Business Update and Executive Appointment
As previously announced, Speedcast's EBITDA result for the 12 months ended 31 December 2019 (FY19) is not within the range anticipated by the market at the time of the Company's guidance last year. As such, there has been additional focus by the Board to consider whether any other matters should be accounted for in FY19, such as impairment charges, asset write downs and provisions, and to determine what additional market disclosures are required.
The Board continues to work with the management team to fully review all elements of the FY19 result, and expects to finalise this review soon.
At this stage, the Company anticipates that FY19 EBITDA (excluding Significant Items1) will be in the range of US$110-121 million (including AASB16 leasing benefit).
FY20 performance affected by the coronavirus
The Board had previously announced that it anticipated identifying the amounts that will provide a baseline for the expected performance of the business in FY20.
Coronavirus has had a substantial impact on the Cruise industry over the past few weeks, which is anticipated to continue for the near term. With Cruise being a key market segment for Speedcast, this downturn has negatively affected the Company's earnings outlook for the current financial year. As a consequence, Speedcast is not yet able to provide a reliable outlook for the performance of the business in FY20.
Speedcast has been working with its Cruise customers to support them during this difficult period, and the Company anticipates that the joint engagement will prove the value of working with trusted partners - in both the good and the difficult times.
Similarly, Speedcast will continue to work with its suppliers during this period, to minimise any impact on the business from customer delays and cancellations where possible.
As with many other companies, Speedcast is moving to have a large proportion of its team members working from home where possible during this time. The Company has implemented a range of other measures around Business Continuity Planning, security and safety of its sites; and to ensure that - where team members are travelling to other sites - appropriate precautions are being observed. Speedcast's key interest remains the health and well-being of its people, and its customers' and suppliers' people. The Company anticipates that a cost of the necessary measures will be some delay and dislocation in operations as the Company works to resolve the range of issues this pandemic has created.
Alternate sources of funding being sought
With current equity market conditions precluding a meaningful equity raising, the Company has appointed Moelis Australia Limited to advise on its funding and recapitalisation alternatives. Obtaining additional funding will provide Speedcast with the opportunity to engage in meaningful discussions with its lending group and suppliers as part of an overall longer-term recapitalisation of the business.
Speedcast has already initiated discussions with its lending group in respect of this additional funding, and to ensure a productive ongoing relationship in the recapitalisation process. The Company is particularly seeking to work with the lending group and suppliers so that all stakeholders can assist in ensuring the stability of Speedcast's customers at this challenging time.
In addition, the Board continues to seek to reduce overall leverage, including the potential sale of non-core assets to reduce debt, where material and beneficial to the Company.
Speedcast continues to trade as close to normal as possible
Although the Company is operating through a challenging business environment, it is seeking to conduct as close to normal operations as possible.
While there are understandable challenges with travel and some site access, Speedcast's global teams are working hard to continue to provide our services to customers around the world. Speedcast's aim is to ensure that its essential communication services are delivered as planned throughout this period.
CEO and President/CCO appointments
Speedcast is very pleased to announce that Peter Shaper and Joe Spytek have agreed to move into full-time Chief Executive Officer and President / Chief Commercial Officer roles respectively, effective immediately, while continuing with their Board roles.
Peter and Joe have been instrumental in formulating a focused transformation plan to address the business issues facing the Company. The Board believes it is a very good outcome that the Company now has continuity in the execution of this plan and the ability to build positive momentum, as Peter and Joe move into full time executive roles.
As a consequence, the Company has suspended its external search for a CEO.
About Speedcast International Ltd
Speedcast International Ltd (ASX:SDA) is the world's most trusted communications and IT services provider, delivering critical communications solutions to the Maritime, Energy, Mining, Media, Telecom, Cruise, NGO, Government, and Enterprise sectors. With more satellite capacity than any other provider, Speedcast enables faster, seamless pole-to-pole coverage from a global hybrid satellite, fiber, cellular, microwave, MPLS, and IP transport network with direct access to public cloud platforms. The company also integrates differentiated technology offerings that provide smarter ways to communicate and distribute content, manage network and remote operations, protect and secure investments, and improve the crew and guest experience. With a passionate customer focus and a strong safety culture, Speedcast serves more than 3,200 customers in over 140 countries. Learn more at www.speedcast.com.
Speedcast International Ltd