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, SkyTerra’s Chairman, CEO
and President. “We have obtained committed
financing for our period of greatest financial need—through
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
industries.
“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 (www.msvlp.com)
SkyTerra is the parent company of Mobile Satellite Ventures LP (“MSV“),
which along with MSV’s 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 462 3837 Farmer, +1 703 290 2719 Media Group |
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