SatelliteFinance has learnt that Asia Broadcast Satellite (ABS) is up for sale and that a number of private equity firms, which have experience in the satellite services sector, have carried out due diligence on the Asian satellite operator.
ABS’…
SatelliteFinance has learnt that Asia Broadcast Satellite (ABS) is up for sale and that a number of private equity firms, which have experience in the satellite services sector, have carried out due diligence on the Asian satellite operator.
ABS’ majority shareholder and part-founder Citi Venture Capital International (CVCI) is looking to exit the company and has brought in Citigroup to run the sales process.
So far the book has not been sent to any strategic players, with one well placed source arguing that this was because the existing ABS management want to remain in charge. However, it is understood that some strategics have been sounded out by potentially interested sponsors.
According to one banker familiar with the process, an LBO of the company would likely involve a much larger equity cheque than usual as it is a challenging deal from a debt financing perspective, given the health and status of the fleet.
ABS owns five satellites, all of which are over ten years old. ABS-1, which is located at 75E, was launched in 1999, while ABS-1B, formerly a Eutelsat bird, was launched in 1997 and is in an inclined orbit. ABS-5, formerly known as Agila-2 under previous owner Mabuhay Satellite, was also launched in 1997 and covers Southeast Asia at 146E. Of the two satellites the company bought from KT Corporation, ABS-1A (Koreasat-2) was launched in 1996 and is currently in an inclined orbit, while ABS-7 (Koreasat-3) was launched in 1999.
In June 2009, the Asian satellite operator ordered an extremely powerful new satellite from Space Systems Loral, ABS-2, which is due to be launched by Arianespace in early 2012. The company has since been looking to secure additional financing to fund the new spacecraft and has sought ECA backing. HSBC was advising ABS on this process. It is thought that as part of the current sales process, management are looking at investment to fund this new satellite.
While the fleet may be aging, SatelliteFinance understands that a number of sponsors remain interested in ABS given its ongoing cash flow generation and potential for growth in the Chinese market. It also has access to both the Office of the Telecommunications Authority (OFTA) in Hong Kong and the mainland Chinese Regulator.
This footprint in China also makes it an attractive target for satellite operators seeking to increase their presence in such a rapidly expanding market. One source argued that the likes of SES could swoop if the sponsors give it a pass. Another potential strategic buyer is AsiaSat which is looking to increase its Chinese business and has a new CEO, William Wade, who is likely to get the backing of the AsiaSat board if he were to push ahead with any deal.
