The telecommunications sector faced significant difficulties in 2023, with several companies filing for bankruptcy.
Cyxtera Technologies, a provider of data center colocation, interconnection services and digital infrastructure, filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of New Jersey in June 2023 and sold its assets to Brookfield Infrastructure Partners in November 2023.
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QualTek Services, an infrastructure services provider for 5G wireless, telecommunications, power grid modernization and renewable energy solutions, filed for Chapter 11 bankruptcy on May 24, 2023 in the U.S. Bankruptcy Court. Southern District of Texas to restructure its debt and emerged from bankruptcy. on June 30, 2023, after reducing its debt by $307 million.
Cloud-based data center provider Internap Holding filed for Chapter 11 bankruptcy on April 28, 2023 in the District of Delaware with more than $198 million in debt and exited on August 1, 2023, after a restructuring.
Starry Group, a licensed fixed wireless technology developer and Internet service provider, filed for prepackaged Chapter 11 in the District of Delaware on February 20, 2023, seeking to reduce its debt and emerged from bankruptcy in August 2023.
Airspan files for bankruptcy and sells majority stake to Fortress
Bankruptcy trend continued from 2023 to 2024, as pioneering telecommunications company Airspan Networks Holdings (MIMO) on March 31, 2024, filed a prepackaged Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Delaware, which calls for the award of a majority interest in funds managed by its senior secured lender of pre-petition, Fortress Investment Group.
As part of the debtor’s restructuring support agreement, Fortress and certain key stakeholders will provide up to $95 million in new equity financing and eliminate all of the company’s existing funded debt. Fortress subsidiaries have also committed to providing $53 million in debtor-in-possession financing, which, along with available cash, will fund the company’s operations during the restructuring.
The Boca Raton, Fla.-based company had total funded debt of approximately $205.1 million as of the date of the petition, according to a statement from CEO Glenn Laxdal. In recent years, the company has suffered significant operating losses, in part due to the commitment of significant resources to research and development as well as competitive pressures. The company relied on debt to cover its operating cash flow shortfall.
Airspan, during the Covid pandemic in 2020, suffered from supply chain disruptions, significant price increases for silicon-based components, increased transportation costs, inflation and stagnant growth, the statement said.
As of 2021, the company has retained the services of an investment banker to seek strategic alternatives and has entered into negotiations for a possible sale of its assets or a restructuring transaction. In 2022, the company focused on reducing operating costs by reducing its workforce from 800 employees to 494 workers. Since then, the number of employees has fallen to about 370, the statement said.
In March 2023, Airspan sold subsidiary Mimosa Networks to Radisys for approximately $60 million. It used $45 million to pay its bonds and senior secured debt before the petition, allocated about $5 million for costs and fees, and freed up about $10 million for fund operations.
Airspan and its pre-petition lenders amended the senior secured debt in May 2023, which provided the company with $25 million in deferred draw term loan commitments and granted the company waivers on existing defaults and default events. The company continued to look to sell all of its assets until mid-December 2023, when it realized a sale would not take place.
Seek a comprehensive restructuring with senior creditors
Instead, it sought a comprehensive restructuring with its senior secured lenders and subordinated creditors. The company entered into a restructuring support agreement with its lenders and creditors on March 29.
As part of the deal, existing common shareholders have the option to receive their prorated share of $450,000 or, at their option, warrants in lieu of cash. If more than 150 shareholders choose warrants, no warrants will be provided.
Founded in 1998, Airspan began its business in proprietary digital wireless access technologies, primarily broadband wireless solutions.
Airspan offers a wide range of software-defined radios, broadband access products and network management software to enable cost-effective deployment and effective management of mobile, fixed and hybrid wireless networks. Its customers include leading mobile communications service providers, large enterprises, infrastructure operators, military communications integrators and Internet service providers.
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