Chinese company raises funding to acquire Thuraya
WASHINGTON — A Chinese technology group is planning to raise $195 million to purchase Dubai-based mobile satellite communications company Thuraya.
China Trends Holdings Limited, a Hong Kong-based company with a self-described focus on electronics and low carbon products and applications, informed the Stock Exchange of Hong Kong’s Growth Enterprise Market Jan. 10 that it is seeking to acquire Thuraya through the purchase of another company, Skynet Satellite Data Limited. However, it warned that factors such as its ability to acquire the Skynet shares, and U.S. regulatory policy, might fluster these plans.
On Nov. 25, China Trends Holdings agreed to purchase all of Skynet’s shares for $3.9 million. Hong Kong-based Skynet, with partners Poly LM Asset Management Co., Ltd. and GC Capital Partners Limited, signed a memorandum of understanding with Thuraya in March 2016 to invest in the company and its “next generation project,” which presumably is the company’s proposed Futura constellation. On Dec. 30, China Trends Holdings arranged convertible notes with a placing agent to raise $195 million for the acquisition of Thuraya.
China Trends Holdings, incorporated in the Cayman Islands, is not the first Chinese company with an overseas presence that has sought to acquire a foreign satellite operator.
Chinese conglomerate Beijing Xinwei Technology Group created Luxembourg Space Telecommunication as a subsidiary to acquire Spacecom in Israel. As a condition of that acquisition, which remains stalled in negotiations after Spacecom lost a satellite in a September Falcon 9 explosion, Israel stipulated that satellite operations remain in Israel.
In its filing, China Trends Holdings said its main concerns regarding the proposed Thuraya acquisition are getting the legal paperwork from third parties and governments, and shareholder approval. China Trends Holdings specifically mentioned the U.S.’s International Traffic in Arms Regulations (ITAR) as a potential concern. Thuraya’s two satellites, Thuraya-2 and Thuraya-3, are both products of California manufacturer Boeing.
China Trends Holdings did not give an alternate strategy if regulatory or other similar challenges circumvent the purchase of Thuraya. If the placing round is under-subscribed, the company said it would both “explore other fund raising method to raise the required funds,” and “negotiate further with the relevant parties” on the nature of the agreements.
Thuraya began fundraising for its next generation Futura constellation in the fourth quarter of 2016, and has yet to select a manufacturer for the satellites. The operator plans to launch two or three Futura satellites around 2020 with L- and Ka-band capacity and a global footprint. Thuraya’s current satellites do not cover the Americas.