Intelsat Acquires PanAmSat for $3.2B

Aug 30, 2005 09:50 UTC by Defense Industry Daily staff

Intelsat, Ltd. Of Pembroke, Bermuda and PanAmSat Holding Corporation of Wilton, CT, USA have signed a definitive merger agreement under which Intelsat will acquire PanAmSat for $25 per share in cash, or $3.2 billion. Using a combined fleet of 53 satellites, the company will serve customers in more than 220 countries and territories.

PanAmSat brings a strong, video-centric customer base, including leading providers of cable TV programming, while Intelsat’s historical strength has been in providing core telephony and advanced data services to developing and underserved regions around the world. Over the long term, the company intends to consolidate best practices from the two respective organizations.

Shareholders owning approximately 58% of PanAmSat’s shares have agreed to vote in favor of the combination. The merged company is expected to have pro forma annual revenues of more than $1.9 billion and to maintain significant free cash flow from operations.

Under the agreement, which was approved unanimously by the Boards of Directors of both companies, Intelsat will acquire all outstanding common shares of PanAmSat, and additionally Intelsat will either refinance or assume approximately $3.2 billion in debt of PanAmSat Holding Corporation and its subsidiaries.

Prior to this financing and the closing of the transaction, Intelsat (Bermuda), Ltd. is expected to transfer substantially all of its assets and liabilities (including its 9-1/4% Senior Discount Notes due 2015) to a newly-formed wholly-owned subsidiary. Upon completion of the transaction, both PanAmSat Holding Corporation and Intelsat Subsidiary Holding Company, Ltd will be direct or indirect wholly-owned subsidiaries of Intelsat (Bermuda), Ltd., and PanAmSat Holding Corporation and its subsidiaries will continue as separate corporate entities.

Mr. McGlade will continue to serve as Chief Executive Officer and a Director of the company upon closing. Joseph Wright, currently Chief Executive Officer of PanAmSat, is expected to become Chairman of the Board upon completion of the transaction.

Intelsat has received financing commitments for the full amount of the purchase price from a group of financial institutions led by Deutsche Bank Securities Inc., Citigroup Global Markets Inc., Credit Suisse First Boston LLC and Lehman Brothers Inc. A substantial portion of the financing for the transaction is expected to be raised at Intelsat (Bermuda), Ltd., with additional financing expected to be raised at PanAmSat Holding Corporation, PanAmSat Corporation, and Intelsat Subsidiary Holding Company, Ltd. Credit Suisse First Boston LLC is serving as Intelsat’s financial advisor, and Wachtell, Lipton, Rosen & Katz, Paul, Weiss, Rifkind, Wharton & Garrison LLP, and Milbank, Tweed, Hadley & McCloy LLP are serving as Intelsat’s legal advisors. Morgan Stanley is serving as PanAmSat’s financial advisor, and Simpson Thacher & Bartlett LLP is serving as PanAmSat’s legal advisor.

This transaction is conditioned upon PanAmSat Holding Corporation shareholder approval, customary closing conditions and clearances from relevant regulatory agencies, including the appropriate U.S. government antitrust authorities and the Federal Communications Commission. The companies anticipate that the transaction could close in approximately 6-12 months. See full corporate release.