UK-based MSS operator Inmarsat has not received any takeover bids, despite reports suggesting approaches from private equity as well as strategic players, according to a source close to the company.
Reports earlier in the week had cited trader…
UK-based MSS operator Inmarsat has not received any takeover bids, despite reports suggesting approaches from private equity as well as strategic players, according to a source close to the company.
Reports earlier in the week had cited trader speculation that companies, including France’s EADS and General Electric of the US, were lining up to acquire Inmarsat at 700p a share. The talk has been boosting Inmarsat’s stock, which closed on 9 February at 470p, up 15.79% on the week.
But the well-placed source dismissed the rumours, adding that the speculation appeared to confuse a throwaway comment made last September by Inmarsat CEO Andrew Sukawaty, who said it would be natural for PE to look at the operator as an attractive investment option.
Inmarsat, which declined to comment on market speculation, is periodically the subject of takeover rumours. Such speculation has intensified since last year’s decision by hedge fund Harbinger Capital Partners to sell its remaining 14% stake in the operator at 670p a share, netting around £431m in the process.
Helping to reinforce the recent takeover speculation is the poor performance of Inmarsat’s shares, which have been weighed down by the planned military withdrawal in Afghanistan and the uncertainty over its spectrum leasing partner LightSquared, the embattled US satellite/terrestrial venture that is backed by Harbinger.
LightSquared’s ability to make payments of US$115m per annum, payable quarterly in advance, is under doubt as it looks increasingly unlikely that the venture will receive the regulatory approval it needs to launch commercial services.
The company is facing significant spectrum interference concerns from the GPS industry, and is still awaiting a ruling from the FCC on whether it can proceed with its planned business model.
But after a long-awaited government investigation found no solutions that would enable LightSquared to launch commercially within the next few years, Inmarsat’s shares fell 5% to close at 397.7p on 16 January. The British operator currently has a market cap of around £2bn.
Meanwhile Harbinger, whose Master Fund I reportedly has more than 60% of its assets invested in LightSquared, saw its entire portfolio decline by 47% in 2011.
A Harbinger spokesman declined to disclose financial details, but explained: “The decline in the portfolio value was primarily due to a conservative adjustment in the fund’s holdings of LightSquared, to be consistent with the results of work done by the fund’s third party valuation firm.”
“The valuation takes into account uncertainty about the outcome of political issues related to alleged interference with the GPS system by LightSquared transmitters. Harbinger continues to work closely with LightSquared to obtain a favourable outcome.”
On 9 February, Bloomberg reported that Harbinger was paying a hefty 15% interest rate on a US$190m loan that matures at the end of October, because of the uncertainty surrounding LightSquared.
It received US$160m from Jefferies Group after fees, added the report citing sources.
For its part, LightSquared has insisted it has access to sufficient cash resources to last several quarters.
