PanAmSat to amend restricted payments, excess flow covenants; repay some term A with IPO proceeds

By Sara Rosenberg

New York, Dec. 20 - PanAmSat Corp. needs to amend its restricted payments and excess cash flow covenants in connection with its $934.3 million net proceeds initial public offering of common stock, according to an S-1 filed with the Securities and Exchange Commission Monday.

Furthermore, the Wilton, Conn.-based satellite company plans to repay about half of its term loan A debt with a portion of the IPO proceeds.

Basically, under the amendment proposal, the company is looking to get greater availability for payment of dividends under the restricted payments covenant and to eliminate mandatory prepayments with excess cash flow.

Currently, PanAmSat is required to prepay outstanding term loans with 50% of excess cash flow (subject to reductions to a lower percentage if the company achieves certain performance targets), 100% of the net proceeds of some casualty events, asset sales or other dispositions, and 100% of the net proceeds of some debt issuances.

PanAmSat estimates net proceeds of about $934.3 million from the IPO, of which about $345.2 million will be used to repay a portion of term loan A debt, about $389.1 million will be used to redeem $353.5 million, or 35%, of its $1.01 billion 9% senior notes, and $200 million will be used to pay a dividend to existing stockholders.

In addition, net proceeds from any greenshoe exercised will be used to repay additional borrowings under the term loan A of up to $114.3 million, the filing said.

As of Monday, $674.3 million was outstanding under the term loan A due Aug. 20, 2009 with an interest rate of Libor plus 250 basis points.

The company also has a $1.647 billion term loan B due 2011 with an interest rate of Libor plus 275 basis points and a $250 million revolver due 2009 with an interest rate of Libor plus 250 basis points.

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