What happened

Shares of heavily indebted satellite communications goliath Intelsat (NYSE:I) stock are up 16% as of 12:40 p.m. EDT -- and it doesn't look like it took much to push the stock up.

This morning, Intelsat announced what was essentially a rollover of some its debt, replacing "senior notes" paying 7.25% interest and due for repayment in 2020 with other senior notes paying 8.5% and due in 2024.

Satellite beaming transmission to Earth

"Hey, Houston! Did you hear? Intelsat made good on its debt!" Image source: Getty Images.

So what

Now admittedly, taking on debt at 8.5% interest in order to pay off debt with only 7.25% interest probably wouldn't ordinarily be considered good news (or good business). Still, Intelsat's 7.25% debt was coming due in 2020, and it was a big slug of debt, too -- $1.7 billion worth. Given that Intelsat only had $444 million in its bank account at last report, there may have been some concerns among investors about the company being able to pay its debt when it came due.

Those concerns have now been pushed out four more years into the future, however, with Intelsat using "a portion of the net proceeds from its offering of its 8.50% Senior Notes due 2024 to fund the settlement."

Now what

Granted, Intelsat still needs to make sure it can generate the cash necessary to service its now higher-cost debt. The good news there is that after burning cash in 2016, Intelsat turned (barely) free cash flow positive in 2017 -- and has generated nearly $100 million in positive free cash flow over the past 12 months.

If it keeps going at this rate, the company may well be able to not just service its existing debt obligations -- but even begin paying off a bit of its debt.