While Intelsat’s manoeuvres to refinance its US$14.85 million debt has been artful, its principle accuser, Aurelius Capital Management remains unimpressed. Intelsat had previously found it difficult to refinance its debt via banks after the hedge fund Aurelius made accusations that Intelsat breeched a covenant and defaulted on bonds Aurelius owned. Thus according to space news, Intelsat made other arrangements including making private placement of US$490 million in debt to finance the repurchase of a portion of three of its bonds.
However, according to a Bloomberg Yahoo report, Aurelius now alleges that the company is backing loans with assets which were already backing other debt – allegedly a possible fraudulent situation. According to the report, Aurelius’s managing director, David Tiomkin, sent a letter to Intelsat and stating that the firm had pledged assets as collateral for a US$1.25 billion loan and that these were apparently already being used to secure another loan in May. Despite the accusations no legal action has yet been begun.