SoftBank Launches OneWeb Loan Offer to Complete Spectrum Sale
This article was updated April 24 at 4:07 p.m. EST to correct loan details.
WASHINGTON – OneWeb is asking bankruptcy court for permission to borrow $ 75 million, the company says it must stay afloat while it tries to sell its spectrum assets.
OneWeb’s largest creditor, SoftBank, has agreed to lead the loan, OneWeb said in an April 10 case filed in U.S. bankruptcy court for the Southern District of New York. SoftBank provided $ 2 billion of the $ 3.4 billion in equity and debt OneWeb raised before filing for Chapter 11 bankruptcy last month.
SoftBank’s decision to give OneWeb a cash injection comes as the Japanese telecommunications giant projects losses of 1.8 trillion yen ($ 16.7 billion) in 2019 for its Vision Fund. On April 13, SoftBank cited OneWeb as one of its most notable losing investments outside of this fund. OneWeb launched 74 of 648 small target broadband satellites into low Earth orbit before filing for bankruptcy on March 27.
OneWeb’s other major creditors – Banco Azteca, Airbus Group, Qualcomm Technologies, Institución de Banca Múltiple and the government of the Republic of Rwanda – may also participate in the loan.
The initial loan, which the court will decide on April 24, would provide OneWeb with an immediate amount of $ 10 million. The remaining $ 65 million depends on OneWeb’s progress towards selling its spectrum.
SoftBank and other lenders in possession of property have agreed to lend OneWeb an additional $ 15 million if they get at least one letter of intent from a spectrum buyer – a goal OneWeb hopes to achieve by the 11th. may.
Once OneWeb secures a binding purchase agreement for most, if not all of its spectrum rights, SoftBank and other lenders would provide a $ 25 million tranche. OneWeb plans to have such an agreement by June 12.
If OneWeb finalizes its spectrum sale by June 22, lenders have agreed to offer a last-round tranche of up to $ 25 million to cover the cost of regulatory approvals to complete the transaction.
OneWeb says the loan would fund it until July 13. The company would be required, as part of the loan terms, to provide weekly updates on its spending and progress towards a sale.
The $ 75 million SoftBank-led loan is contingent on OneWeb’s acceptance to consolidate $ 225 million into “pre-petition bonds,” effectively replacing those old bonds for debtor-in-owner funding. Together, these loans could give OneWeb access to up to $ 300 million.
OneWeb’s main spectrum repositories cover frequencies in Ku-band for downlinks and Ka-band for uplinks for a constellation of 720 satellites in low Earth orbit. The company put that spectrum into service with the International Telecommunications Union and broke the agency’s 10% milestone last month by launching 34 satellites on an Arianespace Soyuz a few days before filing for bankruptcy.
OneWeb also has spectrum repositories for other Ku and Ka-band constellation architectures, as well as repositories for largely unused V and E-band-based constellations. The spectrum repositories for which OneWeb has already built and launched satellites are of the greatest value, thus securing their priority status with the ITU against signal interference from other constellation hopes.