Intelsat has announced that is has completed its initial public offering, raising a total of £572.4m after the underwriters exercised their over-allotment option.
The satellite operator sold a total of 22,222,222 common shares, including the greenshoe…
Intelsat has announced that is has completed its initial public offering, raising a total of £572.4m after the underwriters exercised their over-allotment option.
The satellite operator sold a total of 22,222,222 common shares, including the greenshoe of 2,898,550 shares, at US$18 per share and 3,450,000 Series A mandatory convertible junior non-voting preferred shares, including the over-allotment of 450,000 shares, at US$50 per share.
The Series A preferred shares have a liquidation preference of their per share sales price, a dividend rate of 5.75% payable quarterly, and a mandatory conversion date of 1 May 2016.
Having initially traded down, Intelsat’s share price quickly rose finishing its first day of trading at US$19.25. The shares are now trading at just over US$20.
Intelsat stated that the net proceeds from the offering would predominantly be used to repay debt. To that end, on completion Intelsat announced that it has prepaid approximately US$138.2m of indebtedness outstanding under the US$810.9m senior unsecured credit agreement, dated July 2008.
In addition, the satellite operator has issued a notice of redemption for all of Intelsat Investments’ outstanding US$353.55m 6.5% senior notes due 2013, as well as the outstanding US$366.4m of Intelsat Luxembourg’s 11.25% senior cash pay notes due 2017.
The company stated that the redemption of the 2013 notes would be funded by the proceeds of the IPO, while the 2017 notes would be funded by the circa US$400m proceeds of the insurance claim relating to the launch failure of Intelsat-27.
The redemption date for both offers is 23 May 2013.
Ratings agency Moody’s has subsequently upgraded Intelsat to B3 from Caa1 with Bill Wolfe, senior vice president at Moody’s, citing the expectation that Intelsat’s capital structure will “be sustainable as a consequence of modest, positive cash flow resulting from refinancing debt at historically low interest rates.”
However, Wolfe added that the upgrade was limited to one notch since Intelsat’s continues to be highly levered at 7.8x (pro forma for debt reduction from the IPO) and has limited capacity to repay debt.
Goldman Sachs, JP Morgan, Morgan Stanley and BofA Merrill Lynch are acting as joint book-running managers and underwriters, with Barclays Capital, Credit Suisse, Deutsche Bank, Nomura and UBS book-runners. Evercore Group, HSBC, RBC Capital Markets, LionTree Advisors and Raymond James are acting as co-managers for the offerings.
