US based Harbinger Capital to sell its shareholding in UK satellite operator

Harbinger Capital Monday announced it will offload its shareholding in UK based satellite operator Inmarsat. Under its plans, Harbinger will sell its entire shareholding in Inmarsat. The US based firm is keen on focusing on the development of its 4G wireless broadband network across the US. Harbinger Capital is an Investment fund.

The stake sell will see Harbinger offload 64.3 million shares corresponding to around 14 per cent stake in Inmarsat. With the divestment, Harbinger’s earlier plans for a complete takeover of Inmarsat have now been abandoned. Last year, the US firm had said it was keen on a complete takeover, but such plans appeared shelved in October of last year when Harbinger sold half of its 28 per cent stake into the market for 630 pence a share, raising about £410 million.

Inmarsat provides voice and data satellite services to ships, aircraft and military users. It also offers voice and data satellite services to people operating in remote areas such as aid workers. Under its plans, the remaining Harbinger stake will be sold through a bookbuilding process, expected to be completed by close of business on Tuesday. Pricing will be announced shortly afterwards.

However, Inmarsat will work with LightSquared, Harbinger’s satellite arm, on its next generation wireless network, which will combine terrestrial and satellite technology. The first part of the deal is worth $340 million, payable to Inmarsat over an 18-month period for leasing and rebranding its spectrum in the US.

The second part, which was triggered last month, will see Inmarsat receive $115m a year over five years for a combination of spectrum and services that will enable the network to increase capacity. LightSquared’s network, which will compete directly with networks being built by operators such as Verizon Wireless and AT&T, has overcome a number of obstacles to get off the ground.

Credit Suisse and UBS, which have been appointed as joint bookrunners on the Harbinger disposal, have agreed to waive certain lock-up arrangements that were put in place following the sale of Inmarsat shares in October.

The deal comes sooner than expected, and follows an agreement late last month between Inmarsat and Harbinger-owned LightSquared. Inmarsat will receive $115m a year in return for sharing its satellite spectrum in North America with LightSquared for mobile phone use.

8 Feb 2011.