SoftBank Running Out of Patience as Intelsat Debt Offer Extended

(Bloomberg) -- SoftBank Group Corp. says it is unwilling to pay more for Intelsat SA after the satellite company extended for the fourth time a deadline for a stalled debt swap that’s underpinning its proposed merger with SoftBank’s OneWeb Ltd.

Bondholders now have till May 31 to consider an improved note swap offer, Intelsat said in a May 17 statement. Softbank also boosted its investment in the merger by $61.6 million to $1.79 billion, according to a Wednesday filing.

“We have been crystal clear to the bondholders that we are at the absolute limit of what we are prepared to pay for this, and unwilling to negotiate any further,” Alok Sama, Softbank Group International’s president and chief financial officer, said in an emailed statement. “SoftBank has been approached by and has been in discussions with several other potential merger partners over the past few months.”

Intelsat was planning to extend the deadline after receiving indications from creditors they were open to returning to negotiations after SoftBank revealed sweetened terms on May 16 and gave creditors till May 18 to respond, people with knowledge of the matter said earlier.

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The per share price of SoftBank’s investment was decreased to $4.75 a piece from $5.00. Intelsat now has until the end of the month to convince holders of 85 percent of its bonds to sign up for an exchange deal targeting seven series of its bonds, according to the filing. Softbank is no longer restricted from considering other possible transactions.

OneWeb stockholders now will receive 69.474 Intelsat shares, compared to the original 66 shares. The deal is also contingent on other conditions including its pro forma interest expense.

Dianne VanBeber, an Intelsat representative, declined to comment. 

OneWeb, the U.S. satellite startup owned by Masayoshi Son’s SoftBank, said in February that it planned to combine with Intelsat, an older, larger satellite provider. After Intelsat’s bondholders resisted a debt swap necessary for the merger to close, the parties reached an impasse. Intelsat has since extended the exchange deadlines multiple times.

Last week, SoftBank was said to be close to walking away from the deal as the gap between the two parties seemed too wide. As of Tuesday, only about $31 million of the notes were signed up, with each of the seven issues subject to the swap attracting less than 1 percent of their total outstanding amount, according to an Intelsat statement.