Rate. Undrawn amounts under the DIP Facility shall be subject to a ticking fee of 3.6% of the amount of commitments of the DIP Lenders from the entry of the DIP Order until such commitments have terminated, which ticking fee shall be payable on the last day of each fiscal quarter prior to the date such commitments have been terminated and on the date of such termination. During the continuance of a payment event of default, overdue amounts under the DIP Facility will bear interest at an additional 2% per annum above the interest rate otherwise applicable.
The proceeds of the DIP Facility will be used (i) for the payment of working capital of the DIP Debtors in the ordinary course of business, (ii) for C-band relocation costs, (iii) for investment and other general corporate purposes, (iv) for the payment of the costs and expenses of administering the Chapter 11 Cases, (v) to make the adequate protection payments and (vi) for the repayment of obligations under the Original DIP Credit Agreement.
The maturity date of the DIP Facility is July 13, 2022, subject to the Debtors ability to extend for regulatory purposes.
Under the DIP Facility, the lenders party thereto (the “DIP Lenders”) and Credit Suisse AG, Cayman Islands Branch, as collateral agent, subject to the Carve Out (defined below) and the terms of the DIP Order, at all times: (i) will be entitled to joint and several super-priority administrative expense claim status in the Chapter 11 Cases; (ii) have a first priority lien on substantially all assets of the DIP Debtors; (iii) have a junior lien on any assets of the DIP Debtors subject to a valid, perfected and non-avoidable lien as of the Petition Date, other than such liens securing the obligations under the Credit Agreement, dated as of January 12, 2011 (as amended, amended and restated, supplemented or otherwise modified from time to time, the “Credit Agreement”), among Intelsat Jackson, as borrower, Intelsat Connect Finance S.A., as holdings and successor to Intelsat (Luxembourg) S.A., the lenders party thereto from time to time, Bank of America, N.A., as administrative agent, and the other agent parties party thereto; and (iv) have a first priority pledge of 100% of the stock and other equity interests in each of Intelsat Jackson’s direct and indirect subsidiaries. The DIP Debtors’ obligations to the DIP Lenders and the liens and superpriority claims are subject in each case to a carve out (the “Carve Out”) that accounts for certain administrative, court and legal fees payable in connection with the Chapter 11 Cases.
The DIP Credit Agreement also includes certain customary representations and warranties, affirmative covenants and events of default, including, but not limited to, payment defaults, breaches of representations and warranties, covenant defaults, certain events under the Employee Retirement Income Security Act of 1974 and change of control. Certain bankruptcy-related events are also events of default, including, but not limited to, the dismissal by the Bankruptcy Court of any of the Chapter 11 Cases, the conversion of any of the Chapter 11 Cases to a case under Chapter 7 of the Bankruptcy Code and certain other events related to the impairment of the DIP Lenders’ rights or liens granted under the DIP Credit Agreement.
