David McGlade, Intelsat CEO.
NEW YORK, June 20, 2007 - Satnews Daily - UK-based private equity firm BC Partners has purchased 76 percent of Intelsat, Ltd., the world's largest commercial satellite operator, for $5.03 billion in cash.
BC Partners, which has its business focus in Europe, will also take on Intelsat’s debt load of $11 billion and a further $3.9 billion in debt. The firm received $5 billion in financing commitments from Credit Suisse (which advised Intelsat on the transaction), Banc of America Securities and Morgan Stanley. BC Partners’ advisers were Merrill Lynch and Perella Weinberg. The acquisition is the largest in BC Partners' history.
Intelsat later announced the signing of a definitive agreement for the purchase of a majority of the shares of its parent company, Intelsat Holdings, Ltd., by funds advised by BC Partners and other investors.
Intelsat CEO Dave McGlade said this transaction highlights the significant value that Intelsat has created for its shareholders and the tremendous opportunities the business and employees will enjoy going forward.
“The company has thrived under private equity ownership, including the 2006 completion of the transformative PanAmSat combination that firmly established Intelsat’s global leadership position. As a result, we have a keen appreciation for the financial and strategic support that a firm such as BC Partners can provide. We are confident that they will continue to endorse Intelsat’s objectives for revenue growth and operating improvements,” he said.
“Intelsat and the FSS sector are in the midst of a cycle of strong performance,” said Raymond Svider, a managing partner of BC Partners. “Intelsat is the premier FSS satellite operator, with high-quality assets and a strong global brand. Its valuable cable and direct-to-home neighborhoods, strength in network applications, blue chip customer base and solid backlog of long-term contracts create an attractive investment opportunity. We look forward to working with and supporting Intelsat’s management team as they pursue their growth strategies.”
The BCEC funds-led group will acquire some 76% of the primary ownership of Intelsat Holdings, Ltd. in a transaction valuing the company’s equity at around $5.03 billion. Taking into account $11.4 billion of debt as of March 31, 2007, the enterprise valuation implied by the transaction is about $16.4 billion.
BC Partners described Intelsat as an attractive investment opportunity given its blue chip customer base, strong order backlog and extensive cable and direct-to-home services. Among BC Partners’ technology acquisitions were German firm Telecolumbus, a Level 4 cable service provider, and French firm LD COM, a backbone, local fiber ring and web center operator. It also has major investments in the food and healthcare industries.
Analysts said the price paid by BC Partners was within expectations. Earlier reports said the six firms interested in Intelsat were willing to invest from $4-6 billion for the satellite operator, which is based in Bermuda.
Intelsat bought rival PanAmSat Holding Corporation in 2004 for $3.2 billion, creating the world's largest commercial satellite operator with 51 satellites. SES Global SA, the second largest satellite operator, has 43 satellites.
Founded in 1989, BC Partners describes itself as a leader in acquiring and developing businesses in partnership with management. It has invested in 63 acquisitions (excluding Intelsat) with a total value of $64.3 billion, and took a leading role in 48 acquisitions with an aggregate value of $47 billion.
Over the next five years, BC Partners expects its funds to acquire 15 to 20 businesses, with transaction values typically in the range of $400 million to $5.4 billion, with a cumulative enterprise value of over $20 billion.
Reporting on its results for 2006, Intelsat said it intended to generate growth in its core services this year by leveraging its enhanced strengths in video and broadcasting. McGlade reported revenues of $1.7 billion, a rise $491.2 million, or 42 percent year-on-year. Intelsat, however, took a net loss of $368.7 million in 2006, in part due to the impact of restructuring costs of $26.5 million related to the PanAmSat acquisition.
The PanAmSat business contributed some $456.7 to the revenue increase, including $37.0 million for the operations of the government business of G2 Satellite Solutions Corporation.
Earlier reports said six firms, including Loral Space & Communications, Inc. and U.S. pay TV provider EchoStar Communications Corporation in alliance with Liberty Media Corporation, were reported to be interested in acquiring Intelsat.
Other bidders for Intelsat are said to have included the Carlyle Group, Providence Equity Partners and Australia's Macquarie Bank, Ltd. Absent among the bidders was The Blackstone Group LP, which reportedly offered $6 billion to buy Intelsat last April triggering the current bidding war. Blackstone submitted no formal bid, however.
McGlade is expected to continue to serve as Intelsat CEO. Intelsat will remain focused on serving its global customer base in the media, network services and government sectors. Intelsat's customers include the US military, US TV networks ABC and CBS, France Telecom and News Corp. Intelsat broadcast the Apollo 11 Moon landing worldwide in 1969.
