Intelsat Squeezes Bernie!(from 10K)
Sale of Assets
As stated above, the Sellers agreed on July 15, 2003, to sell certain assets to Intelsat for $1 billion, subject to certain purchase price adjustments. These assets consisted of four satellites then in-orbit: Telstar 5, Telstar 6, Telstar 7 and Telstar 4 (which failed in September 2003); two satellites then under construction: Telstar 13 (which was successfully launched and placed into service on September 12, 2003) and Telstar 8, scheduled for launch in 2004; and certain related assets and liabilities. At the same time, Intelsat agreed to order a new satellite from SS/ L when the sale closes and, subject to obtaining a security interest in certain of our assets, agreed to make a $100 million down payment on that order. Proceeds of the sale will be used to pay off our secured bank debt.
On March 5, 2004, as part of an arrangement to reach agreement with Intelsat on the satisfaction of certain closing conditions, we entered into an amendment to the Asset Purchase Agreement. Among other things, the amendment reduces the purchase price by $20 million (subject to further adjustment based on future events) to cover certain contingent liabilities relating to the transferred assets, reduces from $100 million to $50 million the deposit Intelsat is to make for its new satellite construction contract with SS/L, and provides for a dollar-for-dollar reduction in the price of this satellite if and to the extent the Telstar 4 insurance proceeds are less than $141 million. As part of this amendment, Intelsat agreed to pay SS/L $12.5 million in full settlement and satisfaction of all remaining obligations to make certain orbital payments to SS/ L under the construction contracts relating to the purchased satellites. The effectiveness of this amendment is subject to approval by the Bankruptcy Court and Intelsat’s bank lenders. |
