Satellite communications company Ligado Networks has filed for Chapter 11 bankruptcy protection in the U.S. Bankruptcy Court for the District of Delaware as part of a pre-arranged restructuring plan. The company, grappling with a significant debt burden, has also secured a $940 million debtor-in-possession (DIP) financing facility to maintain operations during the bankruptcy process.
Restructuring Agreement and DIP Financing
Ligado’s Chapter 11 filing follows the execution of a Restructuring Support Agreement (RSA) with stakeholders holding approximately 88% of the company’s funded debt. The RSA outlines a path to address the company’s $7.8 billion debt burden by converting it into new preferred equity and preserving existing equity interests below the new capital structure.
Key components of Ligado’s restructuring include:
- The $940 million DIP financing facility, providing liquidity to fund operations and refinance existing debt, subject to court approval.
- A commercial agreement with AST SpaceMobile Inc. (AST), granting AST usage rights to Ligado’s L-Band Mobile Satellite Services (MSS) spectrum in exchange for $113 million in warrants and payments. The agreement also allows Ligado to participate in AST’s direct-to-device business in the U.S. and Canada.
Legal and Financial Guidance
The restructuring is supported by a diverse group of legal and financial advisors. Kirkland & Ellis LLP represents an ad hoc group of stakeholders holding over $4 billion in Ligado’s debt and equity. The firm also guided negotiations on the commercial transaction with AST. Ligado’s financial advisors, Perella Weinberg Partners (PWP), played a pivotal role in securing the DIP financing.
Bruce Mendelsohn, partner and global head of Financing at PWP, highlighted the urgency of securing DIP financing. “Access to liquidity is critical for Ligado to meet its obligations, retain value for stakeholders, and execute its restructuring plan effectively,” he stated in a recent court filing.
Commercial Transaction with AST SpaceMobile
Under the terms of the RSA, Ligado has entered into a significant commercial arrangement with AST to monetize its MSS spectrum. AST will make payments and provide equity warrants, enabling Ligado to fulfill its financial commitments under spectrum agreements. The deal is subject to court approval and finalization of documentation.
Court Proceedings
Ligado’s bankruptcy proceedings will also extend to Canada, where the company will seek recognition of the U.S. proceedings. The court will address several motions, including approval of the DIP financing and the commercial agreement with AST, in the coming weeks.
Looking Ahead
Ligado’s restructuring aims to position the company for long-term viability in the competitive satellite communications sector. The company will work to obtain court approval for its DIP financing, ensuring uninterrupted operations as it implements the restructuring plan.
Stakeholders and creditors are expected to monitor the proceedings closely, as Ligado navigates its complex restructuring efforts.
