Canadian Satellite Investors with Inmarsat Loan Take Over Stratos
BETESDA, MD, March 21, 2007 - Satnews Daily - Communications Investment Partners, Ltd (CIP), a Canadian professional investment company founded in 2006, has acquired Stratos Global Corp. through a $250 million loan from Inmarsat Finance III, Ltd, a subsidiary of the satellite company Inmarsat plc. CIP took control of Stratos through subsidiary, CIP Canada.
Stratos is an international telecom service provider offering customers operating in remote locations with a variety of wireless IP, data, and voice satellite solutions. Stratos serves an array of diverse markets with products and services such as Inmarsat, Iridium and MarineSat/LandSat.
CIP acquired Stratos for $229 million and will also take on $347 million in Stratos’ debt.
In what financial analysts call an unusually structured transaction, Inmarsat Finance provided the $250 million in loan financing to CIP in return for the option to buy Stratos two years later.
Inmarsat, however, will have no equity stake or control over Stratos until April 2009. Instead, an independent Canadian trust established by CIP will hold the Stratos shares and exercise sole voting control over the company, the two parties said.
Under the terms of the agreement, CIP Canada would acquire beneficial ownership of 100 percent of Stratos through a Plan of Arrangement under the Canada Business Corporations Act for a cash purchase price of C$6.40 per share. The total transaction value, including the assumption of net debt, is US$576 million at current exchange rates.
Inmarsat Finance indirectly financed the transaction.
"After careful consideration, the Stratos board of directors unanimously concluded that this is the right transaction for Stratos’ shareholders, customers, partners, and employees," said Charles Bissegger, Stratos’ chairman of the Board of Directors. "This transaction will allow Stratos to remain as an independent company executing its strategy through April 2009, and will promote stability of our business in the post-April 2009 period when our existing distribution agreements with Inmarsat come up for renewal," added James Parm, Stratos’ president and chief executive officer.
Following closing, Stratos will continue to have a Board of Directors composed of a majority of independent, non-executive directors. Key management is expected to remain with Stratos. None of the directors will be selected by or affiliated with Inmarsat or CIP.
