Intelsat slashes IPO target

In May last year Intelsat said it wanted a future Initial Public Offering (IPO) to raise around $1.75 billion.  Now, in a new regulatory filing, the Luxembourg-domiciled company says it is seeking to raise just $750 million from an IPO.  The final figure will largely depend on how enthusiastic the market is to buy into Intelsat.

Last year saw revenues increase just one per cent to $2.6 billion, and the business has booked net losses for the past four successive years. On February 5th a satellite (IS-27) was lost on launch which will further impact revenues.

The good news, which should not be understated, is that its contracted backlog stands at an industry record of $10.7 billion. Intelsat is ultimately currently owned by Serafina Holdings, a business that was re-named as Intelsat Global back in 2008. Serafina/Intelsat Global is itself owned by BC Partners, Silver Lake and other investors, and permitted the earlier investors in Intelsat (including Apax Partners, Apollo Management, Madison Dearborn and Permira) an exit from the business. The move, in 2008, valued Intelsat at $5 billion. Intelsat had bought PanAmSat back in 2005 for $3.2 billion.

As to current events, the lost IS-27 will result in Intelsat receiving $406m, the craft’s overall insured value.  Intelsat says it will be receiving about $488m overall in insurance claims (the balance of $82m covered a failed solar panel on IS-19) and some of this cash will be banked given that the operator’s capex is said by the company to be currently under control. A new IS-27 replacement will be ordered “almost immediately” although would not be carrying a special – and costly – UHF payload that was on IS-27 but had not found a user. The replacement IS-27R would be targeted for a 2016 launch.

Intelsat says it will use the bulk of the IPO proceeds to pay down debt. Add that sum onto the $400-plus million insurance that it is receiving from the lost IS-27, and Intelsat’s debt burden could tumble.

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