Wednesday, September 23, 2009

SkyTerra Communications, Inc. Announces Going-Private Transaction

Mobile Satellite Carrier Previously Applied for $37 Million in Broadband Stim Funds 09/23/09 SkyTerra Communications, Inc. (OTCBB: SKYT) this morning announced that it has entered into a definitive merger agreement for SkyTerra to be acquired by a new corporation formed and indirectly wholly-owned by two funds associated with Harbinger Capital Partners of New York.
SkyTerra stated in a press release of this morning that under the terms of the agreement, the new corporation will pay $5.00 in cash per share for each of SkyTerra's outstanding shares of common stock not held by Harbinger or its affiliates.

The purchase price represents a premium of approximately 56% over the average closing price of SkyTerra’s common stock for the thirty days ended September 22, 2009, the last day before the announcement of the proposed transaction.

The firm further states that Harbinger and its affiliates together hold approximately 48% of SkyTerra's outstanding voting common stock and approximately 49% of SkyTerra's voting and non-voting common stock combined. The transaction is the culmination of a thorough evaluation of SkyTerra's strategic alternatives by a special committee of SkyTerra's Board of Directors composed solely of independent directors.

Broadband Stimulus Round I Applicant
As we previously reported on August 24, SkyTerra, a provider of mobile satellite communications services (MSS), announced that it had applied for a then undisclosed amount of broadband stimulus funding for public safety applications.

At the time, the firm stated it had applied under, "NTIA’s Sustainable Adoption Program, part of the Broadband Technology Opportunities Stimulus Program, which seeks to provide funds that will increase broadband adoption in the United States. SkyTerra’s application will focus on increasing broadband adoption by the public safety community."

With the publishing, on September9, of the Round I application database by the two federal agencies administering the broadband stimulus program, it was disclosed that SkyTerra applied for $37 million in funding. The satellite carrier stated in its project description, "SkyTerra will develop and assist in deploying two different types of wireless handheld broadband equipment devices for public safety agencies and will conduct a multi-year awareness and training program. The devices will be the first to operate on both the 700 MHz public safety spectrum and on the L-band satellite spectrum used by many first responders."

The application database entry for the firm is here., with the carrier's separate executive summary of its application package here (download: .PDF).

Support resources for the Transaction
The special committee was assisted in its evaluation by its independent financial advisor, Morgan Stanley & Co., and counsel, Skadden, Arps, Slate, Meagher & Flom LLP. Harbinger was assisted by its financial advisor, UBS Investment Bank, and counsel, Weil, Gotshal & Manges LLP.
The merger agreement has been approved by the special committee as well as the full Board of Directors of SkyTerra.

The transaction is subject to approval by the holders of a majority of SkyTerra's outstanding voting common stock, and to regulatory approvals, including approval of the Federal Communications Commission, and other closing conditions.
It is anticipated that the transaction will be consummated in late 2009 or early 2010. Harbinger has agreed to vote its shares in favor of the merger. Since Harbinger has approximately 48% of the voting power of SkyTerra's voting common stock, approval of the merger by stockholders is virtually assured if Harbinger so votes in favor of the merger.

In connection with the proposed transaction, SkyTerra intends to file a proxy statement and other relevant materials with the Securities and Exchange Commission ("SEC"). Before making any voting decision with respect to the proposed transition, stockholders of SkyTerra are urged to read the definitive proxy statement when it becomes available and other relevant materials filed with the SEC because they contain and will contain important information about the proposed transaction.

The full press release, which includes information relative to the firm's filing of the proxy statement and further information for shareholders, is available here, or as a (download . PDF).
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