Intelsat Completes
Acquisition of Loral’s North American Satellite Assets
(17 March 2004) Intelsat Ltd has
completed its acquisition of the North American satellites and related customer
contracts of Loral Space & Communications Corporation. The US$ 961.1
million purchase enhances Intelsat's global market position by adding full
coverage of North America to the Intelsat fleet and expanding its customer base
in the broadcasting, cable television and corporate networking segments.
Upon the closing, Intelsat paid US$ 961.1 million in cash
for the assets acquired under the purchase agreement with Loral. This price
reflects performance-related and other adjustments to the US$ 1.025 billion
base purchase price set forth in the asset purchase agreement. In connection
with the closing, and related to the failure last year of the Telstar 4
satellite, Intelsat was assigned Loral's rights to receive insurance proceeds
(net of currently expected warranty payments) of up to US$ 140 million, which
would further reduce the total consideration for these assets
The four
in-orbit satellites and one satellite under construction that Intelsat has
acquired have been renamed as noted below, with the orbital designation to
remain in degrees West. Intelsat has also acquired rights to use the 77º W
orbital location.
In orbit:
97º W: Intelsat Americas TM
5 or IA-5 (was Telstar 5 or T5)
93º W: Intelsat Americas 6 or IA-6
(was Telstar 6 or T6)
129º W: Intelsat Americas 7 or IA-7 (was Telstar
7 or T7)
121º W: Intelsat Americas 13 or IA-13 (was Telstar 13 or
T13
To be launched in the third quarter of 2004:
89º W:
Intelsat Americas 8 or IA-8 (was Telstar 8 or T8)
Communications
operations and customer support will now be managed by Intelsat, with support
from Loral for a six-month transition period. Command and control of the
Intelsat Americas satellites will be transitioned to Intelsat’s satellite
control centre over the next 12 to 18 months.
Proceeds from the
transaction will be used to pay in full Loral's US$ 967 million of outstanding
secured bank debt, nearly half of the company's total of US$ 2.0 billion in
principal debt obligations.
Loral intends to reorganise around its
remaining satellite services fleet and manufacturing business. Loral Skynet's
satellite services fleet currently comprises four international satellites,
with an additional satellite, Telstar 18, scheduled for launch in mid-2004.
SS/L received orders in late 2003 for the construction of four new satellites -
one each for Intelsat and PanAmSat Corporation and two for DirecTV Inc. As of
December 31, 2003, Loral's external backlog for its remaining businesses
totalled approximately US$ 1.2 billion excluding approximately US$ 240 million
associated with the new manufacturing orders that were booked in the first
quarter of 2004.
(source: Intelsat, Loral Space and
Communications)
