Spacecom Chinese deal done?
December 6, 2016
By Chris Forrester
Chinese telecommunications company Beijing Xinwei Technology Group is to buy Israeli satellite communications company, Spacecom, for $190 million (€177m), according to Israeli press reports, unconfirmed by the company.
A Statement from the company issued to advanced-television.com said: “Spacecom wishes to inform the public that merger talks with Luxembourg Space Telecommunication S.A., a Luxembourg company and subsidiary of Beijing Xinwei Technology Group, are continuing and there is no final agreement about terms for Spacecom’s acquisition by the Luxembourg company.
Spacecom wishes to clarify that the signing of this deal is contingent upon completing discussions between the sides on certain principles that remain open between the two sides. At present, there is no certainty that the deal in its current condition or with future conditions will or can be signed.”
The Chinese company had originally offered to pay $285 million for the satellite operator but that was prior to the September 1st catastrophic loss of its Amos-6 satellite when an engine test-firing of a Falcon 9 rocket went badly wrong.
The new price is some 50 per cent more than Spacecom’s market capitalisation ($128 million) on the Tel Aviv stock exchange, but one-third less than the original price offered.
The September 1st explosion meant that plans to place the Amos-6 satellite into Spacecom’s 4 degrees West orbital position had to be scrubbed. However, last week it emerged that Spacecom had leased a satellite from AsiaSat (AsiaSat-8) and this craft is being moved to the 4 degrees West position.
Spacecom’s senior executives will receive completion bonuses once the deal wraps. For example, David Pollack (CEO) will receive a NIS 3 million payment (€731,000), plus a further NIS 2 million if he stays on at Spacecom for six months after the deal closes.
Amos 6 was to be Spacecom’s main future source of income, with an orders backlog estimated at $345 million. One of the main deals cancelled following the explosion was Spacecom’s $95 million agreement with Facebook. Last year, Spacecom reported that Amos 6 will be used by Facebook for one of its main projects in recent years – connecting African countries to the Internet.
AsiaSat-8 is a fairly-new craft, launched in August 2014 to 105.5 degrees East. It carries 24 Ku-band and 1 Ka-band transponder. The deal with Spacecom only covers Ku-band capacity. Spacecom is coughing up $22 million a year for the AsiaSat capacity and has leased the satellite for four years with a further one-year extension option. AsiaSat-8 is expected to take 45 days to reach 4 degrees West and enter service early in 2017.