Intelsat subsidiaries begin debt exchange offers, consent solicitations

By Marisa Wong

Morgantown, W.Va., March 24 – Intelsat SA announced that indirect wholly owned subsidiaries Intelsat Jackson Holdings SA, Intelsat Connect Finance SA (ICF) and Intelsat (Luxembourg) SA have each begun an offer or offers to exchange some outstanding senior notes for new notes.

In connection with the exchange offers, the issuers are soliciting consents to amend the indentures governing their existing notes. The proposed amendments would eliminate substantially all of the restrictive covenants under the existing indentures, modify or eliminate some other provisions and waive some defaults and events of defaults.

The proposed amendments to each existing indenture require the consent of holders of a majority of the aggregate principal amount of notes outstanding under that existing indenture.

Each exchange offer will expire at midnight ET on April 20. Tenders may be withdrawn and consents revoked prior to 11:59 p.m. ET on April 20.

The Rule 144A and Regulation S exchange offers and related consent solicitations are being conducted under a combination agreement dated Feb. 28 between Intelsat and WorldVu Satellites Ltd. (OneWeb). Following the closing date of the combination, each series of new notes issued under the exchange offer will be mandatorily exchanged for cash, new notes issued by Intelsat Jackson or Intelsat common stock.

The exchange offers are conditioned on the tender of a minimum of 85% of the aggregate outstanding principal amount of each series of existing notes.

Exchange offers

Intelsat Jackson is offering to exchange

• New 7¼% mandatorily exchangeable senior notes due 2019 to be issued by Intelsat Jackson (Jax 2019 exchange notes) for any and all of its outstanding 7¼% senior notes due 2019 (Jax 2019 existing notes);

• New 7¼% mandatorily exchangeable senior notes due 2020 to be issued by Intelsat Jackson (Jax 2020 exchange notes) for any and all of its outstanding 7¼% senior notes due 2020 (Jax 2020 existing notes);

• New 7½% mandatorily exchangeable senior notes due 2021 to be issued by Intelsat Jackson (Jax 2021 exchange notes) for any and all of its outstanding 7½% senior notes due 2021 (Jax 2021 existing notes); and

• New 5½% mandatorily exchangeable senior notes due 2023 to be issued by Intelsat Jackson (Jax 2023 exchange notes) for any and all of its outstanding 5½% senior notes due 2023 (Jax 2023 existing notes).

ICF is offering to exchange new 12½% mandatorily exchangeable senior notes due 2022 to be issued by ICF for any and all of its outstanding 12½% senior notes due 2022.

Intelsat Luxembourg is offering to exchange

• New 7¾% mandatorily exchangeable senior notes due 2021 to be issued by Intelsat Luxembourg (Lux 2021 exchange notes) for any and all of its outstanding 7¾% senior notes due 2021; and

• New 8 1/8% mandatorily exchangeable senior notes due 2023 to be issued by Intelsat Luxembourg (Lux 2023 exchange notes) for any and all of its outstanding 8 1/8% senior notes due 2023.

Jax exchange notes

Under each Jax exchange offer, $1,000 principal amount of Jax exchange notes will be issued in exchange for each $1,000 principal amount of Jax existing notes tendered and accepted.

Prior to the closing date of the Intelsat and OneWeb combination, the Jax exchange notes will have substantially identical terms to the corresponding series of the Jax existing notes for which they are exchanged, except that none of the Jax exchange notes will be registered under the Securities Act of 1933 and holders of the Jax exchange notes will not have any registration rights.

The Jax exchange notes will accrue interest from the last interest payment date with respect to the corresponding series of existing notes for which they are exchanged. If the combination does not occur, the Jax exchange notes will retain their respective original principal amounts and these same terms.

Once the combination is completed,

• For each series of the Jax exchange notes, (a) a portion of the principal amount will become due and payable in cash, and (b) the remaining portion of the principal amount will be mandatorily settled in full by delivery of new 6¾% five-year senior notes to be issued by Intelsat Jackson (final Jax five-year notes) or new 7¼% seven-year senior notes to be issued by Intelsat Jackson (final Jax seven-year notes); and

• Each series of the Jax exchange notes will be cancelled and will cease to be outstanding.

In addition, accrued interest on the Jax exchange notes to but excluding the combination date will be paid upon completion of these mandatory exchanges. As a result, following the combination date, each holder of Jax exchange notes will mandatorily receive, in addition to accrued interest, for each $1,000 principal amount of the applicable series of Jax exchange notes a final consideration as follows:

• $940 for the Jax 2019 exchange notes, consisting of a $45.63 to $90.20 cash consideration and $849.80 to $894.37 principal amount of final Jax five-year notes;

• $880 for the Jax 2020 exchange notes, consisting of a $45.63 to $90.20 cash consideration and $789.80 to $834.37 principal amount of final Jax five-year notes;

• $860 for the Jax 2021 exchange notes, consisting of a $45.63 to $90.20 cash consideration and $769.80 to $814.37 principal amount of final Jax seven-year notes; and

• $760 for the Jax 2023 exchange notes, consisting of a $45.63 to $90.20 cash consideration and $669.80 to $714.37 principal amount of final Jax seven-year notes.

Intelsat said the aggregate cash consideration paid under the mandatory exchanges will equal $1.73 billion, and the amount of cash consideration and final Jax notes received by holders of Jax exchange notes upon the mandatory exchanges will depend on the participation level of holders of existing notes in each of the exchange offers. The amounts above show the minimum and maximum amount of cash consideration, final Jax five-year notes and final Jax seven-year notes that a holder of Jax exchange notes will receive in the mandatory exchanges.

A holder of Jax exchange notes will receive the minimum cash consideration and maximum amount of final Jax notes if holders of 100% of the aggregate outstanding principal amount of existing notes of each series participate in the applicable exchange offer; the maximum cash consideration and minimum amount of final Jax notes if holders of 85% of the aggregate outstanding principal amount of existing notes of each series participate; and an amount in between the minimum and maximum amounts of cash and final Jax notes if participation in any of the exchange offers is greater than 85% and less than 100%.

However, the aggregate final consideration – cash and notes combined – received by a holder of Jax exchange notes will be the same, regardless of participation levels. Participants will not be able to make an election between final Jax notes and cash.

ICF and Lux exchange notes

The ICF exchange offer provides for the issuance of $1,000 principal amount of ICF exchange notes in exchange for each $1,000 principal amount of the ICF existing notes tendered and accepted. Similarly, each of the Lux exchange offers provides for the issuance of $1,000 principal amount of Lux exchange notes in exchange for each $1,000 principal amount of corresponding Lux existing notes tendered and accepted.

Prior to the combination date, the ICF exchange notes and the Lux exchange notes will have substantially the same terms as the corresponding series of existing notes for which they are exchanged, except that none of the ICF exchange notes or Lux exchange notes will be registered under the Securities Act and holders of the ICF exchange notes and Lux exchange notes will not have any registration rights.

The ICF exchange notes and Lux exchange notes will accrue interest from the last interest payment date with respect to the corresponding series of existing notes for which they are exchanged. If the combination does not occur, the ICF exchange notes and Lux exchange notes will retain their respective original principal amounts and these same terms.

Once the combination closes,

• For each series of the ICF exchange notes and the Lux exchange notes (a) a portion of the principal amount will become due and payable in cash, and (b) the remaining portion will be mandatorily settled in full by delivery of a specified number of newly issued common shares of Intelsat; and

• Each series of the ICF exchange notes and the Lux exchange notes will be cancelled and will cease to be outstanding.

In addition, accrued interest on the ICF exchange notes and the Lux exchange notes to but excluding the combination date will be paid upon completion of these mandatory exchanges. As a result, following the combination date, each holder of ICF exchange notes and each holder of Lux exchange notes will mandatorily receive, in addition to accrued interest, for each $1,000 principal amount of exchange notes held, the following consideration:

• $780 for the ICF exchange notes, consisting of a $768 cash consideration and $12 of new common shares;

• $460 for the Lux 2021 exchange notes, consisting of a $448 cash consideration and $12 of new common shares; and

• $460 for the Lux 2023 exchange notes, consisting of a $448 cash consideration and $12 of new common shares.

Global Bondholder Services Corp. (212 430-3774 for banks and brokers or 866 470-4200 for all others) is the information and exchange agent.

Intelsat is a Luxembourg-based communications satellite company.

© 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.