Permira Advisers Buys Satellite Operator ABS

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PARIS — Private-equity investor Permira Advisers has agreed to purchase fast-growing Asian satellite operator ABS in a transaction that would give Permira a nearly 100 percent interest in the Hong Kong-based operator, industry officials said Sept. 10.

Financial details of the transaction were not disclosed. ABS Chief Executive Thomas Choi on Sept. 10 confirmed the acquisition and said a formal announcement would be made the week of Sept. 13.  

“The management of [ABS] will reinvest its equity stake in the business and continue its role,” Choi said in response to a Space News inquiry. “There will be no change in direction, but we will be more aggressive in our expansion plans.”

Industry officials attending the World Satellite Business Week conference here Sept. 6-10 said ABS, which has been struggling to finance its planned large ABS-2 satellite, was in the market for new equity to close the ABS-2 financing.

In Sept. 8 remarks to the conference, Choi said ABS, which up to now has grown by purchasing in-orbit assets, was on the verge of sealing the ABS-2 deal, which he described as key to the company’s planned growth.

Choi said ABS had about $60 million in revenue in 2009 and had a compound annual growth rate of 55 percent since 2007. In 2010, he said, the company was targeting another double-digit revenue increase from its 133 in-orbit transponders on four satellites.

With the large ABS-2 in orbit in 2013, he said, ABS would add 88 transponders to its portfolio. ABS-2 has been ordered from Space Systems/Loral of Palo Alto, Calif., but the manufacturer has never added the satellite to its backlog.

ABS officials have said in the past that they were seeking financing from the U.S. Export-Import Bank to cover the satellite’s construction, and from the French export-credit agency, Coface, to guarantee loans for a launch by Arianespace’s Ariane 5 ECA rocket. The Arianespace launch consortium is based in France.

As described by ABS, ABS-2 would have nearly 7.6 gigahertz of throughput delivered to 48 Ku-band, 34 C-band and six Ka-band transponders. It would be operated alongside the ABS-1 satellite at 75 degrees east. ABS-1 is 100 percent full, Choi said.

Choi said during the conference that ABS-2 would require about $320 million, of which $120 million would come from the company’s cash flow and $150 million from leasing ABS-2 capacity to other satellite operators in a so-called condosat arrangement. The final $50 million in ABS-2 costs would come from additional equity and debt.

Choi said ABS would top $200 million in annual revenue within a year of ABS-2’s start of operations.

Financial analysts and others attending the conference here speculated that 2010 and 2011 could mark the return of private-equity investors to the satellite merger and acquisition scene. East Asia has long been viewed as the region ripest for consolidation, and ABS, which has taken over in-orbit capacity owned by Korea’s KT Corp. and Mabuhay Satellite Corp. of the Philippines, has been conducting a kind of soft consolidation of assets in the region.

But many satellite operators in Asia, as in other regions, are viewed as strategic assets by their governments. That has slowed what industry officials say should be a natural reduction in the number of satellite players given the economies of scale of operating spacecraft.

Permira Advisers is well-versed in the telecommunications satellite business, having been an owner of satellite fleet operator Intelsat of Luxembourg and Washington before selling out to another set of private-equity investors in early 2008.