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Eutelsat’s plan to exit Hispasat stalls

Eutelsat is looking to exit from Hispasat, and sell its 33.69 per cent stake. However, it has hit a major hurdle with 57 per cent majority owner Abertis Group saying that Eutelsat’s ‘Put’ option (which requires Abertis to buy its stake) is not valid.

Eutelsat has had this option in place since 2008. Paris-based Eutelsat, in its statement, said the value of its Hispasat stake would be determined by an independent body, and would also be subject to Spanish government consent. The Spanish government itself owns 9 per cent.

Eutelsat stressed that the its rights to exercise the ‘Put’ option are good until the end of July 2017, and were granted by Abertis. “As such, Eutelsat is within its rights to exercise the put prior to July 2017,” said Eutelsat.

The history of Eutelsat’s involvement in Madrid-based Hispasat goes back decades to 2001. Abertis was once Eutelsat’s largest investor. In January 2012, Abertis sold 16 percent of its stake in Eutelsat, for €981 million. In June 2012 Abertis sold a 7 per cent holding in Eutelsat to China’s CIC Investment Corporation (for €358 million). In March 2013 it sold 3.15 per cent for €182 million. A year later, it used the cash to acquire an extra 16.42 per cent of Hispasat, which took its total holdings in Hispasat to 57.07 per cent. In June 2014, it sold its remaining slice of Eutelsat, 5.01 per cent for €275 million.

Eutelsat’s relationship with Hispasat has frequently been strained. On the one hand it is a shareholder, but at the same time it competes. This came to a head back in 2013 when the two satellite operators were competing to buy SatMex of Mexico.

It seems that strained relationship is now to the fore. Eutelsat has always said it has certain key “pre-emption” rights to any Hispasat shares that come onto the market.

Michel de Rosen, now chairman of Eutelsat but speaking in 2014 when he was CEO, said: “We also have in place a ‘Put’ position where, if we decide that we need the cash, or that things are not working out with Hispasat, the ‘Put’ allows us to exit in a relatively smooth fashion.”

Investment bank Exane/BNP-Paribas said that Abertis’ claim of an “invalid initiative” suggests the transaction is likely to take some time and the final outcome unclear. The bank also values Eutelsat’s stake in Hispasat as being in the region of €250 million.

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