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Bonds sold by Intelsat surged on Monday after it was reported that the deeply indebted satellite operator was nearing a deal with Japan’s Softbank to merge with OneWeb, a satellite startup backed by the technology behemoth.
The deal was expected to be unveiled shortly and include a capital injection of $1.7bn in cash from Softbank, some of which was to be used to pay off bondholders, according to a person briefed on the deal.
The company’s debt maturing in 2023 whipsawed after initial reports of the tie-up, rising from 43 cents on the dollar to a high of 62 cents before paring some of its advance. The group’s 2024 maturing bonds jumped 14 cents on the dollar to 80 cents. The advance in the bonds accompanied a 25 per cent surge in the company’s price in New York.
Intelsat has laboured under a debt load of more than $15bn after its 2008 leveraged buyout by private equity groups BC Partners and Silver Lake. The company has completed a series of distressed debt exchanges to reduce liquidity strains, moves rating agency S&P Global has said constitutes default.
Intelsat was poised to report fourth-quarter results before market open on Tuesday, February 28.
The Luxembourg-based company has struggled to grow revenues since its buyout, with sales sliding each of the last three years. Jacques Kerrest, Intelsat’s chief financial officer, told analysts on a conference call in October that the company’s priority last year was to “raise liquidity” through the debt exchanges.