For the past six weeks or so Intelsat has been trying to restructure some of its older debt (in the form of bonds) but has been held back by a threat from an investor (Aurelius Capital) that Intelsat had violated its bond covenants. The possibility of litigation soured the conventional banking refinancing plans.

Intelsat has by-passed the bank re-financing route and has privately placed the debt notes, worth $490 million, at 9.5 per cent interest, and due in 2022.

Reports say that Aurelius has exchanged a series of letters with Intelsat which were “far from friendly”. Aurelius, in essence, says that in 2015 Intelsat had defaulted on its loan terms following on one Intelsat entity had appeared to provide funding to another. Intelsat is obliged not to exceed 6-times its own EBITDA. Aurelius says Intelsat, during 2015, breached this 6x obligation.

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