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Harbinger to Provide SkyTerra and MSV with $500 Million in Financing

2008-07-25 01:20:00

Harbinger to Provide SkyTerra and MSV with $500 Million in Financing

SkyTerra Communications and the Harbinger Capital Partners Funds

Announce Agreement with Respect to a Proposed Offer for Inmarsat

RESTON, Va.–(EMWNews)–SkyTerra Communications, Inc. (SkyTerra) and Mobile Satellite Ventures

LP (MSV) announced today that the Harbinger Capital Partners Funds

(Harbinger) has agreed to provide $500 million of debt financing to fund

SkyTerra’s business plan through the third quarter of 2010. In addition,

SkyTerra and MSV have entered into a Master Contribution and Support

Agreement (the “Master Agreement”) with affiliates of Harbinger with

respect to the possible combination of SkyTerra and Inmarsat plc, a UK

public listed company and a leading provider of global mobile satellite

communications services. Inmarsat is not a party to the Master Agreement.

Obtaining this financing is a significant

milestone for SkyTerra and MSV, said

Alexander H. Good, SkyTerras Chairman, CEO

and President. We have obtained committed

financing for our period of greatest financial needthrough

the launch of our MSV-1 satellite to the time we expect to launch MSV-2.

We now look forward to bringing to market the advanced services we

believe will set a high-water mark for the MSS/ATC industry, and extend

the marketplace for satellite services far beyond their historical

bounds. This revolutionary satellite system is expected to provide

service for at least 15 years and will ring in the era of integrated

satellite-terrestrial networks.

We appreciate the strong financial support

from Harbinger, a major investor that understands the capital we need

and our approach to advancing both the MSS and terrestrial wireless


Additionally, the combination of SkyTerra and

Inmarsat, assuming financial terms can be reached, makes a great deal of

strategic and operational sense. It would greatly enhance spectrum

efficiency and North American L-Band spectrum while providing a

foundation for innovation in the global mobile satellite industry. Such

innovation would include exciting new applications while preserving

essential national defense, public safety, safety at sea, and

aeronautical safety services. The combination would also provide

opportunities for greater efficiencies and scale benefits and

coordination in the pursuit of next generation integrated

satellite-terrestrial networks, products and applications,

Good concluded.

SkyTerra, MSV, and MSV Finance Co. entered into a Securities Purchase

Agreement (the “Securities Purchase Agreement”) with affiliates of

Harbinger, pursuant to which MSV and MSV Finance Co. will issue to

Harbinger up to $500,000,000 aggregate principal amount of 16.0% Senior

Unsecured Notes due July 1, 2013 (the Notes)

in four tranches, with the first tranche available on January 6, 2009.

In conjunction with the issuance of Notes pursuant to the Securities

Purchase Agreement, SkyTerra will issue to Harbinger warrants to

purchase up to an aggregate of 25,000,000 shares of common stock of

SkyTerra at an exercise price of $0.01 per share of common stock. The

financing is not conditioned upon the commencement or consummation of a

business combination with Inmarsat.

The Master Agreement provides for the possible combination of SkyTerra

and Inmarsat, subject to the receipt of required regulatory and

antitrust clearances. SkyTerra and Harbinger expect the regulatory

approval process, which includes approval from the U.S. Federal

Communications Commission, other telecommunications approvals, and

antitrust clearances to take approximately 12 to 18 months. Assuming

receipt of satisfactory regulatory and antitrust approvals, the proposed

business combination with Inmarsat would be structured as an offer by

SkyTerra to acquire all of the issued and to be issued shares of

Inmarsat not owned by Harbinger (the “Offer”), on terms to be determined

by Harbinger and in accordance with the Master Agreement. As a result of

the timing of the regulatory approvals, it is not the intention of

SkyTerra and Harbinger to announce the formal terms or structure of a

possible Offer at this stage.

If Harbinger decides to proceed with the Offer following the receipt of

required regulatory approvals, Harbinger will arrange for committed

equity and debt financing to fund the Offer. SkyTerra would undertake to

use its best efforts to assist Harbinger in obtaining debt financing. To

provide equity financing for the Offer, Harbinger may purchase newly

issued shares of SkyTerra voting common stock for $2.4 billion in cash

or such other amount as Harbinger may determine. The per share purchase

price for the newly issued shares will be $10.00 per share subject to an

adjustment ratchet relating to the successful Offer price paid for each

Inmarsat share. If the Offer price for each Inmarsat share is greater or

lower than 535p then the purchase price for the newly issued SkyTerra

shares will increase or decrease proportionately (adjustment ratchet).

The 535p per share and $10.00 per share prices are reference prices for

the purposes of the Master Agreement and the arrangements between

Harbinger and SkyTerra. The 535p per share does not constitute a term or

reference price for the Offer. No Offer pricing discussion has taken

place with the board of Inmarsat and no determination has been made by

SkyTerra or Harbinger as to any appropriate Offer price. SkyTerra

shareholders other than Harbinger may participate in the equity

financing for the Offer through a rights offering of voting common stock

up to $100 million.

If the Offer is completed Harbinger would contribute to SkyTerra 132

million ordinary shares in Inmarsat and $37.6 million in aggregate

principal value of 1.75% convertible bonds issued by Inmarsat and due in

2017, in each case currently owned by Harbinger and its affiliates.

Harbinger would also contribute to SkyTerra equity interests that

Harbinger has relating to an option to acquire in TVCC Holding Company,

LLC, which has a lease that provides it the exclusive right to use 5 MHz

of nationwide spectrum from 1670-1675 MHz. In exchange for such

contributions, SkyTerra would issue to Harbinger new shares of voting

common stock at $10.00 per share subject to the adjustment ratchet.

Authorization of new shares of SkyTerra common stock to be issued in the

transaction will be subject to SkyTerra shareholder approval.

Harbinger currently owns approximately 28.80% of the issued and

outstanding ordinary shares of Inmarsat, and approximately 48.43% of the

issued and outstanding shares of voting stock of SkyTerra. Upon

completion of the proposed business combination of SkyTerra and

Inmarsat, it is expected that Harbinger will own in excess of 85.0% of

the outstanding voting stock of the combined entity.

Morgan Stanley acted as financial advisor and, Skadden, Arps, Slate,

Meagher & Flom LLP acted as legal advisor to the Special Committee of

the SkyTerra Board of Directors. Harbinger has retained the services of

Merrill Lynch International, Weil Gotshal & Manges LLP, and Linklaters

LLP for advice and counsel on these matters.

SkyTerra and MSV will conduct an investor conference call at 11:00 a.m.

EST on Friday, July 25, 2008. The toll-free dial-in for the

teleconference is (866) 831-6247. International callers should dial +1

(617) 213-8856. The access code is 32919475. Please allow at least 10

minutes prior to the scheduled start time to connect to the

teleconference. A replay of the teleconference will be available

beginning at 1:00 p.m. EST July 25, 2008, until 11:59 p.m. EST on August

8, 2008. To access the replay, please call (888) 286-8010. International

callers should dial +1 (617) 801-6888. The access code is 46467707.

MSV and its Canadian joint venture partner, Mobile Satellite Ventures

(Canada), Inc. deliver mobile wireless services in the U.S. and Canada.

Mobile Satellite Ventures LP is owned and controlled by SkyTerra

Communications, Inc. (OTCBB: SKYT).

About Mobile Satellite Ventures (

SkyTerra is the parent company of Mobile Satellite Ventures LP (“MSV“),

which along with MSVs Canadian joint venture

partner, Mobile Satellite Ventures (Canada) Inc. (MSV

Canada) delivers mobile wireless voice

and data services primarily for public safety, security, fleet

management and asset tracking in the United States and Canada. MSV and

MSV Canada are developing an integrated satellite-terrestrial

communications network, which they expect will provide seamless,

transparent and ubiquitous wireless coverage of the United States and

Canada to consumer handsets. MSV holds the first FCC licence to provide

integrated satellite-terrestrial services. MSV and MSV Canada plan to

launch two satellites for coverage of the United States and Canada,

which are expected to be among the largest and most powerful commercial

satellites ever built. When completed, the network is expected to

support communications in a variety of areas including public safety,

homeland security, aviation, transportation and entertainment, by

providing a platform for interoperable, user-friendly and feature-rich

voice and high-speed data services.

About the Harbinger Capital Partners Funds

Founded in 2001 by Philip A. Falcone and Harbert Management Corporation,

the Harbinger Capital Partners Funds, managed out of offices in New

York, have grown to be one of the 15 largest hedge funds, by assets, in

the United States. The Harbinger Capital Partners Funds

mission is to achieve superior returns through investments in various

asset classes, special situations and private loans and notes. The

Harbinger Capital Partners Funds may also make strategic investments,

controlling or otherwise, when they see development opportunities and

value creation. The firm consists of a team of investment professionals

who seek to develop investment opportunities through analytical rigour

coupled with a contrarian viewpoint. As of 1 July 2008, the Harbinger

Capital Partners Funds had over $26.0 billion in assets under management

and committed capital.

Statement under the Private Securities Litigation Reform Act

This news release may contain forward-looking statements within the

meaning of the Private Securities Litigation Reform Act, with respect to

plans described in this news release. Such statements generally include

words such as could, can, anticipate, believe, expect, seek, pursue,

proposed, potential and similar words. Such forward-looking statements

are subject to uncertainties relating to the ability of SkyTerra and MSV

to raise additional capital or consummate a strategic transaction or

deploy the next generation system, as well as the ability of SkyTerra

and MSV to execute their business plan. We assume no obligation to

update or supplement such forward-looking statements.

Mobile Satellite Ventures
Tom Surface, +1 703 390 1579
+1 703

462 3837
[email protected]

Farmer, +1 703 290 2719
M : +1 571 271 2395
[email protected]

Media Group
Will Rodger, +1 202 486 6774
[email protected]

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