The merged body will be a provider of world-class communication solutions and will enable the strengthening of global deployment and reliability * Expanding the supply of HDTV (high definition television), broadband and IPTV
Intelest and PanAmSat Holding Corporation today announced the signing of a definitive merger agreement between the two companies, according to which Intelest will acquire Pan-AmSat at a price of $25 per share in cash, or $3.2 billion. The deal will result in the establishment of a premium satellite company that will lead the fields of digital video content transmission, corporate data delivery and providing communication solutions to governments.
The new company will offer its customers an increased coverage range with additional backup satellites, support for fiber networks and an operational ability to provide a level of service that is unmatched. With the increased focus on the development of advanced communication technologies, the company will meet the needs of cable TV channels, broadcasters, businesses, governments and consumers all over the world.
Through a combined fleet of 53 satellites, the company will serve customers in more than 220 countries and regions. Inspired by the core advantages of both companies and the commitment of their employees to quality in operations and customer service, Intelest will have a portfolio of customers not only in the developing world but also in young countries and remote areas where there is a vital need for satellites to create a communication infrastructure that will enable economic development.
"The combination of Intelstel and Pan-Am Set will create an industry leader capable of providing competitive video and communications services to consumers and businesses," said David McGlade, CEO of Intelstel. "The two companies complement each other in terms of customers, geographic data and product focus. Together we will continue to provide the highest level of service to existing customers while developing new businesses in the rapidly growing communications markets."
Mr. McGlade will continue to serve as CEO and as a director of the company after the conclusion of the deal. With the completion of the transaction, Joseph Wright, the current CEO of Pan-Am, is expected to be appointed chairman of the board of directors.
"Today, Pan-Am Set offers its customers a reliable level of service, especially in the area of video, data and governance. This level of service can only be provided by a technically advanced satellite operator that has financial strength," said Mr. Wright. "Now we will unite the best of both companies and bring to the new company a professional business approach that will benefit our customers, employees and shareholders. This is a situation in which both companies will be hired and the shareholders of Pan-Am-St will earn an excellent result. They will receive $25 per share in cash - a significant increase compared to the recent share price and an increase of almost forty percent compared to the price of the first public offering about six months ago. Also, the shareholders will continue to receive dividends, at the current annual rate, until the deal is closed."
Pan-AmSet brings a strong videocentric customer base, including leading cable television providers, while Intel's historical advantage has been providing core telephony and advanced data services to developing and underserved areas around the world. In the long term, the company will unite the best practices of the two organizations. "We will leverage the intellectual, material and human assets of both companies to continue to provide the quality service that Intellect and Pan-Am Set customers have come to expect," said David McGlade.
Following the deal, the company will benefit from strengthening its financial position and opportunities to increase its revenues and free cash flow. The company is expected to enjoy annual pro forma revenues of more
from $1.9 billion and maintain significant free cash flow from operations, which will provide substantial resources for capital expenditures and debt repayment.
According to an agreement, which was unanimously approved by the boards of directors of both companies, Intelest will purchase all of Pan-Am's common shares held by the public. Intellect will refinance or assume approximately $3.2 million in debt from Pan-Am-Set Holding Corporation and its subsidiaries. Shareholders owning 58 percent of Pan-Am's shares agreed to vote in favor of this arrangement.
Intelest received financial commitments for the full amount of the purchase from a group of financial institutions led by Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Credit
Suisse First Boston LLC and Lehman Brothers Inc.. A significant part of the financing of the transaction is expected to be raised by Intelsat (Bermuda) Ltd. and additional financing is expected to be raised by Pan-Am-Set Holding Corporation, Pan-Am-Set Corporation and Intelsat Subsidiary Holding Company, Ltd.. Prior to the provision of this financing and the closing of the transaction, Intelest (Bermuda) Ltd. is expected to actually transfer all of its assets and liabilities (including its 9-1/4% Senior Discount Notes due in 2015), to a wholly owned subsidiary A new one will be built. Upon completion of the transaction, both Pan-Am-Set Holding Corporation and Intelsat Subsidiary Holding Company Ltd. There will be direct or indirect wholly owned subsidiaries of Intelest (Bermuda) Ltd., and Pan-Am-St Holding Corporation and its subsidiaries will continue to exist as separate corporate entities. The transaction is expected to result in a change of control, as defined in the engagement agreement regarding the bonds held by the public of Pan-Am-St Holding Corporation and in part of the engagement agreements regarding the bonds held by the public of Pan-Am-St.
The transaction is conditional on the approval of the shareholders of Pan-Am-Set Holding Corporation, on acceptable closing conditions and approvals from relevant regulatory bodies, including the government bodies in charge of antitrust in the US and the Federal Communications Commission. The companies expect the deal to close within six to 12 months.
Credit Suisse First Boston LLC is acting as financial advisor to Intelest; Vochel, Lipton Rosen and Katz; Paul, Weiss, Rifkind, Wharton & Garrison LLP; and Milbank, Tweed, Hadley & McCloy LLP, are acting as legal advisors to Intellast. Ms. Morgan Santali serves as financial advisor to Pan-Am-St and the firm of Simpson, Thatcher & Bartlett LLP serves as legal advisor to Pan-Am-St.
The translation of the joint press release was carried out by Businesswire.
