Satellite operators Intelsat and OneWeb have confirmed plans to merge, with financial support from OneWeb's investor Softbank. The share-for-share transaction includes a pledge from Softbank to invest USD 1.7 billion in shares to be issued by the new company.
The deal is contingent on a debt exchange offer from Intelsat, which along with the Softbank investment, is expected to reduce the company's debt by around USD 3.6 billion. The debt swap is expected to be completed within 90 days, or the deal may be cancelled.
Softbank also announced that after the transaction it plans to contribute its stake in the new company to its new SoftBank Vision Fund. Under the proposed deal, it will hold 39.9 percent of the voting rights in the new company.
Intelsat is already an investor in OneWeb, which is developing a network of low-earth-orbit satellites to extend internet access around the world. Intelsat said the OneWeb network will complement its own EpicNG fleet of next-generation, high-throughput satellites. The merger also significantly strengthens Intelsat's financial position to help it invest in new applications for its fleet. The proposed transactions will bring the net debt ratio down from the current 8.8x adjusted EBITDA to around 6.6x on a pro forma basis.
The new company will maintain Intelsat's HQ in Luxembourg and listing on the NYSE, as well as OneWeb's manufacturing site in Florida. The seven-member board will include three Softbank representatives, three independent directors and one representative of Intelsat shareholders. Intelsat’s CEO Stephen Spengler will be the CEO of the combined company, and OneWeb’s founder and executive chairman Greg Wyler will be the executive chairman of the board.
Closing of the deal still requires approval from shareholders of both companies as well as regulatory clearance. The companies target completing the transaction in Q3 2017.
