Satellite stock Speedcast (ASX:SDA) had been struggling for years, but COVID-19 was the straw that broke the camel’s back.

Last night Speedcast — which delivers communications solutions to maritime, energy, mining, media, telecom, cruise, NGO and government customers — told the ASX that it was applying for Chapter 11 bankruptcy in the US to recapitalise its balance sheet.

Yet despite the dreaded ‘b’ word, the relevant US law is only equivalent to voluntary administration in Australia. The company is seeking to recapitalise and emerge with a fresh start, potentially under new owners.

This is happening with Virgin Australia (ASX:VAH), which entered administration earlier this week.

Once upon a time Speedcast was a +$7 per share, ASX 200 stock, but it saw a gradual decline over several months as its earnings faded but its debt did not.

The stock was first suspended in early February as it replaced its chief exec and sought to raise capital.

Unfortunately the pandemic has squeezed its biggest customers to an unprecedented extent. The energy industry has been hit by record low oil prices and the reputation of the cruise industry is in tatters.

SpeedCast, which will stay suspended until the restructuring process is done, says it has commitments for a $90 million bankruptcy loan.


Satellites: a tough market to crack

The growth of satellite dependant technologies would make the satellite market seem an appealing market.

Last year it was estimated 20,000 satellites would be launched in the next decade.

But they are heavily capital intensive and the industry relies heavily on debt. In fact, some of SpeedCast’s competitors (and creditors) are also seeking bankruptcy refinancing, one being Intelsat.

SpeedCast’s downfall also comes a few weeks after fellow satellite play Sky and Space Global (ASX:SAS) applied for administration.