By Michael J. de la Merced
The chief executive of SoftBank, Masayoshi Son, is an inveterate deal-maker. And recently, the Japanese mogul unveiled his latest: a complex merger to expand his elecommunications empire.
By orchestrating the merger of OneWeb, a satellite operator where Son has already invested $1 billion, with a debt-laden competitor, Intelsat, the billionaire is hoping to bolster SoftBank’s reach and internet coverage.
But the deal is still contingent on getting Intelsat’s bondholders to effectively take close to a significant haircut on their holdings, to help give the satellite operator some breathing room from its debt load of about $14 billion.
Under the terms of the deal, OneWeb will merge with the publicly traded Intelsat in an all-stock deal. SoftBank will invest $1.7 billion to acquire a 39.9% stake in the combined company, at about $5 a share for common stock.
Adding satellites could help SoftBank and its holdings, including Sprint in the United States, improve their high-speed internet capabilities. Son’s vehicle for his satellite efforts is OneWe—the latest venture by the entrepreneur Greg Wyler—which has a stated goal of providing lower-cost internet access worldwide within the next decade.
Fusing it with Intelsat, a 5-decade-old satellite operator, is meant to help OneWeb expand its services. The two companies contend that together, they would be able to provide more high-speed internet access for homes and businesses, in cars and in other locations.
“We are in the midst of a technological revolution and, provided we receive the necessary cooperation from Intelsat bondholders, we welcome the opportunity to support OneWeb as it creates the foundation for next-generation global internet services anywhere on the planet,” Son said in a statement. “This proposal offers a win-win opportunity to accelerate OneWeb’s mission while enhancing the Intelsat balance sheet.”
But crucial to the transaction is the agreement of Intelsat’s bondholders to a debt exchange that, along with the new money from SoftBank, would help reduce the company’s debt by as much as $3.6 billion. The European-based satellite company must persuade at least 85% of its bondholders to exchange their holdings for new notes.
© 2017 New York Times News Service
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