Intelsat has secured a US$3.75bn debt facility that will be used to refinance the senior secured credit facilities held by its Intelsat Corp and Sub Holdco subsidiaries. The move is part of Intelsat’s intention to simplify its capital structure.
The new…
Intelsat has secured a US$3.75bn debt facility that will be used to refinance the senior secured credit facilities held by its Intelsat Corp and Sub Holdco subsidiaries. The move is part of Intelsat’s intention to simplify its capital structure.
The new facility, which was taken out through subsidiary Intelsat Jackson, is split between a US$3.25bn senior secured term loan B and a revolving credit facility of up to US$500m.
SatelliteFinance understands that the term loan has a tenor of approximately 7.25 years and priced at a 99.5% issue discount at 375bp over a Libor floor of 1.5%. The revolver is due to mature in approximately five years.
Intelsat had originally intended for the size of the term loan to be approximately US$2.35bn with an additional US$500m being raised through a senior secure note offering of around US$500m.
However, the loan was twice increased, first by US$500m to US$2.85bn after the planned bond issue was scrapped and then a further US$400m to US$3.25bn due to demand.
Proceeds from the facility have been used straight away to repay Intelsat Sub Holdco’s US$330.2m outstanding of senior secured term loans due 2013 and Intelsat Corp’s US$1.72bn outstanding of senior secured term loans due 2014 and US$151m outstanding of senior secured term loans due 2012.
A further US$580.7m has been used to fund the redemption of Intelsat Corp’s 9.25% senior unsecured notes due 2016, while Intelsat Corp also expects to redeem the US$111.8m outstanding of 9.25% senior unsecured notes due 2014. The deadline for the tender offer for those notes is January 20.
On completion, the legacy businesses of Intelsat Corp and Intelsat Sub Holdco will effectively combine.
BofA Merrill Lynch (MLA), Credit Suisse, JPMorgan, Barclays Capital, Deutsche Bank, Morgan Stanley and UBS acted as joint bookrunners on the financing with Goldman Sachs, RBC
Capital Markets and HSBC co-managers.
As SatelliteFinance previously reported, the refinancing and subsequent simplifying of the company’s capital structure is understood to be in preparation for a potential bid for fellow FSS operator Telesat.
A number of sources have suggested that Intelsat has been sounding out a number of potential equity investors, including three sovereign wealth funds, with the intention of generating enough financial muscle to fund a bid. Intelsat would not comment on these rumours.
Bank of America is believed to be advising Intelsat on both its equity financing plans and the potential Telesat bid, with Milbank Tweed Hadley McCloy acting as its legal counsel.
Credit Suisse and JPMorgan are understood to be advising both Loral and Telesat.
Galaxy-15 brought under control
Intelsat has finally taken control of the Galaxy-15 satellite and expects the spacecraft to continue operating to its current end of life in 2022.
On April 5, 2010, Galaxy 15 experienced an anomaly in the telemetry & control subsystem meaning it would no longer respond to commands. At first the failure was thought to be due to a solar storm but the satellite’s manufacturer, Orbital Sciences, discovered that it was the result of an electrostatic discharge (ESD) that knocked out the satellite’s firmware.
The failure led to Galaxy-15 drifting out of its orbital slot and across the paths of other satellites, ten of which were owned by other satellite operators. To that end, Intelsat and those operators, including SES, SatMex and Telesat, had to undertake a series of fly-bys to mitigate any service impact. Intelsat itself had covered the loss of Galaxy-15 by transitioning all the media traffic on this satellite to its in-orbit spare Galaxy-12 at 133W.
The recovery of the satellite began in mid-December.
According to Intelsat, Galaxy-15 lost its Earth lock on December 17 meaning that the solar arrays were no longer pointed at the sun and the spacecraft transitioned to its batteries. Over the next five days the battery voltage rapidly declined until they were completely drained leading to the Baseband Equipment command unit being reset on December 23. This caused Galaxy-15 to finally start responding to commands and by December 27 the satellite was successfully commanded to normal (Earth acquisition) mode.
Galaxy-15 arrived at the 93W orbital location on 15 January and is currently undergoing comprehensive in-orbit testing.
Upon completion, the satellite will be drifted to either 133W or 129W. In the interim, Galaxy-15’s C- and L-band payload will remain off so as to prevent any interference.
A Failure Review Board comprising both Intelsat and Orbital Sciences is continuing to investigate the exact cause, with a conclusion expected to be announced in February. Meanwhile, both companies have sought to put in place measures to prevent the anomaly from re-occurring with Intelsat setting up a separate command chain with new hardware that would allow the company to turn off the Baseband Equipment and reboot the unit if a similar error were to happen again.
As to the cost of the Galaxy-15 anomaly and subsequent recovery, Intelsat’s vice president Investor Relations and Communications, Dianne VanBeber said: “Overall, Intelsat does not expect to incur a further material charge related to the costs to address the Galaxy-15 anomaly, but of course this does not reflect the thousands of hours expended by us, our customers and the other operators as we collectively worked through the problems. It’s amazing how little collateral damage was incurred as a result of the anomaly, in terms of minimal service outages experienced, but this was due to the hard work of talented engineering teams across the industry.” However, the existing write down of approximately US$104m that was made in Q2 2010 will remain in place and if Galaxy-15 returns to full service then the revenues generated will be amortised annually.
