The telecommunications industry faced a significant amount of distress in 2023, with several firms 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, a provider of infrastructure services to 5G wireless, telecom, power grid modernization and renewable energy solutions, filed Chapter 11 bankruptcy in May 24, 2023, in the U.S. Bankruptcy Court for the Southern District of Texas to restructure 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 over $198 million in debt and emerged on Aug. 1, 2023, after a restructuring.
Starry Group, a licensed fixed wireless technology developer and internet service provider, filed for a prepackaged Chapter 11 in the District of Delaware on Feb. 20, 2023, seeking to reduce its debt and emerged from bankruptcy in August 2023.
Airspan files bankruptcy to hand majority ownership to Fortress
The bankruptcy trend has continued on from 2023 into 2024, as pioneering telecom company Airspan Networks Holdings (MIMO) on March 31, 2024, filed for a prepackaged Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware that calls for handing majority ownership to funds managed by its senior secured prepetition lender Fortress Investment Group.
Under 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 affiliates have also committed to providing $53 million in debtor-in-possession financing, which, along with cash on hand, will fund the company's operations during restructuring.
The Boca Raton, Fla.-based company had about $205.1 million in total funded debt obligations on the petition date, according to a declaration by CEO Glenn Laxdal. The firm in recent years had incurred sizeable operating losses in part because of a commitment of significant resources to research and development as well as competitive pressures. The company relied on funded indebtedness to cover the shortfall in its cash flow from operations.
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 declaration said.
Beginning in 2021, the company retained an investment banker to pursue strategic alternatives and engaged in talks for a potential 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 decreased to about 370, the declaration said.
In March 2023, Airspan sold an affiliate Mimosa Networks to Radisys for about $60 million. It used $45 million to pay obligations and prepetition senior secured debt, allocated about $5 million for costs and fees and netted about $10 million for fund operations.
Airspan and its prepetition lenders in May 2023 amended senior secured debt, which provided the company with $25 million in delay-draw term loan commitments and granted the company waivers on existing defaults and events of default. The company continued seeking a sale of all its assets until mid-December 2023, when it realized a sale would not happen.
Seeking comprehensive restructuring with senior creditors
It instead sought a comprehensive restructuring with its senior secured lenders and subordinated creditors. The company entered a restructuring support agreement with its lenders and creditors on March 29.
As part of the agreement, existing common stockholders have the option of receiving their pro rata share of $450,000 or, at their election, warrants in lieu of cash. If more than 150 shareholders elect for warrants, no warrants will be provided.
Founded in 1998, Airspan began its business in proprietary digital wireless access technology, primarily broadband wireless solutions.
Airspan provides a broad range of software defined radios, broadband access products and network management software to enable cost-effective deployment and efficient 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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