US-based satellite operator OneWeb, will try and merge with one of its founding investors, Nasdaq-listed, Luxembourg-based peer Intelsat, in an all-stock deal worth about $13bn of equity and debt.
The merger is subject to a successful debt exchange, whereby 85% of Intelsat’s bondholders agree to cutting its debt by $3.6bn, leaving the merged entity with about $11.4bn of debt, in exchange for shares in the combined business.
Intelsat has a market cap of $740m after a fall in its share price following news of the merger and posted $551m in annual revenue for last year.
Telecoms conglomerate SoftBank, which also owns a majority stake in US phone operator Sprint, will invest $1.7bn to acquire a 39.9% stake in the combined company, at about $5 a share for common stock.
In December 2016, SoftBank agreed to invest $1bn in OneWeb as part of a $1.2bn round that included several other corporates, all existing investors in the company.
Mobile chip maker Qualcomm, aerospace group Airbus, beverage producer Coca-Cola Company, conglomerates Virgin Group and Bharti Enterprises, cable and internet service provider Totalplay, as well as satellite services companies Hughes Network Systems and Intelsat also participated in December’s round.
Airbus, Virgin, Bharti, Qualcomm, Coca-Cola, Intelsat, Hughes Network and Totalplay previously invested $500m in OneWeb in June 2015, after Virgin and Qualcomm had supplied the company’s initial funding the previous January.
Greg Wyler, founder and chairman of OneWeb, said of the merger plans with Intelsat: “We want to thank SoftBank, Qualcomm, Grupo Salinas and our tireless, hyper-dedicated, mission driven team for helping to make this vision a reality.
“Our initial investing partners – including Airbus, Bharti, Coca-Cola, Hughes, Intelsat, MDA, and Virgin – have been incredibly supportive during the process, thank you for believing…
“In early 2018 we will launch an initial 10 production satellites, which, pending a detailed test regimen, will become the first of our fleet. Six months later we will begin our full launch campaign and start providing low latency broadband access as early as 2019.”
Founded in 2012, OneWeb is building a network of 720 low earth orbit satellites that will provide internet coverage across the world. OneWeb claims its service will boast “industry- leading speed and performance” as well as lower latency, at an affordable price.
This is the third big satellite deal move in the past month following Google selling its Skybox business acquired for $500m in mid-2014 to Planet, and listed company DigitalGlobe combining with peer MacDonald, Dettwiler and Associates.