The haggling is over and pan-European private equity consortium, BC Partners emerged holding the hand of Intelsat, its new paramour, and the world’s biggest 50 vehicle satellite fleet.
The definitive deal took around $4.6 billion in money changing hands, plus it requires the extension of considerable amounts of debt, or at least the movement of it, some $11.4 billion, onto the new owners’ books.
That means that cost of the deal was $16.4 billion, which reflects the rising value of satellites. At present the satellites which made up PanAmSat were mostly turned over for delivery of TV channels, while the original Asia Pacific Intelsat fleet was more used for general communications. But the future is all about shifting digital media. The increasing requirement for High Definitive TV channels means there is a potential for a five fold increase in transponder capacity devoted to delivering TV channels to cable, DVB-T, IPTV and satellite DTH operators ‘ the imminent arrival of a new generation of mobile TV operators will also soak up more and more of the world’s satellite capacity.
Before PanAmSat and Intelsat merged in August 2005 their respective values were $5 billion when Intelsat was bought by a group of private equity funds, and $4.3 billion when PanAmSat was acquired, with both igures including debt.
The BC Partners led group will acquire 76% of the ownership of Intelsat in a transaction valuing it at $5 billion. The current shareholders of Intelsat, including funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners, Permira and management, are expected to get $4.6 billion in cash, but will continue to hold 24% of the company.
All this for a company that only does around $2 billion in committed contractual traffic delivery, and which has only just recovered to this level, with a whacking great 85% increase in its last quarter figures to $518 million producing an EBITDA of $365 million. However if its other quarters continue in that vein and considering $8.1 billion of booked future revenues, the business could well be worth what is being paid.
The company debt is expected to increase by $3.85 billion. BC Partners has obtained financing commitments from Credit Suisse, Banc of America Securities and Morgan Stanley for $5.11 billion, the proceeds of which will be used to fund the transaction, repay debt and cover transaction expenses.
As part of the deal, Intelsat expects to retire $860 million of existing debt and may retire a further $400 million of 5.25% Senior Notes due 2008.