Global satellite operator Intelsat’s planned merger with Jersey-based OneWeb has suffered its first hiccup. Intelsat’s bondholders are not signing up to the proposed financial restructuring engineered by Japan’s media giant SoftBank and Intelsat has had to extend the acceptance period from its April 20th deadline to May 10th.
To date, barely 1 per cent of bondholders have agreed to the new terms and Intelsat says it needs an 85 per cent acceptance for the merger deal to go through.
SoftBank is planning to invest $1.7 billion and in the process, would enable Intelsat to dispatch $3.6 billion of its current $14.5 billion debt burden. SoftBank has already committed to investing $1 billion in OneWeb, which is building a constellation of 740 Low Earth Orbiting satellites to girdle the planet.
Reportedly, Intelsat’s bond-holders are simply holding out for more cash on the table which is often the pattern in such cases.
However, if terms cannot be agreed with bondholders and the SoftBank offer is withdrawn then Intelsat would fall back on Plan B, which would be to continue trading and operating as normal. Dianne J. VanBeber, Intelsat’s VP/investor relations, told trade mag Space Intel Report 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.”
The Intelsat distribution agreement with OneWeb comes about because of a very savvy $25 million of investment made into OneWeb in June 2015, which now looks like a bargain given that the OneWeb scheme, one way or another, will definitely go ahead.