Intelsat Proposes New Debt Issuance

PEMBROKE, Bermuda, Feb. 4/Satnews Daily/ — Intelsat, Ltd. announced on Thursday the company and a newly formed subsidiary are intending to issue new Senior Discount Notes due 2015.

Intelsat said subject to regulatory approvals of certain asset transfers between subsidiaries of Intelsat and consummation of those transfers, the net offering proceeds of approximately $300 million are expected to be used to fund the repurchase of certain preferred shares held by the shareholders of Intelsat's parent, Zeus Holdings Limited.

In a statement, Intelsat said if the required approvals are not received and the transfers are not completed within 90 days, the notes will be redeemed at 100% of their accreted value. The notes will accrete in value for the first five years, after which time noteholders will be paid cash interest on a semi-annual basis. Upon consummation of the offering, receipt of regulatory approvals and completion of the asset transfers, the new Senior Discount Notes will rank structurally subordinate to the existing debt of Intelsat (Bermuda), Ltd. and structurally senior to the existing debt of Intelsat, Ltd.

Meanwhile, the Standard & Poor's has revised its outlook on Intelsat to negative from stable, in reaction to the company's planned note sale. The negative outlook applies to the company's "BB-minus" corporate credit rating, which is three steps below investment-grade, S&P said.

S&P assigned a "B" rating to Intelsat unit Zeus Special Subsidiary Ltd.'s senior discount notes due 2015, which will initially yield $300 million of net proceeds. "The (outlook) revision reflects not only the increase in absolute debt, but also a shift to a somewhat more aggressive financial policy," S&P said.

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