Intelsat agrees note exchanges, to start exchange offer

New York, Dec. 5 – Intelsat SA said that it agreed to exchange new 12½% senior notes due 2022 plus cash for some of its 6¾% senior notes due 2018 in a private transaction and to exchange new 12½% senior notes due 2022 plus cash for some of its 6¾% senior notes due 2018, 7¾% senior notes due 2021 and 8 1/8% senior notes due 2023 in a separate agreement.

As part of the terms of the agreements, Intelsat will start exchange offers to some eligible holders of the notes, according to 6-K filing with the Securities and Exchange Commission.

The new 12½% notes due April 1, 2022 will be issued by a newly created subsidiary, Intelsat Connect Finance SA and guaranteed by Intelsat (Luxembourg) SA.

The indenture will have “substantially similar” covenants to the 6¾% senior notes due 2018 with some exceptions that will include covenants restricting the ability of Intelsat Connect to incur liens, effect dispositions and make restricted payments.

The covenants will also cap Intelsat Connect’s ability to incur senior indebtedness at $750 million, including the new notes, and subordinated indebtedness.

The 12½% notes will have a make-whole call until June 1, 2018 and a par call after that.

In the first agreement, Intelsat will issue $350 principal amount of the 12½% notes plus $600 in cash for each $1,000 principal amount of the 6¾% senior notes due 2018 issued by Intelsat (Luxembourg) SA. Holders will also receive cash for accrued interest up to but excluding the settlement date.

In the second agreement, like the first a private agreement with some noteholders, Intelsat will issue $350 principal amount of 12½% notes plus $600 in cash for each $1,000 principal amount of 6¾% senior notes due 2018 issued by Intelsat (Luxembourg) SA, $550 principal amount of 12½% notes plus $30 in cash for each $1,000 principal amount of 7¾% senior notes due 2021 issued by Intelsat (Luxembourg) SA and $550 principal amount of 12½% notes plus $30 in cash for each $1,000 principal amount of 8 1/8% senior notes due 2023 issued by Intelsat (Luxembourg) SA. Holders will also receive cash for accrued interest up to but excluding the settlement date.

As part of both agreements, Intelsat agreed to start exchange offers for the 6¾% notes and the 7¾% notes on the same terms that will be open to “certain eligible holders.”

The exchanges will have early tender premiums included in the consideration on offer.

For the 6¾% notes, the exchange offer will be capped so that the amount accepted plus the amount exchanged in the private agreements will be no more than 90% of the outstanding amount.

In addition, the amount of Intelsat Connect notes to be issued in all the exchanges will be limited to $750 million.

Intelsat must begin the exchange offer by Dec. 9.

In connection with these transactions, Intelsat Luxembourg will contribute all the equity interests in Intelsat Jackson Holdings SA, $25 million principal amount of the 6¾% senior notes due 2018 held by Intelsat Luxembourg and any cash in excess of $50 million currently held by Intelsat Luxembourg to Intelsat Connect.

In addition, Intelsat Luxembourg expects to start on a future date an exchange in which it will offer new 12½% senior notes due 2024 issued by Intelsat Luxembourg with terms otherwise similar to the 6¾% notes for the 6¾% notes.

Intelsat Connect expects to pay debt service on its new notes in the near term from the proceeds of interest payments it will receive as holder of the existing Intelsat Luxembourg notes and new Intelsat Luxembourg notes due 2024.

Intelsat said on Friday that it had been talks with noteholders about exchanges but had not reached agreement. Discussions were continuing, it added.

Intelsat is a Luxembourg-based communications satellite company.

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