UPDATED April 4, 10:21 a.m. EDT
PARIS — Satellite fleet operatorGlobal moved forward April 2 with its long-planned initial public offering (IPO) of stock in a transaction valued at up to $823 million if its underwriters are able to sell their maximum allotments.
The company also said it expects its revenue for the three months ending March 30 to fall to between $645 million and $660 million. The lower figure would mean zero growth from the same period a year ago. The upper figure would represent a 2 percent increase.
Luxembourg- and Washington-based Intelsat is selling more than 21.739 million common shares at up to $25 per share, plus 3 million convertible preferred shares at $50 apiece, the company said in a prospectus filed with the U.S. Securities and Exchange Commission (SEC).
Its underwriters — Goldman Sachs, JP Morgan, Morgan Stanley and Bank of America Merrill Lynch — have the option, good for 30 days, of selling an additional 3.26 million common shares and 450,000 preferred shares if market demand exceeds the initial quantity.
The shares will be traded on the New York Stock Exchange.
Intelsat is the world’s largest commercial satellite fleet operator by revenue, just ahead ofof Luxembourg, and has a fleet of 54 satellites that cover just about every region of the globe. The second- and third-largest fleet operators, SES and of Paris, respectively, are both publicly traded on European stock exchanges.
Intelsat’s revenue growth has slowed in recent years, and following a series of purchases and sales by private-equity owners the company is now carrying nearly $16 billion in debt. The company reported $2.6 billion in revenue in 2012, with a backlog of $10.7 billion as of Dec. 31.
Intelsat said in its prospectus that 5 percent of its revenue in 2012 came from new business, compared with 6 percent in 2011 and 2010, 8 percent in 2009 and 7 percent in 2008.
The U.S. government, mainly the Defense Department, accounted for 20 percent of Intelsat’s 2012 revenue but was only 7 percent of the company’s backlog as of Dec. 31. This is more a reflection of the U.S. military’s aversion to long-term bandwidth-purchase commitments than an impending drop in military demand.
The company said it had $194.1 million in orbital-incentive payments outstanding as of Dec. 31. Commercial fleet operators often withhold from satellite builders about 10 percent of the agreed price, paying it out with interest over the satellite’s 15-year life. Payments cease or are reduced in the event of a major in-orbit failure.
It has told investors it will use the IPO’s proceeds to reduce its debt and to make a one-time payment to its current private-equity owners to end the annual $25 million in consulting fees its owners have demanded. The company said $39.1 million in IPO revenue would be used to terminate the consulting-fee obligation.
The company’s cash position has recently improved following a launch failure of the heavily insured Intelsat IS-27 satellite earlier this year. The satellite included UHF-band capacity for a military customer that never materialized. Intelsat has said the replacement satellite to be ordered will not have UHF, enabling the company to pocket the large share of the $406 million insurance claim that will not be needed for the replacement.
Intelsat has three satellites under construction and scheduled for launch between late 2013 and late 2014. Two more satellites are expected to be ordered in short order. The first would replace the non-UHF payload on IS-27, and the second would be IS-33e, the second of Intelsat’s Epic spacecraft offering high-throughput capacity in C- and Ku-bands.
The company said its current fleet of 54 satellites — including 11 in inclined orbit, a fuel-saving measure used for satellites nearing the end of their service lives — is likely to shrink in the coming years. As of Dec. 31, Intelsat operated 1,200 C-band transponders and 900 Ku-band transponders. The combined fleet was 78 percent utilized at that time.