Intelsat talks restructured $2.55 billion three-part bond offering

By Paul A. Harris

St. Louis, Jan. 21 - Intelsat Bermuda Ltd.'s $2.55 billion three-part high-yield bond offering (B1/B+B+) emerged with a new structure and price talk, according to syndicate sources.

Pricing is expected to take place late Monday.

Under the new structure, Intelsat shifted $500 million to its seven-year floating-rate tranche from its eight-year fixed-rate tranche.

The company is now offering an upsized $1 billion of seven-year floating-rate notes with six months of call protection. The tranche was increased from $500 million. Price talk is in the six-month Libor plus 500 basis points area.

In addition, the company is offering a downsized $800 million of eight-year fixed-rate notes. The tranche was downsized from $1.3 billion. Price talk is in the 8¼% area. The notes are non-callable for four years.

Intelsat's 10-year fixed-rate note tranche is left unchanged at $750 million. This tranche is talked in the 8½% area. The notes are non-callable for five years.

Deutsche Bank Securities, Credit Suisse First Boston and Lehman Brothers are joint bookrunners for the Rule 144A offering. The co-managers are Banc of America Securities LLC, Bear Stearns & Co., BNP Paribas, Merrill Lynch & Co., CIBC World Markets, RBC Capital Markets, The Royal Bank of Scotland, Guggenheim Capital Markets and SG Corporate & Investment Banking.

The roadshow for Intelsat's bond deal was extended last week when its IS-804 satellite, in charge of the South Pacific's media delivery, was reported to have undergone an electrical power system anomaly on Jan. 14, causing total loss of the craft.

On Dec. 9, a source told Prospect News that private equity group Zeus Holdings Ltd., formed by private equity firms Apax Partners, Permira, Apollo Management and Madison Dearborn Partners, was re-evaluating its takeover of Intelsat in light of the company's electrical difficulties with its Americas-7 satellite.

That re-evaluation ultimately pushed the deal into 2005.

The proceeds will be used to help fund Zeus Holdings Ltd.'s $5 billion acquisition of Intelsat.

Intelsat is a Bermuda-based worldwide satellite telecommunications company.

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