The management of satellite operator AsiaSat has formed a Management Stock Ownership Trust (MSOT) in order to buy out the company’s minority shareholders and take the company private.
About 25.32% of AsiaSat is held in free float and MSOT has…
The management of satellite operator AsiaSat has formed a Management Stock Ownership Trust (MSOT) in order to buy out the company’s minority shareholders and take the company private.
About 25.32% of AsiaSat is held in free float and MSOT has offered these independent shareholders HK$22 (US$2.83) per share for the cancellation of approximately 100 million shares.
This represents a 15.79% premium over the closing price of HK$19 on the Hong Kong Stock Exchange on 21 March. It is also a 32.29% premium over the average of the closing prices as quoted on the stock exchange for the 90 trading days up to 21 March.
The company explained that “the amount of cash required for the proposal is approximately HK$2.246bn [US$289m]. The amount payable to scheme shareholders under the proposal will be borrowed by the offeror from the group under the loan arrangement, which in turn will be funded by HSBC and the internal resources of the group.”
SatelliteFinance understands that the debt will be carried on AsiaSat’s books.
HSBC is financial adviser to MSOT on the proposal, while an independent financial adviser is expected to be appointed for the independent shareholders shortly.
The Hong Kong-based operator is currently majority-owned by China International Trust and Investment Corporation (CITIC) and General Electric Capital Corp, who together own 74.43% through a holding company called Bowenvale.
A further 0.25% or so is controlled by the ESAS Trustee and by some of the company’s directors, including CEO William Wade and Peter Jackson, all of whom are acting in concert with MSOT on the offering and have agreed to sell their stakes to the trust.
After the privatisation, expected to be finalised at the latest in September, the MSOT Trustee will control 25.57% of AsiaSat while Bowenvale’s stake will remain intact. The MSOT Trustee includes Wade as well as Catherine Chang, general counsel of the company, and Roger Tong, vice president, engineering and operations.
AsiaSat said that the reason for the privatisation is predominantly due to the low level of liquidity in the company’s shares, stating in a stock exchange filing: “The offeror and the company believe that the level of liquidity of the shares is insufficient to allow investors to trade freely in the shares, and the ability of the company to take advantage of its listed status to raise funds from the public equity capital market is limited, and that the costs associated with the maintenance of the company’s listing on the stock exchange may no longer be warranted.”
The company added that, by delisting its shares, it will have “greater flexibility in the structuring of possible future corporate transactions, and relieve the company from other regulatory sanctions and compliance obligations to which the company is presently subject as a public listed company.”
This statement echoes similar comments made by William Wade in an interview with SatelliteFinance in April last year. At the time, he explained that, as a public company, AsiaSat had to disclose a lot of information, most notably to its competitors. He also highlighted the costs associated with being a public company. “All those difficulties are emphasised by the fact that we have not tapped the public market yet to raise capital,” Wade added.
Following the privatisation, the company will adopt a management incentive award plan (MIAP) for the benefit of selected employees of the group.
AsiaSat expects a positive outlook for its core business in 2012 but added that significant growth in the near term will be impacted several factors, including the high utilisation level of its satellite fleet.
Although AsiaSat 7 was recently placed into orbit, it does not expect major growth until the planned launch of two other satellites in 2014, AsiaSat 6 and AsiaSat 8.
AsiaSat 6 will be a shared satellite with Thail satellite operator Thaicom. In mid-December, the two companies agreed to provide services from a shared bird, known as AsiaSat6/Thaicom7, which will allow Thailand to maintain its rights on 120E, which are due to expire in October 2012.
