Confirming that minimum tender conditions for exchange offers and consent solicitations conducted pursuant to the previously-signed share purchase agreement among Intelsat, Softbank Group and OneWeb had not been satisfied by the prescribed May 31 expiration date, Intelsat announced yesterday that the exchange offers have been terminated and that “OneWeb and Softbank will exercise their respective termination rights” to withdraw from the Intelsat merger agreement.
SoftBank, the parent company of national U.S. wireless carrier Sprint, recently paid $1 billion for a 40% stake in OneWeb, which aims to deploy a constellation of 640 low-earth orbit (LEO) satellites that would expand broadband connectivity worldwide by the early 2020s. Under the merger agreement, which was announced on February 28, OneWeb had planned to combine with Luxembourg-based Intelsat in a share-for-share transaction through which Softbank would also invest $1.7 billion in newly-issued common and preferred shares of the combined entity. As stated in a press release issued at that time, the proposed union of Intelsat and OneWeb, combined with the investment by Softbank, had been “intended to create a financially stronger company with the flexibility to aggressively pursue new growth opportunities resulting from the explosion in demand for broadband connectivity for people and devices everywhere.”
As specified in a press release published by Intelsat yesterday, the successful completion of the aforementioned exchange offers “would have satisfied a condition to completion of the transactions under the Combination Agreement and the Share Purchase Agreement.” Explaining that bondholders “were unwilling to accept the terms of the exchange offers presented over the course of this process,” Intelsat CEO Stephen Spengler acknowledged, “there were many stakeholders’ interests that needed to be satisfied in this complex transaction.” Spengler emphasized, however, that “even without a merger of our companies, the pre-existing commercial agreement among Intelsat, OneWeb and Softbank will continue” and that Intelsat and OneWeb will “jointly develop integrated solutions utilizing both of our fleets and to act as a subdistributor to Softbank for the attractive application segments of mobility, energy, government and connected cars.”
Meanwhile, the FCC announced yesterday that it will soon vote on a declaratory ruling that would pave the way for OneWeb’s entry into the U.S. satellite broadband service market. As specified in the tentative agenda for its upcoming monthly open meeting scheduled for June 22, the FCC will consider “an order and declaratory ruling that recommends granting OneWeb’s request to be permitted to access the U.S. market using its proposed global non-geostationary satellite constellation for the provision of broadband communications services in the United States.” Declaring, “one of our top priorities remains promoting broadband competition and deployment, FCC Chairman Ajit Pai voiced his support for the proposed declaratory ruling and order, observing that the satellite technologies used by OneWeb “hold unique promise to expand Internet access in remote and rural areas.”