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Intelsat and OneWeb in merger agreement

Intelsat and OneWeb in merger agreement OneWeb

Intelsat and OneWeb have announced that they have entered into a definitive combination agreement, which will see the two companies merge into a single satellite operator.

{mprestriction ids="1,2"}Intelsat and OneWeb will be combined in a share-for-share transaction, while Intelsat and SoftBank Group have concurrently entered into a definitive share purchase agreement pursuant to which SoftBank will invest $1.7 billion in newly issued shares of the combined company.

Both the merger and the SoftBank investment are subject to, among other conditions, successful completion of debt exchange offers to certain existing Intelsat bondholders as well as receipt of certain regulatory approvals.

The debt exchange offers, together with the proceeds of the SoftBank investment are intended to reduce Intelsat's debt by approximately $3.6 billion, assuming the minimum level of participation in the debt exchange offers is achieved.

Either party can terminate the agreement and SoftBank can terminate its investment if the debt exchange offers have not been successfully completed within 90 days of the date of the agreement.

“We believe that combining Intelsat with OneWeb will create an industry leader unique in its ability to provide affordable broadband anywhere in the world. As an early equity investor in OneWeb, we recognised a network that was a complement to our next-generation Intelsat EpicNG fleet and a fit with our long-term strategy,” said Stephen Spengler, chief executive officer of Intelsat.

“By merging OneWeb’s LEO satellite constellation and innovative technology with our global scale, terrestrial infrastructure and GEO satellite network, we will create advanced solutions that address the need for ubiquitous broadband.”

“The transaction, including SoftBank’s investment, will significantly strengthen Intelsat’s capital structure and accelerate our ability to unlock new applications, such as connected vehicles, as well as advanced services for our existing customers in the enterprise, wireless infrastructure, mobility, media and government sectors, while also reducing execution and other risks.”

If the transaction is completed, the companies hope that OneWeb’s proposed network of more than 600 low earth orbit (LEO) satellites, combined with Intelsat’s geostationary orbit (GEO) satellites would accelerate the combined company’s strategic growth plans to offer a global and affordable satellite network.

In December 2016, SoftBank announced its commitment to invest $1 billion in OneWeb to support the technological development and construction of its satellite network. Intelsat was a founding investor in OneWeb, making a minority equity investment in 2015.

The board of directors of the combined company will be made up of seven directors, including three independent directors, three members selected by SoftBank and one director selected by a current Intelsat shareholder.

Intelsat’s CEO, Stephen Spengler, will be the CEO of the combined company. OneWeb’s founder and executive chairman, Greg Wyler, will be the executive chairman of the combined company’s board of directors.

The combination agreement has now been approved by the boards of directors of Intelsat and OneWeb. Closing of the transactions is subject to approval by Intelsat and OneWeb shareholders, certain regulatory approvals and other customary closing conditions. The transaction is expected to close late in the third quarter of 2017.{/mprestriction}

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