The Hindu : Business : Private investors set to buy Intelsat for $5 billion

Online edition of India's National Newspaper
Wednesday, Aug 18, 2004

Business

Business

Private investors set to buy Intelsat for $5 billion

WASHINGTON, AUG. 17. America's oldest satellite company Intelsat today said it was being purchased by a group of private investors for $5 billion in cash and the assumption of debt.

The deal, completed today in Bermuda, marks a big transition for Intelsat, which for most of its 40-year history has been owned and governed by companies representing governments around the world.

Intelsat is incorporated in Bermuda, but the bulk of its corporate operations and most of its 900 employees work out of its large mirrored-glass building in North-West Washington.

At one time Intelsat was based here and owned by the governments of the world, with the U.S. being the largest shareholder.

It was the first in the business. However, the U.S. insisted on privatising it and it shifted its headquarters to Bermuda.

If the deal wins regulatory and shareholder approval, Intelsat, which is best known for transmitting the first satellite phone call and for transmitting international broadcasts such as the Olympics, will be owned by a conglomerate of four private-equity groups: Apax Partners; Apollo Management; Madison Dearborn Partners; and Permira. The buyers will pay Intelsat's 200 shareholders $18.75 per share, or $3 billion in cash, and will assume Intelsat's $2 billion in debt.

Lockheed Martin Corp. of Bethesda is by far Intelsat's biggest shareholder, owning 24 per cent of the company, followed by Indian telecom firm VSNL and France Telecom, which own about 5 per cent.

"Once completed, this transaction will both satisfy our shareholders' interest in a strong valuation and allow shareholders to monetise their investments," Intelsat Chief Executive, Conny Kullman, said in a statement. The deal is expected to close by the end of the year, pending antitrust and Federal Communications Commission reviews.

The investor group, which calls itself Zeus Holdings Ltd., outbid other investors such as Blackstone Group, KKR, Texas Pacific Group and Francisco Partners, all of which had submitted bids, according to sources. — PTI

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