Paris-based satellite operator Eutelsat is planning to seek permission from the European Commission to forego an initial public stock offering (IPO) that the company otherwise would need to complete by a June 30 commission deadline.
Washington, D.C.-based Intelsat is planning to complete its IPO by its extended statutory deadline of June 30 next year when company officials expect market conditions to improve. Both Eutelsat and Intelsat are faced with the need to change their ownership structures to comply with European and U.S. laws designed to provide an even playing field between those former intergovernmental satellite organizations and their private sector rivals.
Eutelsat CFO Charles Hindson said during a presentation at SATELLITE 2003 in Washington last week that the company’s planned sale of more than 30 percent of its equity to “non- distributors” of its service may well fulfill the commission’s’ intent. Holding an IPO is not a formal, “legal requirement,” he argued.
Private equity investors purchased 20 percent of Eutelsat’s shares previously held by Telecom Italia [TI] 18 months ago, and a deal is expected to close soon for Deutsche Telekom [DT] to sell its 11 percent stake in the former intergovernmental organization, Hindson said. The completion of the sale of Deutsche Telekom’s stake would allow Eutelsat to ask the commission whether private equity sales would satisfy the IPO obligation.
Written language previously used by the commissioners indicated that they “expected” an IPO to be used to fulfill the obligation of diversifying the company’s ownership, Hindson explained. However, that wording is “fuzzy” and stops short of requiring it, he added.
Giuliano Berretta, chairman and CEO of Eutelsat, said he believes that his company has complied with the “spirit” of what the commissioners sought through ownership changes. The commissioners’ two requests involved separating Eutelsat’s shareholder base from its customer base and selling at least 30 percent of its stock by July 1 to non-carriers by the company’s major carrier shareholders, Berretta said.
“I think we have achieved it,” Berretta said in an interview with SATELLITE NEWS. “The IPO might not be a necessity” to fulfill that objective, he added.
Eutelsat already has prepared a prospectus for the IPO and has filed it with a stock exchange in Europe.
Intelsat CFO Joe Corbett told attendees at SATELLITE 2003 that he expected market conditions to improve sufficiently by June 30, 2004, to allow the global satellite operator to complete its planned initial public stock offering.
A great deal of money is “on the sidelines” waiting to be invested, said Corbett, who predicted that the market for the company’s IPO would open by next year. Congress granted Intelsat an extension on its IPO obligation.
Intelsat has been thwarted in its attempts to complete an IPO following its 2001 privatization due to a “virtually closed” market for such calls, Corbett said.
–Paul Dykewicz
