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S&P lowers Intelsat on exchange offers, merger
S&P said it lowered the ratings on Intelsat SA subsidiary Intelsat Jackson Holdings SA's senior notes to CC from CCC.
The action follows news that Intelsat will launch a series of exchange offers to repurchase existing notes at a material discount to par using a combination of new notes, common shares and cash, S&P said.
The exchange offers include Intelsat Jackson's 7¼% senior notes due in 2020, 7¼% senior notes due in 2019, 7½% senior notes due in 2021 and 5½% senior notes due in 2023.
S&P also said it lowered the ratings on these notes to CC from CCC.
The exchange offer also includes Intelsat Connect Finance's 12½% senior notes due in 2022. The rating on these notes remains at CC.
Intelsat (Luxembourg) SA's 7¾% senior notes due in 2021 and 8 1/8% senior notes due in 2023 also were included in the exchange. The ratings on these notes remain at D.
The agency said it expects to lower the ratings on the senior notes of Intelsat Jackson Holdings and Intelsat Connect Finance to D if and when the exchange of this debt is completed.
At the same time, S&P said it raised the rating on Intelsat (Luxembourg)'s 6¾% senior notes due in 2018 to CC from D since these notes are not part of the announced exchange offer.
The exchange offers follow news that Intelsat plans to merge with OneWeb in an all-stock transaction, S&P explained.
Softbank Group Corp., which previously invested $1.2 billion in OneWeb, will invest $1.7 billion in Intelsat to support the exchange offers, which reduces the company's debt burden, the agency said.
The merger is contingent on the completion of the exchange offers, S&P added.
The corporate credit rating on Intelsat SA remains at SD (selective default).
The agency said it plans to raise that rating when the transaction closes in the third quarter of 2017, but could provide interim guidance as additional information becomes available.
S&P said it will raise the corporate credit to a level that reflects the business prospects, leverage profile and financial policy of the combined company.
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