Satellite operator Intelsat confirmed on 24 May that it no longer plans to float on the New York Stock Exchange by the former deadline of 30 June, and will instead start to explore takeover offers. But a buyout could damage the company's creditworthiness by increasing its debt burden.
News of a possible takeover this year first appeared earlier this month, when Intelsat said it had received "non-binding preliminary indications of interest". At the time, the company planned to continue with the flotation, then scheduled for June, and proceed to the buyout later in the year. Under US law Intelsat, formerly an intergovernmental organisation that became a private company in 2001, had until the end of June to float. But the law was amended on 18 May, giving it until the end of 2005.
The possibility of a leveraged buyout has raised doubts over the company's creditworthiness. In a leveraged buyout, the newly floated company would be bought up by a private equity investor, which would fund the purchase by issuing more Intelsat debt. Intelsat already had $2.4 billion in debts at the end of last year, and this figure is set to rise as a result of the $1.1 billion purchase of Loral's North American satellite fleet. The company says it is still without permission to operate the ex-Loral fleet beyond 13 September and is negotiating an extension with US telecommunications regulators.
New Skies Satellites is negotiating with an unnamed private equity house, believed to be Blackstone Group, interested in buying the listed company. New Skies has a market value of $920 million, but any buyout would involve a significant premium, the company says. New Skies is the seventh largest satellite operator in the world by sales, with revenues of $215 million in 2003 and $11.8 million net profits.
Source: Flight International