The Working Party agreed that a total of five Intelsat satellites located at 57 degrees E, 183 degrees E, 319.5 degrees E and two co-located satellites at 338.5 degrees E, plus the K-TV satellite to be located at 95 degrees E, should be transferred at book value to the Intelsat New Company (INC) upon its incorporation under the jurisdiction of the Netherlands. With these satellites and any others it may eventually procure, INC is expected to focus on multi-regional video distribution DTH and interactive multimedia services to residential and business customers. Existing contracts on the transferred satellites will be moved from Intelsat to INC, with safeguards to guarantee lifeline PSN service and cable restoration in certain cases.

In keeping with the decision of the last Assembly of Parties in Puerto Vallarta in April 1997, the orbital registrations relevant to the six satellites in question will be transferred to the Netherlands on behalf of INC. Still to be resolved before the Extraordinary Assembly of Parties in March is the transfer of Ka-band registrations at two of the satellite locations being transferred from Intelsat to INC.

On ownership of the affiliate, the Working Party recommended that Intelsat should have a 10 percent shareholding in INC, managed through an independent trust arrangement with no representation on the INC Board. Remaining INC shares will initially be held by the Signatories in proportion to their ownership of Intelsat, with considerable natural dilution of that ownership in favor of outside investors expected to occur through an initial public offering and subsequent voluntary share trading on public markets. Individual investor ownership will be capped at 17 percent, for eventual review by INC shareholders.

INC's commercial activities will be subject to national and multinational competition and regulatory authorities in the countries where it operates. A clear arms-length relationship will exist between INC and Intelsat with respect to transitional and any future business transactions, plus separation of directors, officers, personnel, marketing and credit arrangements.

Several other competitive safeguards will be put into place to assure a level playing field between INC and its competitors, including a commitment by INC not to seek exclusive authorization to provide services in any country or region. In addition, final wording of a text related to Intelsat waiving certain treaty privileges and immunities with respect to any business relations with INC is still under discussion.

INC will be established immediately following the Assembly of Parties' formal approval of the IWP proposals. The transfer of satellite assets will be completed within a few months thereafter and an IPO expected in the following year, as determined by INC's future directors and management.

Intelsat will continue to operate with its remaining satellites under the treaty provisions of the Intelsat Agreements. The restructuring will allow Intelsat to concentrate on its core mission of providing global, universal telecommunications services, including PSN and other services such as video contribution and wholesale distribution.

``We are looking forward to the resolution of this restructuring process. Negotiators from dozens of countries have been grappling with many detailed issues in their search to balance the dual needs of establishing a healthy INC that will survive its first years on the market and at the same time ensuring the operational integrity and long-term health and viability of Intelsat,'' said Irving Goldstein, Intelsat's Director General and CEO. ``Everyone deserves to be congratulated on their hard work, perseverance and willingness to compromise,'' he added.

For background information on the restructuring issue, please contact Intelsat Headquarters.

Intelsat owns and operates the world's most extensive global communications satellite system. With 1997 revenues of over US$ 960 million, the Intelsat system provides voice/data and video services in more than 200 countries and territories via satellite.