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Intelsat + SoftBank plan at risk

Satellite operator Intelsat is looking to merge with Jersey-based OneWeb with help from Japanese media giant SoftBank. The deal needs Intelsat’s debt-holders to agree to new financial terms, and that agreement looks to be in doubt. The deadline for acceptances of new terms was at midnight yesterday, May 10th.

New York-based Reorg Research, in a detailed May 8th note to investors, say that Intelsat’s debt-holders, who had been holding out for improved financial terms to emerge from SoftBank, are likely to be disappointed. Reorg says, “as of [May 8th] Softbank has not been willing to amend the terms or further extend the exchange.”

Furthermore, Reorg says that advisors to a Luxembourg group of bond holders holding more than 50 per cent of a key stake in Intelsat’s ‘Jackson’ division have had no dialogue with either Softbank, Intelsat or the pair’s advisors in recent weeks. Reorg says that the Luxembourg bondholders failed to show up at a recently called meeting between the financial advisers to the planned merger.

“Sources add that Softbank has not indicated to Intelsat that it intends to issue a counterproposal before Wednesday’s midnight deadline but that the satellite company maintains hope that Softbank may,” said Reorg.

On April 23rd, Intelsat stated that it was ready with an alternate plan in order to continue trading beyond May 10th should bondholders fail to accept new terms on offer. Dianne J. VanBeber, Intelsat’s VP/investor relations, said that such a move would be “disappointing…but we will move forward and run the business as before. We already have a distribution agreement with OneWeb and we got exclusivity [for OneWeb services] in the markets we were interested in. So, we are partnered with OneWeb no matter what happens.”

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