The European investment company purchasing Intelsat has agreed to take on an unnamed partner who
will have a substantial minority ownership stake that will
reduce further the equity now held by Intelsat’s four private-equity investors.
In a conference call with investors Aug. 9, officials with Bermuda-headquartered, Washington-based Intelsat said the acquisition of the company by BC Partners still is
expected to close late this year or early in 2008.
BC Partners in June concluded an agreement with Intelsat’s current owners –
private-equity investors Apax, Apollo, Madison Dearborn and Permira –
to purchase 76 percent of the world’s largest commercial-satellite fleet operator in a deal that valued Intelsat’s equity at slightly more than $5 billion. The four current owners will receive $4.6 billion from BC Partners in return for the 76 percent ownership stake.
BC Partners is nearing completion of the financial package needed for the purchase. But recently the company
informed Intelsat that it had found a new partner that would be purchasing from Intelsat’s current owners an equity stake of more than 10 percent in Intelsat, reducing current owners’ stake to 5.5 percent of Intelsat’s equity.
Intelsat officials did not identify the investor but said the deal is expected to close, following regulatory review, late this year or early in 2008.
“We made the disclosure because indeed one institution will hold more than 10 percent
stake,” BC Partners Managing Partner Raymond Svider said Aug. 10. “The name of the partner will be disclosed later. It’s a well-known institution that we feel will add value long-term with us. This was done as part of the equity syndication and will not reduce BC’s investment in Intelsat in any way.”
Presenting the company’s financial results for the three- and six-month periods ending June 30, Intelsat Chief Executive David McGlade said the satellite operator grew its business by 6 percent, to $543 million, for the three-month period compared to a year earlier when the results of both Intelsat and the former PanAmSat are included. Intelsat purchased satellite-fleet operator PanAmSat in July 2006.
EBITDA, or earnings before interest, taxes, depreciation and amortization, was 78 percent of revenue.
and Intelsat Chief Operating Officer Jim Frownfelter reiterated the company’s position that the
planned expansion of its satellite fleet and an associated $615 million in spending foreseen this year will not be compromised by the change in ownership and the substantial new debt that Intelsat is taking on as a result.
The BC Partners buy will add some $3.85 billion to Intelsat’s total debt, bringing it to $15.25 billion.
said in a June interview after the purchase announcement that BC Partners endorses Intelsat’s investment program. “The fleet investment plan remains on track,” McGlade said in the conference call.
Intelsat has seven satellites on order. Two of them are scheduled for launch on European Ariane 5 rockets this year, in September and December.