AsiaSat CEO ‘Not Surprised’ By U.S. Government’s Decision To Halt Privatization Plans
The U.S. Department of State’s rejection of the proposed privatization of Asia Satellite Telecommunications Holdings Ltd. (AsiaSat) did not come as "a complete surprise," AsiaSat CEO Peter Jackson said.
According to reports, the U.S. government was concerned about compliance with U.S. International Traffic in Arms Regulations and concerns over potential transfer of satellite technology to China.
"The consequences of proceeding with the scheme without obtaining authorization from the U.S. Department of State would be materially adverse to AsiaSat, as it would result in AsiaSat being deemed to be in breach of important U.S. Department of State approvals previously granted to AsiaSat in relation to its business," Jackson told Satellite News following the April 24 announcement.
General Electric (GE) and Citic Group unveiled a plan in February to take AsiaSat private, which was made in conjunction with GE selling 103.1 million shares of SES Global back to the satellite operator. As a result of that deal, which closed in early April, GE received shares in a new company, SES International Holdings Inc., which included 100 percent of Satlynx; 49.5 percent of Bowenvale, which includes 34.1 percent of AsiaSat; 19.99 percent of Star One and 5.5 percent of Orbcomm.
The privatization plan would have made GE and Citic Group, which currently holds a 34.8 percent stake in AsiaSat, co-owners of the regional satellite operator, which owns three satellites that provide service throughout Asia.
AsiaSat’s privatization plans are now dead in the water. Jackson said, "The privatization will not go ahead. We will just continue as we have in the past as a public company."
The privatization of Hong Kong-based AsiaSat was intended to give the company’s management "greater flexibility to focus on the development of business and marketing activities" as well as relieving AsiaSat of a "heavy financial and administrative burden of dual listings on both the Hong Kong Stock Exchange and the New York Stock Exchange." Jackson said.
"Generally, a private company can move faster than a public company especially if share swap arrangements are contemplated," he added. "However, of course it is always possible to create opportunities if either public or private."
In terms of whether privatization would have had a significant impact on the company’s ability to move forward quicker with its business plans, Jackson said "the real issue is the management time involved in maintaining a public company. As we go forward we will assess our resources to ensure we have sufficient to achieve our growth objectives."
In March, AsiaSat announced that it earned 454 million Hong Kong dollars ($58 million) on revenues of 929.9 million Hong Kong dollars ($119 million) in 2006. In 2005, the company reported profits of 366.2 million Hong Kong dollars ($46.8 million) on revenues of 879.7 million Hong Kong dollars ($112.5 million).
Trading of AsiaSat shared on the Hong Kong Stock Exchange and the New York Stock Exchange was suspended for a day following the decision to cancel the deal.
Now that the decision has been made, it is business as usual for the operator. "There will be no change to the direction of the company and our strategy remains in place," Jackson said.
"Economic improvement in Asia continues and demand for transponders is picking up very slowly," Mi Zeng Xin, AisaSat’s chairman, said in a statement. "However, new satellite supply has been added to an already over-supplied market, and this is keeping rates under pressure at the bottom end and holding back growth in the premium sector, which is disappointing. Nevertheless, it is encouraging that AisaSat’s blue chip customers are committed to our premium services."