COVID-19 pushes satellite firm OneWeb into bankruptcy
London-based satellite company OneWeb has filed for bankruptcy in the US citing the Coronavirus as the cause.
In a statement on Friday 27, the company confirmed that it had filed for relief under Chapter 11 of the Bankruptcy Code in the US Bankruptcy Court for the Southern District of New York.
The company confirmed that it intends to find a buyer through the proceedings claiming that the COVID-19 outbreak has caused turbulence in the financial market and prevents it from securing funding for its commercial launch, this includes from its largest investor SoftBank.
“Our current situation is a consequence of the economic impact of the COVID-19 crisis,” said Adrian Steckel (pictured), CEO of OneWeb.
“Today is a difficult day for us at OneWeb. So many people have dedicated so much energy, effort, and passion to this company and our mission. Our hope is that this process will allow us to carve a path forward that leads to the completion of our mission, building on the years of effort and the billions of invested capital.”
As a result of the filings, the company has also had to make a number of redundancies, a reported 10% of its workforce – though the exact figure has yet to be confirmed.
“It is with a very heavy heart that we have been forced to reduce our workforce and enter the Chapter 11 process while the company's remaining employees are focused on responsibly managing our nascent constellation and working with the Court and investors."
The company has already filed numerous customary motions with the US Bankruptcy Court for support of its ongoing operations during the Chapter 11 process, including approval for the consensual use of its existing cash collateral to continue to fund the business.
At the same time, OneWeb says that it is actively negotiating debtor-in-possession financing, which if goes ahead, will ensure OneWeb is able to meet additional financial commitments. Together, these moves will allow OneWeb to meet its obligations to its remaining employees and vendors.
So far, OneWeb has successfully completed the launch of 74 satellites as part of its constellation, secured valuable global spectrum, begun development on a range of user terminals for a variety of customer markets, has half of its 44 ground stations completed or in development, and performed successful demonstrations of its system with broadband speeds in excess of 400Mbps and latency of 32ms.
SoftBank shares fell 10% on the Tokyo stock exchange as of Monday morning. The news follows SoftBank’s announcement to sell $41 billion (JPY4.5 trillion) of its assets, earlier this month.
Once completed, the compant intends on repurchasing up to $18 billion (JPY 2 trillion) of SBG common stock with the balance to be used for pay down its debt, bond buybacks and increase its cash reserves.