Inmarsat has sold its retail energy operations to oil & gas industry communication services provider RigNet as part of a wider strategic partnership between the two companies. Rignet will pay US$25m in cash for the unit, which is currently managed…
Inmarsat has sold its retail energy operations to oil & gas industry communication services provider RigNet as part of a wider strategic partnership between the two companies.
Rignet will pay US$25m in cash for the unit, which is currently managed within the Inmarsat Solutions Enterprise division.
Under the terms of the deal, Inmarsat will carve out and sell to RigNet all of its energy broadband assets, which include its microwave and WiMAX networks in the US Gulf of Mexico serving drillers, producers and energy vessel owners; its VSAT interests in Russia, the UK, US and Canada; a global telecommunications systems integration business; an M2M SCADA VSAT network in the continental US serving the pipeline industry; and a global L-band MSS retail energy business. The energy carve-out includes assets, employees, contracts and working capital.
In 2012, the operations subject to the sale had total revenues of US$81m. RigNet expects the acquired business to achieve, on a run-rate basis within the first year of closing, an EBITDA contribution margin of 8-10%.
The company also anticipates that it will make additional capital investments of US$5m in 2014 to continue the network upgrade projects in the acquired business that are currently underway.
Commenting on the acquisition, Mark Slaughter, RigNet’s chief executive officer and president, said: “A major goal will be to raise over time the acquired business’ growth rates and margins to levels closer to those we see in RigNet’s existing operations today.”
RigNet expects to finance the transaction with a new credit facility and existing cash.
Simultaneous with the closing of the acquisition, which is expected to occur by Q1 2014, RigNet will become a key Global Xpress distribution partner for the global energy sector and will offer Global Xpress and L-band services to its customers.
In addition, RigNet has agreed, under certain conditions, to a significant four-year pre-purchase of Global Xpress capacity.
Rupert Pearce, Inmarsat’s CEO, said “We are excited about this partnership as it enhances the strategic positioning of both companies as we seek to address the communications needs of the global energy sector together. RigNet is the perfect partner for Inmarsat, supporting a large customer base of oil and gas VSAT customers, whom we expect to be at the forefront of the transition to Global Xpress services.”
Slaughter added, “We are delighted to enter into this strategic partnership with Inmarsat. As the two companies came together for discussions over a number of months – with RigNet evaluating high-throughput satellite providers and Inmarsat seeking a strong distribution channel into the energy market for its Global Xpress offering – it quickly became clear that this deal represented the best path forward for both companies.”
Trinity Advisers acted as Inmarsat’s adviser and Steptoe & Johnson its legal counsel on the transaction. Deutsche Bank advised RigNet with Norton Rose Fulbright providing legal advice.
