Stratos Global announced Monday the signing of a letter of intent to purchase the shares of Xantic. This transaction, involving two of the largest providers of mobile satellite services, will create a provider of advanced remote communications solutions, with a significantly expanded geographic presence and customer base in the Americas, Europe and the Asia-Pacific region.
Under the terms of the agreement, Stratos will acquire 100 percent of Xantic, jointly owned by KPN N.V. (65 percent) and Telstra Corporation (35 percent), for a purchase price of approximately US$191 million.
The purchase price is subject to adjustment based upon audited EBITDA (defined as operating income before interest expense, income taxes, depreciation and amortization, and other (income) costs) for the 12 months immediately preceding closing and specified working capital levels.
Xantic, with 2004 revenue of approximately US$172 million, employs 270 people worldwide and operates two Inmarsat Land Earth Stations in Burum, Netherlands, and Perth, Australia.
In addition, Xantic has been selected by Inmarsat to host the new Satellite Access Station for the next-generation Inmarsat BGAN (Broadband Global Area Network) service, slated for commercial launch later this year.
The combination of Stratos' market-leading presence in the Government and Military, Energy and Leasing sectors, combined with Xantic's position as the number one provider to the Maritime and Carrier sectors, gives the combined business an unmatched presence in the key markets for mobile satellite services.
"For some time, we've anticipated consolidation in the mobile satellite services sector, and our strategy has been focused on ensuring that Stratos leads that consolidation," said Jim Parm, Stratos' president and chief executive officer.
"Today, I'm pleased to announce that we have successfully executed on that strategy. With the acquisition of Xantic, we will be even better positioned to deliver enhanced service for our customers and additional value for our shareholders."
Added Mr. Parm, "The addition of Xantic significantly expands our geographic and vertical market presence, and the extensive skills and experience of Xantic's staff will be an asset as we continue to rollout new advanced data services, such as high-speed BGAN data service, to better serve the critical remote communications needs of our customers. Finally, our expanded scale will drive operational synergies, an improved cost structure, and create value for our shareholders."
Stratos has arranged committed credit facilities to finance the acquisition and related transaction costs, and to refinance all of Stratos? existing credit facilities. RBC Capital Markets acted as exclusive financial advisor to Stratos on this transaction.
A request for the advice of Xantic's Works Council has been submitted and customary information has been provided to the unions in the Netherlands. The acquisition is subject to competition clearances in Australia and Norway, and is expected to close in late 2005 or early 2006.
