So something interesting happened over the Christmas break that I missed initially. Seabras-1 Bermuda Ltd and Seabras 1 USA LLC have filed for bankruptcy, aiming for a quick reorganization. Seaborn Networks itself is fine, as apparently they structured things such that this was the case. However, it certainly can’t have been their preferred path.
So what happened? Well, apparently when a bunch of brand new cables (Seabras-1, BRUSA, Monet) get built on a route such that the available capacity outstrips demand to a region whose economy isn’t doing so well, prices tend to fall. So in order to bring Seabras-1’s balance into line with the new reality, apparently something had to give.
The companies hope to complete restructuring within Q2 of 2020, without making any moves in the direction of a sales process. However, it seems those debt holders may not be ready to play nice. According to a WSJ article, Seaborn says the private equity group Partners Group Holding AG tried to ‘size control’ of the process and a lawsuit has been filed. Partners Group invested in the cable back in 2015.
There’s surely more to this story, but at this time I don’t know the details. Anyone who does is welcome to chime in below.
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Categories: Financials · Undersea cables
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I predict more of this kind of thing, far too many lines being drawn and “hey a new cable” with the existing builds not even near full. Some markets will see a capacity glut and the inevitable effects, with the independent providers being most vulnerable, especially with many of those being tied to landmark deals with the Google/FB/Amazon/Microsoft quad with little else to show but overpriced and over estimated “dreamland” low latency bandwidth sales on routes where it isn’t all that important, and dirt cheap point to point waves in a crowded market. Not saying this is SeaBras but this is a general view of all these builds. Has something of the gold rush about it, and we all know it the guys that made the digging kit that got rich in the end!
According to few sources, Seabras got into problem with partners from day 1. In fact, Sparkle (partner owning 3 Fiber Pairs) filed charges against Seabras as they added latency in their fiber pairs in order to have the lowest latency. A that time, Google also brought an article about carriers adding latency. So I do not think Google would buy traffic to Seabras. Seaborn has been advertising Seabras cable but their sales have been very little and some of the bandwidth they have sold are only for short period of time.