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Comsat backs Inmarsat Privitization
Bethesda MD - March 16 - COMSAT with little surprise says it supports the Inmarsat Council's plan to privatize the world's first satellite mobile phone system - Inmarsat. The Council, which met last week, will present its plan for approval by member governments at an Assembly of Parties meeting in April 1998.
``This agreement is an important strategic milestone for COMSAT,'' said Betty C. Alewine, president and chief executive officer of COMSAT Corporation. ``The action plan developed by the Inmarsat Council is an excellent road map for the formation of a private company from Inmarsat's assets by January 1, 1999. A public offering is planned within approximately two years of that date.'' The privatization timetable is contingent on Inmarsat member governments agreeing to implement the proposed amendments to the Inmarsat Convention. If such agreement is not achieved, the ratification process could take longer. ``If agreed, however, the transformation of Inmarsat into a private company and its subsequent public offering will create, for the first time, a tangible market valuation for these assets,'' Alewine continued. An investment banker, SBC Warburg Dillon Read (SBC), has been hired by the Council to provide financial and strategic advice, due diligence and review of Inmarsat's business plans with a view toward the privatized organization's ability to raise capital in public markets. COMSAT will be a shareholder and board member of the new private company and will continue to provide services to its customers using the Inmarsat system through its four land earth stations. Although ownership in the company is planned to be capped at 15%, COMSAT's current 22% ownership in Inmarsat will be grandfathered. Prior to the public offering, owners will be able to trade shares, and strategic investors will be able to invest up to $500 million in equity in the private company. ``This plan also addresses many of the policy goals of the U.S. Government,'' said Alewine. ``The privatization of Inmarsat will be pro- competitive, pro-consumer and will preserve the value of COMSAT's shareholders' investment in Inmarsat since its founding.'' If the privatization is approved, COMSAT would change its accounting for its Inmarsat investment from consolidation to the equity method. Other financial details, including Inmarsat dividend policy prior to its public offering, will be determined at subsequent Council meetings.
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