GHL Acquisition (stock symbol: [t]GHQ[/t], which raised $400 million when it went public in February 2008, has announced that it has signed a definitive agreement to acquire Iridium, described as "a leading provider of voice and data mobile satellite services."
Greenhill & Co.'s SPAC to Combine with Iridium, a Leading Provider of Voice and Data Mobile Satellite Services
Tuesday September 23, 6:00 am ET
- Upon Completion of Transaction, Combined Enterprise Will Be Renamed Iridium Communications Inc. and Apply for Listing on NASDAQ
- Transaction Provides Foundation for Deployment of Iridium's Next Generation Satellite Constellation -
NEW YORK and BETHESDA, Md., Sept. 23 /PRNewswire/ -- GHL Acquisition Corp. (Amex: GHQ - News) and Iridium Holdings LLC, a leading provider of voice and data mobile satellite services ("MSS"), today jointly announced the signing of a definitive agreement under which they plan to combine. The proceeds of the transaction will enable Iridium to be debt free and well positioned to develop its next generation satellite constellation, "Iridium NEXT." GHL Acquisition is the special purpose acquisition company sponsored by Greenhill & Co., Inc. (NYSE: GHL - News), which raised approximately $400 million of gross proceeds earlier this year, and is approximately 17.5% owned by Greenhill & Co.
The transaction, unanimously approved by the Board of Directors of GHL Acquisition and Iridium as well as Iridium's major shareholders, values Iridium at approximately $591 million enterprise value(i). Following completion of the transaction, the combined enterprise will be renamed "Iridium Communications Inc." and will apply for listing on the NASDAQ. Existing owners of Iridium will maintain a significant stake in the combined company.
Iridium, currently with more than 305,000 subscribers, is the only provider of truly global satellite voice and data communications solutions with complete coverage of the entire Earth including oceans, airways and Polar Regions. Iridium has demonstrated an impressive history of growth since its re-launch in 2001, increasing subscribers and revenue at 32 percent and 31 percent annual rates, respectively, from 2002 through 2007. The company's growth continues at a rapid pace with revenue, Operational EBITDA(ii) and net income growing 31 percent, 55 percent and 87 percent, respectively, in the first half of 2008 over the same period in 2007.
Scott L. Bok, Chief Executive Officer of GHL Acquisition, said: "After carefully considering numerous potential acquisition candidates, we are pleased to have identified such an attractive partner in Iridium and its management team. Iridium is the fastest-growing full-service voice and data MSS provider and one of only a handful of major players in its industry, which has significant barriers to entry. It has developed substantial scale in terms of revenue and cash flow, and has an impressive track record of growth across each of its five subscriber verticals. At the agreed transaction valuation, Iridium should be a compelling alternative to investors in a fast growing sector with few participants."
Matt Desch, Chief Executive Officer of Iridium, said: "We are excited to partner with GHL Acquisition and Greenhill in this transaction. Greenhill has a long track record of value creation in the public equity markets, and we believe its commitment to Iridium will be extremely valuable as we continue to grow our business and look to deploy our next generation constellation. Not only will this transaction permit us to have a strong balance sheet and potential future funding from GHL Acquisition's future warrant proceeds, but it will also provide us access to Greenhill's expertise and network of relationships as we develop Iridium into the future. This transaction positions us well to meet and exceed the needs and expectations of our customers, suppliers, employees and stockholders."
Robert H. Niehaus, Senior Vice President of GHL Acquisition who will become Chairman of the combined company upon completion of the transaction, added: "Iridium has a superior product relative to its competitors and provides services that are considered mission-critical by its subscriber base. The company also operates in an industry with significant barriers to entry in the form of spectrum and orbital space allocations, lead-times and high switching costs for subscribers. We look forward to supporting the management team, under Matt Desch's leadership, as it continues to create value for Iridium's customers, deliver profitable growth, and realize Iridium's full potential."
Details of the Transaction
Under terms of the transaction:
-- The transaction values Iridium at approximately $591 million enterprise value(i).
-- Current shareholders of Iridium will receive approximately $77 million of cash and 36.0 million common shares upon completion of the transaction.
-- Remaining cash held in trust, approximately $324 million, will be available to retire Iridium's current net indebtedness of approximately $131 million, pay transaction-related expenses including deferred compensation to GHL Acquisition's underwriters, and be used by Iridium for general corporate purposes and capital expenditures.
-- Greenhill & Co. will invest approximately $23 million in Iridium convertible debt prior to completion of the transaction, for which it will receive approximately 2.3 million common shares ($10.00 per share) of the combined company upon completion of the transaction. The proceeds from this investment will be used for distributions to existing Iridium investors. In addition, prior to closing of the transaction, Iridium may make up to $15 million of further distributions to its existing shareholders.
-- GHL Acquisition's existing stockholders will own approximately 55 percent of Iridium's common shares outstanding after the completion of the transaction (stated before tender offer described below and assuming no shareholders elect redemption).
-- Iridium's current shareholders will remain in the aggregate the combined company's largest shareholder, with approximately 42 percent of the common shares outstanding (stated before tender offer described below and assuming no shareholders elect redemption).
-- Greenhill & Co.'s $23 million pre-completion investment in Iridium will convert into the remaining 3 percent of outstanding GHL Acquisition shares upon completion of the transaction (stated before tender offer described below and assuming no shareholders elect redemption).
-- Post-transaction and after the forfeitures and full participation in the tender offer described below, GHL Acquisition will have approximately 73.9 million shares outstanding and 46.1 million warrants outstanding, assuming no GHL Acquisition public shareholders vote against the transaction and elect conversion. In the case that 30% of GHL Acquisition's current public shareholders vote against the transaction and elect conversion, approximately 73.3 million shares and 46.1 million warrants will be outstanding, with no shares tendered.
-- Shares held by Greenhill and its affiliates and by Iridium's current owners will be subject to lock-up agreements for a period of one year after completion of the transaction, except for underwritten offerings approved by the Board anytime after six months from the closing of the transaction.
-- Iridium's existing management team, including CEO Matt Desch, will continue to lead the combined company.
Completion of the transaction is subject to Federal Communications Commission approval, expiration of the applicable Hart-Scott-Rodino waiting period, GHL Acquisition stockholder approval and other customary closing conditions, and is expected to occur in the first part of 2009.
Duff & Phelps rendered a fairness opinion to the GHL Acquisition Board of Directors in connection with the transaction and Davis Polk & Wardwell served as legal advisor to GHL Acquisition. Evercore Partners and Fieldstone Partners served as financial advisors and Simpson Thacher & Bartlett served as legal advisor to Iridium.
GHL Acquisition's Tender Offer
GHL Acquisition will launch a tender offer for its common shares which will close concurrent with completion of the Iridium transaction. Shares will be acquired at a price per share of $10.50, up to an aggregate purchase price of $120 million reduced by the amount of cash distributed to stockholders who vote against the Iridium transaction and elect conversion of their shares.
Securities Forfeitures by Greenhill & Co.
Effective upon completion of the transaction, Greenhill & Co. has agreed to forfeit the following GHL Acquisition securities which it currently owns: (1) 1,441,176 common shares; (2) 8,369,563 founder warrants; and (3) 2,000,000 private placement warrants. These forfeitures will reduce the combined company's shares and warrants outstanding immediately post-closing.
GHL Acquisition Corp. Trust Account Holdings
GHL Acquisition's trust account, from which the majority of the cash used in the transaction and tender offer will be sourced, is currently invested in managed funds which exclusively hold short-term obligations of the United States Treasury, obligations guaranteed by the U.S. Government, its agencies and instrumentalities and repurchase agreements that are fully collateralized by such obligations.
Necessary Steps for Consummation of the Transaction
GHL Acquisition cannot complete the transaction unless (1) a majority of the shares issued in the initial public offering cast at the Special Stockholders' Meeting, to be scheduled, are voted in favor of the transaction; (2) holders of no more than 11,999,999 shares of common stock (such number representing 30 percent minus one share of the 40,000,000 shares of GHL Acquisition issued in the initial public offering) vote against the transaction and validly exercise their conversion rights to have their shares converted into cash; and (3) certain other customary conditions are satisfied.
As provided in GHL Acquisition's certificate of incorporation, each holder of GHL Acquisition's common stock has the right to convert such holder's shares into cash if such holder votes against the transaction, validly exercises such holder's conversion rights and the transaction is approved and completed.
GHL Acquisition's initial stockholders have agreed to vote the 8,500,000 shares they already own, which were issued to them prior to GHL Acquisition's initial public offering, in accordance with the vote of the holders of a majority of the shares issued in the initial public offering.
Additional Facts about Iridium Holdings LLC
Iridium Holdings LLC (http://www.iridium.com) is the only MSS company offering gap-free, pole-to-pole coverage over the entire globe.
The company delivers reliable, secure, real-time, mission-critical communications services to and from areas where landlines and terrestrial-based wireless services are either unavailable or unreliable. Iridium's constellation consists of 66 low-earth orbiting ("LEO"), cross-linked satellites operating as a fully meshed network and supported by multiple in-orbit spares. It is the largest commercial satellite constellation in the world.
The Iridium service supports mission critical applications in the maritime, aviation, government/military, emergency/humanitarian services, mining, forestry, oil and gas, heavy equipment, transportation and utilities industries. The U.S. Department of Defense ("DoD") and other U.S. and international governments rely heavily on Iridium for global communications capabilities. The company sells its products, solutions and services through a worldwide network of more than 150 distributors.
Iridium supplies both voice and data connections through its global communications network. Voice services are provided via dedicated handsets, or through a variety of installed communications systems onboard ships, aircraft and land-based vehicles. Increasingly incorporated into hundreds of applications, Iridium's short burst data ("SBD") transceivers provide packet data connections to every corner of the Earth for machine-to-machine ("M2M") applications. These applications include transferring asset tracking and location information, weather reports, email, or any other data requiring a reliable, global, two-way connection. With SBD subscribers up 157% from June 2007 to June 2008, the M2M sector is Iridium's most rapidly expanding subscriber vertical.
Iridium has launched a major development program for its next-generation satellite constellation, Iridium NEXT, which will result in continued and new Iridium MSS offerings. The company is headquartered in Bethesda, Maryland.
<snip>
biz.yahoo.com |
