As expected, Intelsat has confirmed it will raise more than $600 million in fresh funds.
Intelsat says that about $230 million (€195m) will take the form of new common shares (with a nominal value of $0.01) and be used as an inter-company loan to a new division, Intelsat Envision Holdings. The shares will be priced at $14.84, and be issued on June 14th.
This new business will become the direct parent of Intelsat Connect Finance SA, and which will be used to guarantee Intelsat’s new convertible notes.
An additional (approximately) $350 million will be raised via its Convertible Senior Notes (due 2025) in a private offering to institutional buyers. “The notes will be convertible into common shares at the option of the holders under specified circumstances (subject to Intelsat’s option to cash settle such conversions in whole or in part)” says Intelsat.
There’s already market enthusiasm for the bond issue and Intelsat says that it could lead to a further $52.5 million being raised under the same terms. The issue will pay interest of 4.5 per cent.
The cash raised is expected to be used to purchase existing bonds due for repayment in 2021.
Goldman Sachs and Morgan Stanley are the joint book-runners for the offering.