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SES expects to wrap its acquisition of the O3b constellation of Mid-Earth Orbiting (MEOs) satellites on August 1st. SES says it has received the regulatory approvals necessary to conclude its $730 million (€657m) purchase of the 51 per cent of O3b’s shares that it did not already own.
SES has recently raised extra cash in order to fund the purchase, and will as part of the deal consolidate O3b’s $1.2 billion of debt. Once the deal wraps then SES will refinance “a significant proportion” of the more expensive elements in O3b’s borrowings which are typically costing interest payments of some 9.5 per cent. SES expects these interest rates to fall to about 4 per cent.
SES commented: “The transaction is expected to generate a return (pre-synergies) in excess of SES’s hurdle rate for infrastructure investments. In addition, SES expects to generate €53 million of annual commercial, operational, product development and financial synergies in 2017, increasing to €106 million annually by 2021.”
Karim Michel Sabbagh, President/CEO at SES, added: “Moving to 100 per cent of O3b will be highly accretive for SES, both from a strategic and economic standpoint. In addition to exceeding SES’s investment hurdle rates, full consolidation accelerates the delivery of important transformational and combinational synergies that are only possible with 100 per cent ownership.”