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Inmarsat’s acquisition by a consortium of buyers is facing shareholder opposition. The satellite provider announced that it had received representations from investors OakTree Capital Management (Oaktree), a fund owned by billionaire Howard Marks, and had provided these to a law firm ahead of its court sanction hearing.
Oaktree is now concerned that new information has come to light and therefore the transaction should be delayed. The court hearing which had originally been scheduled for 12 November 2019 has now been delayed to 28 and 29 November.
OakTree argument is that the offer failed to take into account the potential value of spectrum assets (assets which have been licenced by the American Federal Communications Commission (FCC)) used by Ligado LLC, Inmarsat’s American partner. Ligado emerged from Lightsquared, a company that went bankrupt. Lightsquared had planned to build a wireless network using Inmarsat’s spectrum assets. The FCC at the time rejected the plan because the services interfered with GPS signals used in the farming industry.
OakTree cited a draft written by the FCC of a modified licence to be granted to Ligardo. Although Inmarsat has acknowledged the potential Ligardo’s spectrum assets could bring, it has noted that it is uncertain that any plans to deploy a wireless network will be made.
OakTree has around 2.85% stake in Inmarsat and its calls to delay the transaction have been supported by Kit Lake Capital Management (3.8% stake) and Rubric Capital Management (2.2%). These parties had voted in favour of the transaction at the court and general meeting but feel it should be put on hold to assess the value the spectrum assets could bring.
Although the High Court has discretion to not sanction a scheme of arrangement, it would be unprecedented for the court to refuse sanctioning the scheme on the grounds raised by OakTree.
Market Tracker will continue to monitor this transaction as it develops.
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Market Tracker is a unique service for corporate lawyers housed within Lexis®PSL Corporate. It features a powerful transaction data analysis tool for accessing, analysing and comparing the specific features of corporate transactions, with a comprehensive and searchable library of deal documentation across 14 different deal types. The Market Tracker product also includes news and analysis of key corporate deals and activity and in-depth analysis of recent trends in corporate transactions.
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