Intelsat gets more than $7 billion bank, bond debt commitment for PanAmSat buyout

By Sara Rosenberg

New York, Aug. 30 - Intelsat Ltd. received commitments for a little more than $7 billion in bank and bond financing to fund its acquisition of PanAmSat Holding Corp. and to refinance some debt, according to a commitment letter filed with the Securities and Exchange Commission Tuesday.

Bank financing commitments are being provided at two tiers - the PanAmSat operating company level and the Intelsat operating company level.

Citigroup, Credit Suisse First Boston, Deutsche and Lehman are joint lead arrangers and joint bookrunners on the credit facilities, with Citigroup the administrative agent and CSFB the syndication agent.

The PanAmSat opco credit facility commitment consists of a $355.95 million five-year term loan A, a $1.6309 billion seven-year term loan B and a $250 million six-year revolver.

Revolver and term loan A interest rates are based on a four-tier grid that can range from Libor plus 175 to 250 basis points, depending on leverage, and the commitment fee can range from 25 to 50 bps.

Term loan B pricing is Libor plus 225 bps with step down to Libor plus 200 bps if leverage is less than 4.5:1.0.

Proceeds from the term loans will be used to finance the acquisition and to refinance debt, and revolver borrowings will be available for general corporate purposes.

The Intelsat opco credit facility consists of a $344.5 million seven-year term loan B and a $300 million six-year revolver.

Both the revolver and term loan B will carry an interest rate of Libor plus 175 bps if leverage is greater than 3.5:1.0 and Libor plus 150 bps if leverage is less than or equal to 3.5:1.0. The revolver has a commitment fee of 37.5 bps.

Proceeds from the term loan will be used to finance the acquisition and to refinance debt, and revolver borrowings will be available for general corporate purposes.

Both the PanAmSat and the Intelsat loan commitments will be available if amendments are not obtained under each company's respective existing credit facilities, the commitment letter said.

Bond financing planned

As for bond financing, there are four levels under which the debt will be issued - PanAmSat opco, PanAmSat holdco, Intelsat opco and Intelsat holdco.

PanAmSat opco plans on issuing $572.9 million in senior notes with the option to issue an additional $663.57 million of senior notes if the PanAmSat 9% notes are refinanced.

PanAmSat holdco plans on issuing $721.2 million in senior notes with the option to issue an additional $301.9 million of senior notes if the PanAmSat 10 3/8% notes are refinanced.

Intelsat opco plans on issuing up to $557 million of senior notes.

And, Intelsat holdco plans on issuing up to $1.4155 billion in senior notes.

Interim loan commitments set

As a back up for the notes, Intelsat has received 365-day interim loan commitments for each issuer in the equivalent amounts.

Deutsche, Citigroup, Credit Suisse First Boston and Lehman are joint lead arrangers and joint bookrunners on the interim loans, with Deustche the administrative agent.

The PanAmSat opco interim loan carries an interest rate of Libor plus 450 bps, the PanAmSat holdco interim loan carries an interest rate of Libor plus 550 bps, the Intelsat opco interim loan carries an interest rate of Libor plus 475 bps and the Intelsat holdco interim loan carries an interest rate of Libor plus 600 bps. All pricing on the interim loans will increase by 50 bps 180 days after close and every 90 days thereafter.

In addition to the loan and bond financing packages, PanAmSat plans on providing $62.2 million in funds from cash on hand and Intelsat plans on providing $95.2 million in funds from cash on hand.

Under the acquisition agreement, Intelsat will pay $25 per share in cash, or $3.2 billion, for PanAmSat to create one large Pembroke, Bermuda-based satellite company with U.S. headquarters in Washington, D.C. Plus, Intelsat will either refinance or assume about $3.2 billion in debt of PanAmSat and its subsidiaries.

The combined company is expected to have pro forma annual revenues of more than $1.9 billion and to maintain significant free cash flow from operations, providing significant resources for capital expenditures and debt service.

Prior to closing of the transaction, Intelsat (Bermuda) Ltd. is expected to transfer substantially all of its assets and liabilities, including its 9¼% senior discount notes due 2015, to a newly formed, wholly owned subsidiary.

Completion of the buyout, which could happen in six to 12 months, is subject to PanAmSat shareholder approval, customary closing conditions and regulatory clearances, including the appropriate U.S. government antitrust authorities and the Federal Communications Commission.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.