TerreStar launches exchange offers for seven series of preferreds

By Angela McDaniels

Tacoma, Wash., Oct. 9 - TerreStar Corp. and TerreStar Networks Inc. have begun exchange offers for seven series of preferred stock, according to a schedule TO filing with the Securities and Exchange Commission.

The companies are offering:

• Up to 418,500 series F preferreds in exchange for TerreStar's series A and series B cumulative convertible preferreds;

• Up to 10,000 series F convertible preferreds in exchange for TerreStar's series C and series D preferreds and TerreStar Networks' series A and series B preferreds; and

• Up to 1.2 million shares of series G junior preferreds in exchange for TerreStar's series E junior participating preferreds.

The companies are also soliciting consents to amend the certificate of designations of the series B preferreds. Holders who tender series B preferreds will be deemed to have given consent.

The series F and series G preferreds will be issued by TerreStar Holdings Inc., a newly formed subsidiary of TerreStar.

TerreStar said it will issue up to 418,500 shares of the series B preferreds and up to 2.4 million shares of the series E preferreds to TerreStar Holdings immediately prior to the completion of the exchange offers.

If enough consents are received, the series B preferreds issued to TerreStar Holdings will be amended like the other series B preferreds.

Holders of the series F and series G preferreds issued in the exchange offer will be beneficial holders of the series B and series E preferreds issued to TerreStar Holdings, respectively.

The series B preferreds will mature June 30, 2014, at which time the series F preferreds will be redeemed.

Holders of series F preferreds will be entitled to receive the 7% dividends payable on the series B preferreds and to convert their beneficially owned series B preferreds into TerreStar common stock.

Holders of the series G preferreds will be entitled to convert their beneficially owned series E preferreds into TerreStar common stock.

The exchange offers and consent solicitation will expire at 5 p.m. ET on Nov. 10.

The offers are conditioned on the receipt of approval from TerreStar equity holders and the consent of the holders of some debt instruments.

Epiq Financial Balloting Group (646 282-1800) is the exchange and information agent.

TerreStar, formerly Motient Corp., is a Lincolnshire, Ill., mobile satellite services company.

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