Intelsat/PanAmSat sets structure for up to $3.5 billion multi-tranche note transaction

By Paul A. Harris

St. Louis, June 5 - Intelsat Ltd. and PanAmSat have announced the structures of a multi-tranche note transaction that could total up to $3.5 billion, according to a syndicate source.

PanAmSat Holding Corp. plans to sell a $725 million tranche of 10-year senior notes with five years of call protection.

PanAmSat Corp., the operating company, plans to sell $575 million of 10-year senior notes with five years of call protection.

Deutsche Bank Securities, Citigroup, Credit Suisse, Lehman Brothers and Merrill Lynch & Co. are joint bookrunners for the Rule 144A and Regulation S offerings. Goldman Sachs & Co., BNP Paribas, JP Morgan and The Royal Bank of Scotland are the co-managers.

Meanwhile Intelsat (Bermuda) Ltd., the holding company, plans to sell $750 million of 10-year senior notes with five years of call protection. These notes will be guaranteed by the operating company.

Intelsat (Bermuda) Ltd. also plans to sell $1.16 billion of senior notes in two tranches that will not be guaranteed by the operating company. The non-guaranteed offerings will be comprised of a tranche of seven-year floating-rate notes with two years of call protection and a tranche of 10-year notes with five years of call protection. Tranche sizes remain to be determined.

Deutsche Bank Securities, Citigroup, Credit Suisse and Lehman Brothers are joint bookrunners for the Rule 144A and Regulation S transaction. Goldman Sachs & Co., BNP Paribas, JP Morgan, The Royal Bank of Scotland and Merrill Lynch & Co. are co-managers.

The company will conduct a June 6 through June 15 roadshow.

Proceeds, together with cash on hand, will be used to fund a portion of the acquisition of PanAmSat Holding Corp. by Intelsat (Bermuda), Ltd., a subsidiary of Intelsat, Ltd.

The final structure depends upon the outcome of the tender offer for PanAmSat's 10 3/8% senior discount notes, with an accreted value of $296.6 million. If the tender offer is consummated, then the PanAmSat Holding Corp. $725 million tranche of senior notes will be dropped and the Intelsat (Bermuda) Ltd. two-tranche transaction, non-guaranteed by the operating company, will be upsized to $2.2 billion from $1.16 billion.

The existing term loans will be amended, extending the maturities and with a lighter covenant package.

PanAmSat is a Wilton, Conn.-based satellite network operator.

Intelsat is a satellite communications company based in Pembroke, Bermuda, and in London.

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