WASHINGTON — OneWeb is asking its bankruptcy court for permission to issue up to $8.8 million in worker retention and incentive payments to discourage its remaining employees from quitting before the company can sell its spectrum.
OneWeb cut its headcount from 531 employees to 74 in March shortly before filing for Chapter 11 bankruptcy protection, leaving a small crew in place to keep flying its satellites and handle company operations while executing a spectrum sale. The company issued roughly $587,000 in retention payments to employees in late March, but said May 13 that the payments were not enough to prevent some employees from deciding to leave.
“Any further loss to the skeletal team of current employees would leave the debtors severely understaffed and could cause irreparable harm to the sale process,” OneWeb told the United States Bankruptcy Court of the Southern District of New York.
OneWeb didn’t say how many employees have chosen to leave the company after it had already laid off about 85% of its staff. But to prevent further losses, the company has proposed spending $1.8 million in additional retention payments payable in tranches, one each in June, September and December. The retention payments would be equivalent to 40% of each employee’s annual salary.
In addition to the retention program, OneWeb said the company and its debtor-in-possession lenders developed a second program that would provide up to $7 million in further payments to “incentivize the current employees to go above and beyond the call of duty in connection with the sales process.”
Individual employees are doing tasks that would usually be shared among two, three or four people, OneWeb said. Current staff levels are “barely sufficient” to keep the company running while handling bankruptcy related reporting requirements, creditor communications, and claims analysis, OneWeb said.
The exact size of the incentive payments would be based on the proceeds of OneWeb’s spectrum sale, for which an auction is scheduled for July 2. The amount of proceeds OneWeb anticipates from the sale was redacted. Regardless, some 32.5% of the incentive payments would go to OneWeb CEO Adriane Steckel and Chief Financial Officer Tom Whayne.
OneWeb’s bankruptcy court has scheduled a hearing on the retention and incentive payment programs on May 27. The court authorized OneWeb on May 1 to borrow up to $300 million under a Softbank-backed loan after OneWeb failed to raise enough funding to complete its envisioned constellation of 650 small broadband satellites. OneWeb has 74 satellites in low Earth orbit using Ku-band and Ka-band frequencies.