spacetoday.net: SkyTerra to acquire half of HNS

Posted: Tue, Dec 7, 2004, 7:14 AM ET (1214 GMT)
The DirecTV group will self half of Hughes Network Systems (HNS) to SkyTerra Communications, a venture backed by a private-equity firm, the companies announced Monday. DirecTV, owned by the News Corporation, and SkyTerra, owned by Apollo Management LP, will create a new joint holding company, valued at $360 million, that will own the assets of HNS. When the deal closes DirecTV will receive $50 million and 300,000 shares from SkyTerra, plus an additional $200 million from a $375-million line of credit provided to the new holding company from undisclosed lenders. DirecTV will retain two satellites, Spaceway 1 and 2, that had originally been part of a high-speed Internet service planned by HNS but will instead be used for TV broadcasting; SkyTerra will retain rights to a third spacecraft, Spaceway 3, as well as a potential fourth spacecraft in the series. DirecTV had been looking to divest itself of HNS, which provides satellite networking services and equipment, as part of an effort to shed assets not part of its core consumer satellite TV business; most observers had expected DirecTV to sell all of HNS rather than half. Apollo Management is a private-equity firm that is the largest shareholder in Sirius Satellite Radio as well as one of the companies involved in the purchase of Intelsat.