November 20, 2020 – The Debtors notified the Court that their Modified Third Amended Plan of Reorganization had become effective as of November 20, 2020 [Docket No. 686]. The Court previously confirmed the Debtors’ Plan on October 2, 2020 [Docket No. 622].

On March 28, 2020, OneWeb Global Limited and 18 affiliated Debtors (“OneWeb” or the “Debtors”) filed for Chapter 11 protection with the U.S. Bankruptcy Court in the Southern District of New York, lead case number 20-22437. At filing, the Debtors, the developers of a global satellite communications network, noted estimated assets between $1.0bn and $10.0bn and estimated liabilities between $1.0bn and $10.0bn.

The Debtors were represented by Dennis F. Dunne of Milbank LLP. Further board-authorized engagements included (i) FTI Consulting, Inc. as financial advisors, (ii) Guggenheim Securities, LLC as investment bankers and (iii) Omni Agent Solutions as claims agent.

In a press release announcing the emergence, the (former) Debtors stated: “OneWeb, the Low Earth Orbit (LEO) broadband satellite communications company, announces its emergence from U.S. Chapter 11 bankruptcy protection and achievement of all relevant regulatory approvals. A consortium of UK Government (through the UK Secretary of State for Business, Energy and Industrial Strategy) and Bharti Global, has invested $1bn of new equity to offer broadband connectivity services, via a constellation of 650 LEO satellites. OneWeb will continue to be headquartered in the UK, bringing new R&D programmes, manufacturing opportunities and a global platform with priority spectrum usage rights. The company will ensure that the UK is at the forefront of a new commercial space industrial age, evolving technology and innovation, and will work with the UK commercial and academic space communities, along with other international specialists, in its research and development activities.

In connection with completion of the restructuring process, OneWeb is pleased to announce that Neil Masterson has been appointed CEO.”

Sunil Bharti Mittal, Founder and Chairman of Bharti Enterprises, added: “Together with our UK Government partner, we recognized that OneWeb has valuable global spectrum with priority rights, and we benefit from $3.3bn invested to-date and from the satellites already in orbit, securing our usage rights.”

On OneWeb's "Return to Flight," the press release adds: "OneWeb also announces the target date of 17th December 2020 for its Return to Flight, with a 36-satellite payload scheduled for launch by Arianespace from the Vostochny Cosmodrome. All the satellites have been shipped from Florida to Vostochny and are now undergoing preparation for launch. 

Due to investment decisions made by the new shareholders, the joint venture facility with Airbus in Florida, USA was re-activated and the dual production lines brought back into service. 

Launches will continue throughout 2021 and 2022 and OneWeb is now on track to begin commercial connectivity services to the UK and the Arctic region in late 2021 and will expand to delivering global services in 2022."

Plan Overview

The Debtors' memorandum in support of Plan confirmation [Docket No. 603] provides: "Just six months after commencing these extremely complex and challenging 'free-fall' cases in the midst of a global pandemic and global recession, the Debtors have successfully achieved a going concern sale of their business to BidCo 100 Limited, a private limited company organized under the Laws of England and Wales ('BidCo' or 'Plan Sponsor') for over $1 billion in value pursuant to a plan of reorganization that maximizes value for all of the Debtors’ stakeholders. Indeed, the Plan offers the best path to emergence from chapter 11 and allows the Reorganized Debtors to immediately resume their full operations in pursuit of their go-forward business plan. The transactions contemplated by the Plan will support the Reorganized Debtors’ business, fund the significant recoveries provided for by the Plan, permit the Reorganized Debtors to continue ordinary course relationships with their vendors and suppliers, assume hundreds of executory contracts and unexpired leases (including the payment of hundreds of millions in Cure Claims), and preserve jobs for the Debtors’ Current Employees. The Plan is the result of extensive negotiations that occurred in connection with the Court-ordered mediation before the Honorable Shelley C. Chapman, through which the Debtors have reached a global settlement (the 'Global Settlement') with the Official Committee of Unsecured Creditors (the 'Committee'), the Plan Sponsor, the DIP Lenders and the holders of Secured Note Claims (collectively, the 'Mediation Parties'). The terms of the Global Settlement, as incorporated into the Plan, provide meaningfully increased distributions to unsecured creditors and for a consensual path to confirmation of the Plan.”

Global Settlement

On September 22nd, the Debtors filed the Third Amended Plan and Disclosure Statement supplement to reflect changes to Plan terms resulting from a recently completed mediation and global settlement amongst the Debtors, the Debtors' creditors' committee and the expected purchaser of the Debtors' assets. 

The Disclosure Statement supplement motion states, “As a result of extensive negotiations that occurred in connection with mediation before the Honorable Shelley C. Chapman, the Debtors have reached a global settlement with the Official Committee of Unsecured Creditors (the ‘Committee’), BidCo 100 Limited (the ‘Plan Sponsor’), the lenders under the DIP Agreement (the ‘DIP Lenders’) and the Holders of Secured Note Claims (the ‘Global Settlement’). The terms of the Global Settlement, as incorporated into the Amended Plan, provide meaningfully increased distributions to unsecured creditors and provides what the Debtors hope to be a consensual path to the value-maximizing going concern transaction embedded in the Amended Plan. Critically, as explained further below, the Amended Plan provides holders of Allowed General Unsecured Claims in Class 4 with an approximate 50% increase in estimated recoveries as compared to the Second Amended Joint Chapter 11 Plan of Reorganization of OneWeb Global Limited, et al. [Docket No. 533] (the ‘Prior Plan’), and provides certain former members of Class 4 with even further enhanced recoveries by categorizing them in a new class for convenience claim holders, Class 10, that will receive even higher recoveries. The Global Settlement also provides a path to ensuring that certain allowed administrative expenses, secured claims, and priority claims will be satisfied under the Amended Plan. The Global Settlement also significantly reduces the risk to confirmation of the Amended Plan as a result of protracted and expensive litigation and the administrative expenses of these chapter 11 cases.

To provide disclosure to parties in interest regarding the changes reflected in the Amended Plan, including the incorporation of the Global Settlement, the Debtors’ have prepared a supplement to the Disclosure Statement (the ‘Disclosure Statement Supplement’) and the Committee has prepared a letter in support of the Amended Plan (the ‘Supplemental Committee Letter’) which sets forth the Committee’s support for the Amended Plan, and recommendation that unsecured creditors vote in favor of the Amended Plan.

The Debtors and the other parties to the Global Settlement in these chapter 11 cases have worked tirelessly to arrive at a fully consensual plan of reorganization that will allow these Debtors to emerge from Chapter 11. The relief requested in this Motion, which has full support from the Debtors, the Committee, the Plan Sponsor, the DIP Lenders, and the Holders of Secured Note Claims, is critical to implementing the Global Settlement.”

The Disclosure Statement supplement summarizes the global settlement and Plan amendments as follows: "Under the Settlement between the Mediation Parties, the proposed recoveries to Classes 4 and 5 will increase significantly from those proposed under the Prior Plan. Namely: 

• The Amended Plan provides that holders of Allowed Claims in Class 4 and Class 5 will receive their pro rata share of at least $9.3 million (i.e., the General Unsecured Claims Settlement Distribution). This recovery represents an improvement of more than 50% over the $6.1 million that would have been distributed to holders of Class 4 and Class 5 Claims pursuant to the Prior Settlement under the Prior Plan.
• The Debtors’ estimated recovery for holders of Allowed General Unsecured Claims now ranges from 14% to 16.8%. This compares to an estimated recovery of 7.6% to 9.1% under the Prior Plan.
• The Debtors’ estimated recovery for holders of Ongoing Trade Claims now ranges from 56.7% to 65.4%. This compares to 50.3% to 57.8% under the Prior Plan. 

In addition, pursuant to the Settlement, the Amended Plan re-classifies a small set of Class 4 Claims to a newly-created Class of Convenience Claims, Class 10. The Amended Plan proposes to pay Class 10 Claims 100% of their Allowed Convenience Class Claims, subject to an aggregate cap of $700,000, rather than the 7.6% to 9.1% recovery that they would have received under the Prior Plan, in exchange for, among other things, (a) a release of all claims and causes of action against the Debtors (including the Reorganized Debtors), the Debtors’ non-Debtor affiliates, the Released Parties, and any successor to the foregoing in any applicable jurisdiction, and (b) such person or company agreeing (if requested and subject to availability) to provide services to the Reorganized Debtors on terms no less favorable than those provided to the Debtors in the preceding six month period prior to the Petition Date subject to appropriate annual price increases.

The Settlement is the result of an agreement by the holders of the Secured Notes Claims to approve an overall reduction in their recoveries by an additional approximately $7 million in value (or $10 million in the aggregate inclusive of the terms of the Prior Settlement, i.e., they will receive their pro rata share of $90 million of BidCo Equity instead of $100 million of BidCo Equity as originally contemplated under the BidCo Successful Bid). In addition, SoftBank will agree to contribute its Cash recovery on account of the Allowed SoftBank DIP Claims (approximately $91 million plus accrued interest) in exchange for the issuance of an equivalent amount of BidCo Equity."

The following is a summary of classes, claims, voting rights and expected recoveries, now including the new Class 10 (defined terms are in the Plan or Disclosure Statement):

• Class 1 (“Secured Notes Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $1,643,809,254.40 (excludes amounts “rolled up” from the $1,733,809,254 40 of Secured Notes outstanding as of the Petition Date) and expected recovery is 5.9%. Each Holder shall receive its pro rata share of the BidCo Equity Consideration for Allowed Secured Notes Claims, and that portion of the Allowed Secured Notes Claims not satisfied with the pro rata portion of the BidCo Equity Consideration will be considered as uncollectible accounts, and the obligations of the Debtors thereunder or in any way related thereto will be deemed extinguished and cancelled in full.
• Class 2 (“Other Secured Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 3 (“Priority NonTax Claims”) is unimpaired, deemed to accept and not entitled to vote on the Plan.
• Class 4 (“General Unsecured Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $55.52mn – $65.78mn and expected recovery is 14% – 16.8%. Each Holder shall receive its pro rata share of the General Unsecured Claims Settlement Distribution. Each holder of an Allowed General Unsecured Claim that votes to accept the Plan shall also receive an Avoidance Action Release. 
• Class 5 (“Ongoing Trade Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $0.72mn- $0.82mn and expected recovery is 56.3% – 64.4%. Holders shall receive:

(i) If Class 5 votes to accept the Plan, each holder of an Allowed Ongoing Trade Claim shall receive its pro rata share of both the General Unsecured Claims Settlement Distribution and the Ongoing Trade Claims Recovery Pool. For the avoidance of doubt, a vote in favor of the Plan shall constitute an agreement by each holder of an Allowed Ongoing Trade Claim to continue to provide goods and services to the Reorganized Debtors on terms and conditions no less favorable than currently provided.

(ii) If Class 5 votes to reject the Plan, each holder of an Allowed Claim in Class 5 shall receive its pro rata share of the General Unsecured Claims Settlement Distribution.

(iii) Each holder of an Allowed Ongoing Trade Claim that votes to accept the Plan shall also receive an Avoidance Action Release.

• Class 6 (“Intercompany Claims”) is impaired or unimpaired and deemed to accept or reject.
• Class 7 (“Intercompany Interest”) is impaired or unimpaired and deemed to accept or reject.
• Class 8 (“Section 510(b) Claims”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 9 (“OneWeb Interests”) is impaired, deemed to reject and not entitled to vote on the Plan.
• Class 10 (“Convenience Class Claims”) is impaired and entitled to vote on the Plan. The aggregate amount of claims is $0.54mn – $0.68mn and expected recovery is 100%. Holder shall receive its pro rata share of the Convenience Class Distribution Amount on the later of the Effective Date and the date that is ten (10) business days after the date such Convenience Class Claim becomes an Allowed Claim.

In exchange for receiving its distribution from the Convenience Class Distribution Amount, the holder of an Allowed Convenience Class Claim shall execute and deliver a written release of all claims and causes of action against the Debtors (including the Reorganized Debtors), the Debtors’ non-Debtor affiliates, the Released Parties, and any successor to the foregoing in any applicable jurisdiction, and such person or company shall agree (if requested and subject to availability) to provide services to the Reorganized Debtors on terms no less favorable than those provided to the Debtors in the preceding six-month period prior to the Petition Date subject to appropriate annual price increases.

For the avoidance of doubt, any portion of the Convenience Class Distribution Amount not required to make payments on account of Allowed Convenience Class Claims shall be reallocated to the other distributions and payments contemplated by the definition of Global Unsecured Settlement Distribution. Each holder of an Allowed Convenience Class Claim that votes to accept the Plan shall receive an Avoidance Action Release.

Asset Sale 

On July 5, 2020, further to an April 29th bidding procedures order [Docket No. 104], the Debtors notified the Court that they had selected BidCo 100 Limited, a private limited company organized under the Laws of England and Wales as the successful bidder for substantially all of the Debtors’ assets [Docket No. 367]. BidCo 100 is a consortium led by Her Majesty’s Government (“HMG,” through the UK Secretary of State for Business, Energy and Industrial Strategy) and Bharti Global Limited (“Bharti,” an Indian conglomerate which includes Bharti Airtel, the group’s flagship company). The Debtors attached a Plan Support Agreement (the “PSA”), which detailed the terms of the purchase, to the motion as Exhibit A.

As it stands, the agreed purchase price is approximately $1.1bn comprised of: (i) a $150.0mn cash payment to satisfy existing DIP Facility and other claims, (ii) a contribution of $100.0mn in BidCo equity that will be issued to the holders of the allowed secured notes claims under the contemplated plan of reorganization for the Debtors and (iii) an additional funding commitment of up to $850.0mn to capitalize the Debtors’ businesses and operations through emergence and thereafter, of which up to $110.0mn will be made available before the closing of the Plan Sponsor’s successful bid through the provision of incremental DIP financing (the “Interim Funding”).

Key Documents:

The Debtors' Disclosure Statement [Docket No. 473] attached the following documents:

• Exhibit A: Liquidation Analysis
• Exhibit B: Financial Projections

The Debtors filed Plan Supplements [Docket Nos. 572 and 608], which attached the following documents:

• Exhibit A: Schedule of Rejected Executory Contracts and Unexpired Leases [Docket No. 572]
• Exhibit B: Schedule of Retained Causes of Action [Docket No. 572]
• Exhibit C: Certain Amended Organizational Documents [Docket No. 608]
• Exhibit D: Identities of the New Directors and Officers [Docket No. 608]
• Exhibit E: Restructuring Steps [Docket No. 608]
• Exhibit F: Plan Administrator Agreement [Docket No. 608]

Significant Prepetition Shareholders

• Softbank Group Corp.: 37.41%
• Qualcomm Global Trading Pte.: 15.93%
• 1110 Ventures, LLC: 11.94%
• Airbus Group Proj B.V,: 8.50%
• Vieco Nominees Limited: 7.39%
• Indian Continent Investment Limited: 5.14%

Prepetition Capital Structure

Equity

• In 2015, OneWeb raised approximately $500.0mn in equity financing primarily from strategic investors, including certain entities affiliated with Airbus Group, Inc., Hughes  Network  Systems,  LLC, EchoStar  Corp., Intelsat  Corporation, Qualcomm  Incorporated and Virgin Group Ltd. 
• In December 2016, OneWeb raised an additional $1.2bn consisting of a $1.0bn investment from SoftBank Group Corp. (“SoftBank”)  and a $200.0mn investment from certain of its existing investors.
• As of the Petition Date, OWG had 6,897,734 ordinary shares and 606,061 preferred shares outstanding.

Debt

• July 2018 Note Purchase Agreement: On July 12, 2018, the Debtors entered into a note purchase agreement (the “Original NPA”) with SoftBank, as administrative and collateral agent. Between July 2018 and January 2019, the Debtors issued notes to SoftBank under the Original NPA in an aggregate principal amount of $408.0mn.
• March 2019 Note Purchase Agreement and Senior Secured Financing: On March 18, 2019, the Debtors entered into an Amended and Restated Note Purchase Agreement (the “A&R NPA”) with Softbank, Banco Azteca, S.A., Institución de Banca Múltiple, Airbus Group Proj B.V., Qualcomm Technologies, Inc. and The Government of the Republic of Rwanda as the initial purchasers (the “Purchasers”), Global Loan Agency Services Limited, as administrative agent, and GLAS Trust Corporation Limited, as collateral agent. 

Between March 2019 and October 2019, the Debtors issued to the Purchasers 12.5% senior secured promissory notes in an aggregate principal amount of $1,560,621,949.30 (the “Senior  Secured  Financing”).  As of the Petition Date, there was approximately $1,733,121,855.82 (principal plus accrued interest) outstanding under the Senior Secured Financing.

Events Leading to the Chapter 11 Filing

"This latest funding round, our largest to date, makes OneWeb’s service inevitable and is a vote of confidence from our core investor base in our business model and the OneWeb value proposition." So said the Debtors' CEO just over a year ago when commenting on the completion of a further $1.25bn round of funding that brought OneWeb's total financing haul to $3.4bn. 

In a July 2019 interview with Bloomberg, Steckel continued to exude confidence in OneWeb’s ability to see off contenders in a space race against, amongst others, Elon Musk and the bottomless pockets of Jeff Bezos. “We’re going to have global coverage first, and then we’ll add more capacity to it." Promising to deliver satellites into orbit at a clip of 30 per month from Q4 2019, Steckel defended the venture’s economics as premised on OneWeb's ability to slash costs and manufacture satellites for about $1.0mn each. “But when you go to the next batch, it goes way below that, because we’ve amortized all the costs of the factory and whatnot,” said Steckel. “We will be able to broaden it and make it more affordable to everybody.”

So What Happened?

The Debtors make much of COVID-19 pandemic as the event that kicked shut the door to continued financing; with "anticipated funding opportunities…significantly and precipitously impacted by the COVID-19 pandemic and the resulting shuttering of the global economy." Indeed, it is undoubtedly COVID-19 that caused existing lenders and then potential bridge lenders to definitively turn their backs on the Debtors in Mid-March. Clearly, however, and notwithstanding the fairly fresh infusion of $1.25b in equity capital, the Debtors' liquidity issues preceded the arrival of COVID-19. The privately-held Debtors are not, however, effusive on the details as to how they ended up facing a "rapidly deteriorating liquidity position as the cost of building out the OneWeb System exhausted its existing equity and debt financing," with the story now essentially being: "We were always going to need more money, we had every reason to expect access to the capital markets…and COVID-19 has made that impossible." Cost over-runs; overly optimistic projections as to the number and timing of operational satellites; and management issues do not make it into OneWeb's mea culpa.

In a declaration in support of the Chapter 11 filing (the “Whayne Declaration”) [Docket No. 3], Thomas Whayne, the Debtors'  Chief Financial Officer, detailed the events leading to OneWeb’s Chapter 11 filing. the Whayne Declaration states: 

"OneWeb remains in the development stage of its business. Notably, the Company does not yet generate revenue. Historically, and throughout the various development stages of the OneWeb System, OneWeb has looked to its key equity and debt investors to provide liquidity for the next stage of its operations. Since 2019, OneWeb has been actively seeking investments from both its existing and new investors to fund its continuing operations and completion of the OneWeb System. In February 2020, OneWeb achieved its most momentous of development stages with the first launch of 34 satellites for its GEN-1 Constellation. Over the course of 2020, it was anticipated that OneWeb would continue with a monthly launch cadence to deploy the complete GEN 1 Constellation of 648 satellites. At that time, OneWeb had anticipated raising additional capital to meet its launch and constellation implementation schedule. However, OneWeb continued to face a rapidly deteriorating liquidity position as the cost of building out the OneWeb System exhausted its existing equity and debt financing. OneWeb engaged Guggenheim Securities, LLC (‘Guggenheim) in February 2020 to serve as its investment banker and assist the Debtors in their evaluation and pursuit of strategic opportunities. 

OneWeb had been hopeful to achieve an out of court solution to its deteriorating liquidity position. After several due diligence meetings during the first and second weeks of March 2020, the Company believed that it was going to be able to secure a long-term funding arrangement from existing shareholders. However, on March 12, 2020, as the markets began to feel the impact of COVID-19, OneWeb was notified that its current investors would not commit to a long term solution. On March 16, 2020, OneWeb entered into a term sheet for bridge financing to be consummated by March 26, 2020. On March 21, 2020, the Company was notified that the bridge financing offer was unavailable. Unfortunately, the anticipated funding opportunities OneWeb pursued were significantly and precipitously impacted by the COVID-19 pandemic and the resulting shuttering of the global economy. OneWeb, in an effort to preserve liquidity during these difficult social, political, and economic times, began shutting down nonessential aspects of its business in order to preserve the value of its existing assets.

Corporate Structure Chart

About the Debtors

Prior to the Petition Date, OneWeb was in the process of deploying the world’s first global satellite communications network to deliver high-throughput, high-speed, low-latency Internet connectivity services, having an ability of channeling 50 megabits per second, with a latency of less than 50 millisecond, and capable of connecting everywhere, to everyone. Founded in 2012, OneWeb has spent the past eight years developing a low-Earth orbit (“LEO”) satellite constellation system and associated ground infrastructure, including terrestrial gateways (“Satellite Network Portals”, or “SNPs”) and end-user terminals, capable of delivering communication services for use by consumers, businesses, governmental entities, and institutions, including schools, hospitals, and other end-users whether on the ground, in the air, or at sea (the “OneWeb System”). 

OneWeb’s business consists of the development of the OneWeb System, including the development of next generation, small-satellites being mass produced by a joint venture, and associated ground infrastructure, including operations centers, ground control facilities, SNPs, and various end-user terminals for various markets. In order to operate the OneWeb System, the Company holds various authorizations and licenses, including for the use of Ku-band and Ka-band radio-frequency spectrum on a global basis, and domestic market access/services authorizations necessary for operating the satellites and associated ground infrastructure. Having already completed three successful launches of over 70 satellites between February 2019 and March 2020, OneWeb was well on its way to growing its constellation to 648 satellites with the goal of beginning customer service demonstrations in late 2020 and providing full global commercial coverage by late 2021 or early 2022.

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