The proposed merger between satellite giant Intelsat and Jersey-based OneWeb is “close to being scrapped” reports Bloomberg, with Intelsat’s bond-holders holding out for a higher price than that on offer from Japan’s SoftBank, which was looking to facilitate the scheme.
Intelsat said May 11th that it had extended the deadline for bond-holders to accept the terms on offer from May 10th to May 15th in an attempt to keep the deal on track, and reportedly say the situation is fluid and that the proposed deal could still be salvaged. But Bloomberg added that SoftBank already had “one and a half feet out of the door” in regard to the terms already on offer. SoftBank is proposing to invest $1.7 billion in cash, and to then hold a 39.9 per cent voting stake in a re-constituted Intelsat.
In essence, SoftBank is currently offering bondholders an average of 74 cents on each dollar of debt, in order to ease Intelsat’s massive $15 billion of debt. One group of investors/bondholders is reported to be holding out for 95 cents on each dollar held. Current valuations on Intelsat’s debt trade at around 53 cents/dollar.
Whether this last-minute extension saves the day is – currently – entirely in the hands of Intelsat’s bondholders, and in equal measure whether SoftBank improves its tabled offer or walks away from the deal. Intelsat itself is on record as saying that if the SoftBank offer is withdrawn then it will proceed with its commercial relationship with OneWeb, which is already in place.