Electrical Problem Ruins Intelsat Americas-7; Threatens Intelsat Sale to Zeus

PEMBROKE, Bermuda, Nov. 29/Satnews Daily/ ¾ Intelsat, Ltd. reported Sunday its Intelsat Americas-7 satellite experienced a sudden and unexpected electrical distribution anomaly causing permanent loss of the spacecraft on Nov. 28, 2004 at approximately 2:30 am EST.

Intelsat said the company has already made alternative capacity available to most of its IA-7 customers, many of whom have already had their services restored. This reflects Intelsat's intention to ensure a smooth transition for its customers, the company said. Intelsat added it is working with Space/Systems Loral, the manufacturer of the satellite, to identify the cause of the problem.

The satellite, which operated at 129 (degree) West, was launched in September 1999 and covered the continental U.S., Alaska, Hawaii, Canada, Central America, and parts of South America. The satellite was self-insured by Intelsat.

Meanwhile, the satellite loss may threaten the $5 billion sale of Intelsat, Ltd to a consortium of four private investors. The sale, unanimously approved by the company’s Board of Directors only last month, provides for the “amalgamation” under Bermuda law of Intelsat and a subsidiary of Zeus Holdings Limited, a company formed by a consortium of private equity groups: Apax Partners, Apollo Management, Madison Dearborn Partners and Permira.

The total value of the transaction, including approximately $2 billion of existing debt, is approximately $5 billion.

Under the terms of the agreement dated August 16, 2004, among Intelsat, Ltd., Intelsat (Bermuda), Ltd., Zeus Holdings Limited, Zeus Merger One Limited and Zeus Merger Two Limited, the total loss of the IA-7 satellite would give the purchasers the right not to consummate the acquisition of Intelsat. The purchaser, Zeus Holdings Limited, has advised Intelsat it is evaluating the impact of the IA-7 failure.

Intelsat said the upcoming launch of the IA-8 satellite, currently scheduled to occur on December 17, 2004, will provide 36 Ku-band, and 24 C-band, equivalent transponders to the Intelsat North American fleet and help mitigate the impact of the permanent loss of IA-7.

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