Intelsat/PanAmSat revises price talk on mega-deal

By Paul Deckelman

New York, June 15 - PanAmSat Holding Corp. and Intelsat Ltd. revised and widened out somewhat price talk Thursday on the $3 billion-plus multi-part bond deal being brought to market by the merging satellite communications operators. That deal is expected to price on Friday.

High yield syndicate sources said that PanAmSat Corp. - the operating company for PanAmSat Holding - is now likely to price its $575 million of senior notes due 2016 to yield in the 9% area. Those notes were previously talked in a range of 8¾% to 9%. Deutsche Bank Securities, Citigroup, Credit Suisse, Lehman Brothers and Merrill Lynch & Co. will serve as joint bookrunning managers on the deal, with Goldman Sachs & Co., Bear Stearns, BNP Paribas, JP Morgan and Royal Bank of Scotland as co-managers.

The sources said that Intelsat (Bermuda) Ltd. - the holding company unit that is issuing the bonds for Intelsat Ltd. - is now likely to price its $750 million of senior notes guaranteed by its operating company, Intelsat Subsidiary Holding Co., and due 2016, to yield around 9 ¼% - wider than the 8 ¾% to 9% range at which the notes were originally expected to price.

They said that Intelsat (Bermuda) was also likely to price its 10-year non-guaranteed fixed-rate senior notes in a range of 11% to 11¼%, versus the 10 ¾% to 11% anticipated yield initially talked about. It is expected to price the non-guaranteed seven-year floating-rate senior note tranche to yield between 575 and 600 basis points over Libor. There was no indication of any earlier talk on that tranche. The two non-guaranteed tranches of notes are expected to total about $2.19 billion, with tranche sizes to be determined at the time of pricing. The joint bookrunners for the Intelsat tranches are the same as those for the PanAmSat portion of the deal, except that Merrill Lynch is a co-manager, rather than one of the joint bookrunners.

The deal is being brought to market under Rule 144A and Regulation S. It has been marketed to potential investors via a roadshow which began on June 6.

The proceeds will be used, along with cash on hand, to fund the acquisition of Wilton, Conn.-based PanAmSat by Intelsat, which is based in Pembroke, Bermuda and in London.

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