Intelsat crashes back to earth as OneWeb merger borders on collapse
Intelsat’s merger with OneWeb has collapsed after the two companies failed to strike a deal with debtholders over existing bonds believed to be worth around $15 billion.
Intelsat informed OneWeb and its backer SoftBank that bondholders had rejected its latest offer as it would have imposed steep losses on some of them, according to Reuters.
The deal, which would have potentially created a new business with an enterprise value of around $18 billion, is expected to be terminated on 2 June, with SoftBank already reportedly eyeing alternative partners.
Intelsat is majority-owned by private equity firm BC Partners, following a $16.5 billion deal struck in 2008. Bondholders rejected a proposal from the company’s equity holders to receive a recovery while they are offered less than the full value of the debt, even after SoftBank bumped its offer to try and bring them on board.
Intelsat CEO Stephen Spengler said: “There were many stakeholders’ interests that needed to be satisfied in this complex transaction. We are disappointed that our bondholders were unwilling to accept the terms of the exchange offers presented over the course of this process. Even without a merger of our companies, the pre-existing commercial agreement among Intelsat, OneWeb and SoftBank will continue.”
The collapse of the deal means SoftBank will look elsewhere to boost its satellite portfolio, with Inmarsat reportedly one possible target.
SoftBank invested $1 billion in the OneWeb satellite project in December, and had expected to acquire a voting stake no greater than 39.9% in the combined entity.
Alongside the Japanese technology giant, OneWeb’s backers include Qualcomm, Airbus, Bharti Enterprises, Hughes Network Systems, Intelsat and Virgin.
In an emailed statement, SoftBank’s chief financial officer Alok Sama said the company was “disappointed” that Intelsat had failed to reach an agreement.
“We continue to be enthusiastic about OneWeb’s standalone prospects, and its potential to disrupt the satellite industry and communications business generally. SoftBank will continue to work with the OneWeb management team to seek alternative paths to accelerate its strategy.”