[Satellite News 08-05-08] SkyTerra displayed strong confidence during its second quarter earnings report that a speedy regulatory process would allow the company, along with Harbinger Capital Partners, to acquire Inmarsat.
    While SkyTerra has had discussions with Harbinger to make an offer for Inmarsat, it remained unclear if Inmarsat itself was as far along in these discussions and who would run such a company. What is clear is that SkyTerra has planned far ahead and is acting as if the acquisition will take place — going as far as revealing that talks with the U.S. Federal Communications Commission (FCC) already have been initiated.
    “We understand that Harbinger has indeed had conversations with the appropriate governmental agencies,” SkyTerra CEO Alexander Good said during an Aug. 5 telephone conference. “It is somewhat of an unusual process, but we believe it will be a process that the FCC and other federal agencies will go forward as if this were a firm offer at this point.”
    Good added that he believed the process involved in the transaction between SkyTerra and Inmarsat would go through in a reasonably short time and that the structure of the deal will be embraced by appropriate U.K. agencies. Other agencies, including the U.S. Department of Justice and Industry Canada, also would be involved, he said.
    “There is still some ongoing work with regards to the actual approvals that are required for the transfer of control in the United Kingdom,” said Good. “We have spent a great deal of time with the U.K. authorities in regard to the takeover panel. I might add that since Harbinger has some foreign control elements there is also a [Committee on Foreign Investment in the United States] review here in the United States in regards to Harbinger ownership. Once again, we have reviewed these elements and do not anticipate this to be a significant burden for us.”
    When asked if Inmarsat has been approached and who would run the company, SkyTerra’s CFO Scott Macleod said, “I have not had detailed conversations with Andy [Sukawaty, CEO of Inmarsat] on any of these issues. Our conversations to date have been focused on ensuring that we have the favorable regulatory rulings to ensure that we have timely regulatory rulings and to really push forward on this. Because of the regulatory timeframe, we will have sufficient time to discuss the issues around the new company. We’ll put that on our ‘to do’ agenda as we continue to focus on getting regulatory approvals and getting a firm offer that is attractive.”
    Harbinger’s unveiled plans July 29 to gain greater control of the mobile satellite services sector, four days after Inmarsat said the two companies had suspended discussions in relation to a possible offer. SkyTerra and Mobile Satellite Ventures (MSV) then entered into an agreement with affiliates of Harbinger with respect to the possible combination of SkyTerra and Inmarsat.
MSV also announced that Harbinger will provide $500 million in funding that would guarantee MSV’s continued operations through the 2010 third quarter, including the launch of the two satellites that will form the space segment of MSV’s hybrid communications network.
Harbinger currently owns about 48 percent of SkyTerra and a 28 percent stake in Inmarsat. Under the structure of the combination of SkyTerra and Inmarsat outlined by SkyTerra in its second quarter earnings report, shares of the company would expand from approximately 114 million to 551 million and Harbinger would own 86.2 percent of these shares pro forma.

–From SkyTerra’s public release slideshow. Available for download from their website.