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Four Firms Buy Intelsat

Over time, as the satellite industry deregulated, Intelsat had to adjust to changing times and technology. In July 2001, through another act of Congress, the company privatized, with the intention of eventually transferring its ownership from governmental owners to public shareholders.

Intelsat is still required by federal law to issue shares to the public by June 30, 2005, although it could ask Congress to do away with that requirement, said Tony A. Trujillo Jr., chief administrative officer for Intelsat.


Scenes from the 1969 Apollo 11 moon landing were transmitted around the world by Intelsat satellites. (NASA--Reuters)

_____Correction_____
An Aug. 17 Business article incorrectly recounted the history of commercial satellites. Congress created Comsat in 1962 to participate in the development of a global satellite system; Intelsat was founded in 1964 as an international satellite organization.


_____Press Release_____
Intelsat to Be Acquired by Consortium of Private Investors (Aug 16, 2004)
_____Multimedia_____
Video: Intelsat Ltd., the pioneering commercial satellite company that connected the world through global television and telephone communications, announced Monday its sale to a group of private investors for $3 billion in cash. The Post's Yuki Noguchi discusses the deal.
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Intelsat Ltd.
_____Intelsat News_____
Intelsat Agrees to Be Acquired for $3B (Associated Press, Aug 16, 2004)
Intelsat IPO Delayed for a Third Time (The Washington Post, May 22, 2004)
Lockheed Martin Sells Satellite Telecom Unit (The Washington Post, May 12, 2004)
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Inmarsat, the maritime satellite phone provider, faces a similar requirement to sell shares to the public. It already has petitioned for an exemption through the Federal Communications Commission.

The new investors will pay each of Intelsat's more than 200 shareholders $18.75 per share for a total of $3 billion. One of the biggest beneficiaries is Lockheed Martin Corp. of Bethesda, which is Intelsat's largest shareholder, with 24 percent ownership in the company. It acquired Comsat in 2000 and has been working to exit the telecommunications business since late 2001.

The next largest Intelsat shareholders are Indian telecom firm Videsh Sanchar Nigam Ltd. and France Telecom, which own about 5 percent each.

Intelsat, one of the world's largest satellite companies, generated profit of $181.1 million on revenue of $952.8 million last year.

"We have been saying that this is an industry ripe for consolidation," said Conny L. Kullman, chief executive of Intelsat. "You have four pocketbooks here, and we'll be working with them on strategic opportunities."

Kullman said he and other members of Intelsat's management have not yet signed employment agreements with the buyers but expect to stay on for the foreseeable future.


Intelsat's board of directors unanimously approved the deal. Intelsat still needs the approval of shareholders representing at least 60 percent of its ownership, and it requires approvals from both the Federal Trade Commission and the FCC. The company said the deal could close as early as later this year.

Intelsat's new investor group outbid other investors including the Blackstone Group LP, Kohlberg Kravis Roberts & Co. (KKR), Texas Pacific Group, and Francisco Partners Management LLC, according to sources close to the deal.

Until May, Intelsat planned to sell itself by issuing shares to the public, but it delayed those plans for the third time on May 21 because management believed it could get a better deal for shareholders by negotiating a private sale.

The deal comes as private equity groups scramble to reinvest in the satellite industry. In June, New Skies Satellites NV -- a spinoff of Intelsat -- announced it would sell to Blackstone Group for $956 million. In April, Connecticut-based PanAmSat Corp. announced it sold the company to KKR for $3.3 billion in cash and the assumption of $750 million in debt, then KKR turned around and sold 54 percent of its stake to Carlyle Group and Providence Equity Partners Inc. Also, last year, Inmarsat sold to Apax and Permira, two of Intelsat's buyers.

After building too much capacity in the late 1990s, the satellite industry has consolidated some of its smaller players, and investors believe there is new demand, said Marco A. Caceres, an analyst with Teal Group Corp., a Fairfax-based consultancy. "The satellite industry is in an upswing."


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