Narrative

0022-EX-TU-2008 Text Documents

Inmarsat, Inc.

2008-08-22ELS_92823

Before the
Federal Communications Commission
Washington, D.C. 20554

In the matter of )
)
SkyTerra Communications, Inc., ) File No. _____________________
Transferor, )
)
Harbinger Capital Partners Funds, )
Transferee, )
)
Applications for Authority to Transfer Control of )
Mobile Satellite Ventures Subsidiary LLC )
)
and )
The Current Shareholders of )
Inmarsat plc )
Transferor, )
)
Harbinger Capital Partners Funds, )
Transferee, )
)
Applications for Authority to Transfer Control of )
Inmarsat Hawaii Inc. and Inmarsat, Inc. )
)

NARRATIVE

-i-

TABLE OF CONTENTS

I. INTRODUCTION AND SUMMARY-------------------------------------------------- 2

II. DESCRIPTIONS OF THE TRANSACTION------------------------------------------ 4

A. The Parties ------------------------------------------------------------------------- 4

(1) MSV and SkyTerra ------------------------------------------------------- 4

(2) Inmarsat ------------------------------------------------------------------- 5

(3) Harbinger ----------------------------------------------------------------- 6

B. The Transactions ------------------------------------------------------------------ 7

C. Sequence of Transactions and Requested Waivers --------------------------- 8

(1) Waiver of the Commission’s Signature Requirement--------------- 17

(2) Waiver of the Time by Which the Transaction Must be
Consummated------------------------------------------------------------ 18

III. STANDARD FOR REVIEW ----------------------------------------------------------- 18

IV. COMPLIANCE WITH THE COMMUNICATIONS ACT AND THE
COMMISSION’S RULES--------------------------------------------------------------- 20

V. THE PROPOSED TRANSACTION WILL YIELD SUBSTANTIAL
PUBLIC INTEREST BENEFITS------------------------------------------------------- 22

A. The Proposed Merger Will Unlock the Full Promise of L-Band
Spectrum for MSS-ATC Services to Benefit Public Safety Entities,
People in Rural Areas, and the Public at Large ----------------------------- 23

B. The Proposed Transaction Will Create More Rapid, Lower Cost
Deployment of ATC to the Benefit of Rural and Public Safety
Users as well as Traditional Terrestrial Wireless Consumers ------------- 27

C. The Transaction Will Generate Additional Operating Efficiencies ------- 29

(1) More Efficient Use of Satellites and Orbital Resources ----------- 29

(2) Administrative, R&D, and Other Cost Savings --------------------- 29

D. Existing Services ----------------------------------------------------------------- 30

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VI. THIS TRANSACTION WILL NOT HARM COMPETITION -------------------- 31

A. The Commission’s Method of Analysis: Identify Where the
Parties Compete and Analyze Whether the Combination Would
Adversely Affect That Competition ------------------------------------------- 31

B. Current MSS Services: The Few Areas of Overlap Are
Characterized By Thriving Competition That Will Not Be
Adversely Affected By the Proposed Transaction --------------------------- 33

C. Future Directions----------------------------------------------------------------- 37

VII. PROCEDURAL MATTERS ------------------------------------------------------------ 39

A. Pending Applications and Petitions-------------------------------------------- 39

B. Request for Permit-But-Disclose Ex Parte Status --------------------------- 39

VIII. CONCLUSION --------------------------------------------------------------------------- 40

Before the
Federal Communications Commission
Washington, D.C. 20554

In the matter of )
)
SkyTerra Communications, Inc., ) File No. _____________________
Transferor, )
)
Harbinger Capital Partners Funds, )
Transferee, )
)
Applications for Authority to Transfer Control of )
Mobile Satellite Ventures Subsidiary LLC )
)
and )
The Current Shareholders of )
Inmarsat plc )
Transferor, )
)
Harbinger Capital Partners Funds, )
Transferee, )
)
Applications for Authority to Transfer Control of )
Inmarsat Hawaii Inc. and Inmarsat, Inc. )
)

NARRATIVE

Harbinger Capital Partners Funds 1 (collectively referred to herein as “Harbinger”) and

SkyTerra Communications, Inc. (“SkyTerra”) request 2 Federal Communications Commission

(“FCC” or “the Commission”) consent to the following transactions:

1
These funds consist of Harbinger Capital Partners Master Fund I, Ltd. (the “Master Fund”) and Harbinger Capital
Partners Special Situations Funds, L.P. (the “Special Situations Fund”). The exact percentages to be held by each
fund will vary depending upon market conditions and other factors. Both funds are, however, under the same
ultimate control, so changes in the two funds’ relative percentages would have no material impact on the transfers of
control that are proposed herein. Currently, another Harbinger fund, Harbinger Capital Partners Fund I, L.P. (the
“Partners Fund”) has an interest in SkyTerra, but it is contemplated that the Master Fund and the Special Situations
Fund will absorb that interest by the time of the occurrence of either transaction. A fourth fund, Harbinger Co-
Investment Fund, L.P. (the “Co-Investment Fund”), currently created, but unfunded, may also acquire an interest in
(footnote cont’d on next page)

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(i) the transfer of control of Mobile Satellite Ventures Subsidiary, LLC (“MSV

Sub”), from SkyTerra (as it is currently controlled) to Harbinger; 3 and

(ii) the transfer of control of Inmarsat Hawaii Inc. and Inmarsat, Inc. from the

current shareholders of Inmarsat plc (“Inmarsat”) 4 to Harbinger. 5

I. INTRODUCTION AND SUMMARY

As set forth herein, the combination of MSV and Inmarsat would yield enormous public

interest benefits. It would enhance spectrum efficiency in the L-band, while solidifying the

foundation for the development of an integrated satellite-terrestrial communications network that

would provide critical public safety services, essentially immune to local disasters, and coverage

SkyTerra as part of a funding vehicle for the Inmarsat transaction. Both the Partners Fund and the Co-Investment
Fund are under common control with the Master Fund and the Special Situations Fund. If either the Partners Fund
or the Co-Investment Fund would be involved in the purchase of SkyTerra shares that is associated with either
transaction, amendment(s) showing a pro forma change in ownership would be filed to the appropriate individual
applications.
2
This narrative is included with each of a series of related applications seeking consent to transfer control of the
licenses identified in Attachment A hereto. It is respectfully requested that the applications be processed as a group.
Please note that Question 21 of FCC Form 312 asks whether the licenses that are the subject of the application
are common carrier or non-common carrier. Some of the transfer of control applications that the parties are filing on
FCC Form 312 include both common carrier and non-common carrier licenses. The electronic filing system,
however, does not permit both the common carrier box and the non-common carrier box to be checked, so only the
common carrier box was checked.
3
Following Commission consent, Harbinger would control SkyTerra, which would, in turn, remain the parent
company of Mobile Satellite Ventures, L.P. (“MSV L.P.”), which wholly owns MSV Sub, as set forth in Section
II.A(i) below. (MSV L.P. and MSV Sub are collectively referred to herein as “MSV.”)
4
There is presently before the Commission an application requesting Commission consent to the transfer of control
of Stratos Global Corporation (“Stratos”) from Robert M. Franklin to Inmarsat. See Robert M. Franklin, Trustee,
and Inmarsat plc Seek FCC Consent to the Transfer of Control of Stratos Global Corporation, and its Subsidiaries
from an Irrevocable Trust to Inmarsat plc, Pleading Cycle Established, Public Notice, IB Docket No. 08-143, 2008
FCC Lexis 5360 (rel Aug. 13, 2008) (the “Stratos Transfer of Control Proceeding”). If the Stratos Transfer of
Control Application is granted while the application for consent to transfer control of Inmarsat to SkyTerra is
pending, the application for the transfer of control of Inmarsat to SkyTerra will be amended accordingly.
5
Harbinger has an option to acquire, subject to prior FCC consent, a controlling equity interest in TVCC One Six
Holdings LLC (“TVCC”), which has entered into an FCC-approved de facto lease of 1670-1675 MHz spectrum with
the licensee of that spectrum, OP LLC (the “1.6 GHz Spectrum Lease”). If the option is exercised, an application to
the FCC to permit the transfer of control of the 1.6 GHz Spectrum Lease from the current equity owners of TVCC to
Harbinger will be filed.
As part of the financial arrangements contemplated in connection with the contemplated acquisition of
Inmarsat, Harbinger would contribute its interest in TVCC to SkyTerra. As Harbinger would, at such time (pursuant
to the FCC consent herein requested) control SkyTerra, that transfer would constitute a pro forma transfer of control
of TVCC. Accordingly, if the option is exercised and the Commission has granted its consent to the transfer of
(footnote cont’d on next page)

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for consumer handsets both to the most rural and underserved areas of this country and Canada

and to urban centers.

By combining the resources and expertise of MSV and Inmarsat, and the financial

strength and investment of Harbinger, there would be created a stronger, more operationally

efficient organization of global reach that would be better able to realize the promise of

ubiquitous wireless coverage of North America through an integrated satellite-terrestrial

communications network. More than it is possible to achieve pursuant to the companies’

recently announced Cooperation Agreement, 6 the combination of these entities would facilitate

the more rapid roll out of the innovative mobile satellite services-ancillary terrestrial component

(“MSS-ATC”) services envisioned today, with both advanced satellite and terrestrial services

being the result. As a combined company, they would have the resources and the technical and

operational efficiencies to make the most of contiguous blocks of spectrum and increased

technical and operational flexibility, unencumbered by the limitations on the coordination of

shared spectrum by two companies with divergent business interests and to develop innovative

technologies in the future.

As demonstrated herein, there will be no adverse effect on competition. Much of MSV’s

and Inmarsat’s businesses are complementary: For example, Inmarsat reports that over 60% of

its sales are for global maritime and aeronautical services, which MSV does not offer. Moreover

Inmarsat’s leading land mobile service is a satellite high speed data service (BGAN), while MSV

control of TVCC to Harbinger, an application for the further pro forma transfer of control of TVCC from Harbinger
to SkyTerra will be submitted to the Commission.
6
Cooperation Agreement between and among Mobile Satellite Ventures, L.P., Mobile Satellite Ventures (Canada)
Inc., SkyTerra Communications, Inc., and Inmarsat Global Limited (Dec. 20, 2007), available at
http://www.sec.gov/Archives/edgar/data/756502/000114420407068694/v097951_ex10-1.htm (included in a
February 28, 2008 SkyTerra Communications, Inc., Form 10-K Filing with the Securities and Exchange
Commission) (“Cooperation Agreement”).

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offers only low speed (4.8 kbps) service today. MSV on the other hand provides a “push-to-talk”

functionality that Inmarsat does not offer, and is focusing for the future on its ATC business

model aimed primarily at the mass-market while Inmarsat has not pursued ATC over its network.

In all events, as the Commission has recognized, satellite communication services are

characterized by vibrant competition from numerous players including new entrants and new

technologies.

As further described herein, two interrelated transactions, both of which are subject to

FCC and other regulatory approvals, are contemplated. Initially, Harbinger will become

SkyTerra’s controlling stockholder by exercising warrants to purchase additional SkyTerra

common stock and becoming the owner of SkyTerra shares that are currently held in escrow.

Harbinger’s control over SkyTerra also will give it control over SkyTerra’s operating subsidiary,

MSV LP, and MSV LP’s wholly-owned FCC licensee subsidiary, MSV Sub. Then, upon

successful conclusion of the offer for Inmarsat, the Harbinger-controlled SkyTerra will become

Inmarsat’s controlling shareholder. The reasons and basis for this sequential process and the

associated waivers of the Commission’s rules that are requested are set forth in Section II.C

below.

II. DESCRIPTIONS OF THE TRANSACTION

A. The Parties

(1) MSV and SkyTerra

MSV Sub is licensed by the Commission to operate AMSC-1 (also known

as MSAT-2), an L-band Mobile Satellite Service (“MSS”) satellite, at 101.3° W.L., and to

launch and operate a replacement satellite for AMSC-1, MSV-1, at the same orbital location.

MSV Sub holds an authorization to operate ATC facilities in conjunction with the

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aforementioned satellites; various fixed and mobile earth stations licenses; Section 214

authorizations; various experimental licenses; and a mobile itinerant license, all associated with

the operation and development of the aforementioned satellites and the planned MSS-ATC

network.

MSV is a joint venture partner of Mobile Satellite Ventures (Canada), Inc.

(“MSV Canada”), which holds various Canadian authorizations to operate its own L-band MSS

satellite (MSAT-1) as well as a next generation replacement (MSV-2) for that satellite. MSV

and MSV Canada currently provide certain land mobile services in the United States and Canada

via their existing satellites. MSV and MSV Canada are developing an integrated satellite-

terrestrial communications network, including proceeding with the construction of state of the art

replacement satellites, to provide seamless, transparent and ubiquitous wireless coverage of the

United States and Canada to consumer handsets. That network will reach both underserved rural

areas and heavily-populated areas, providing vital public safety and consumer services. MSV

Canada is controlled by BCE, a Canadian corporation. Control of MSV Canada is unaffected by

the transactions proposed herein.

SkyTerra is a holding company which holds an approximate 99% equity

interest in its operating subsidiary, MSV L.P., a Delaware limited partnership, which wholly

owns MSV Sub, a Delaware corporation. The general partner of MSV L.P. is Mobile Satellite

Ventures GP Inc., a Delaware corporation which is a wholly-owned subsidiary of SkyTerra.

SkyTerra is also a Delaware corporation.

(2) Inmarsat

Inmarsat is a U.K. company that (together with its subsidiaries) operates a

network of eleven geostationary satellites. Its satellite orbital locations are filed at the

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International Telecommunication Union through the United Kingdom. Inmarsat is a leading

provider of global mobile satellite communications services, with the majority of its revenue

from global maritime and aeronautical communications services. Inmarsat also supports land

mobile voice and data applications, including in North America, which applications are

discussed further herein. Inmarsat, through its wholly-owned subsidiaries, Inmarsat Hawaii Inc.

and Inmarsat, Inc., holds three FCC authorizations: two special temporary authorizations to

operate an earth station and an experimental license. Inmarsat Hawaii Inc. is a Hawaii

corporation and Inmarsat, Inc. is a Delaware corporation.

(3) Harbinger

The Harbinger Capital Partners Funds are investment funds founded in

2001 by Philip A. Falcone and Harbert Management Corporation. The Master Fund is an

exempted company organized under the laws of the Cayman Islands. The Special Situations

Fund is a Delaware limited partnership. A more detailed description of these funds and their

ownership structure is set forth in the Declaratory Ruling Petition that is Attachment B, hereto.

Mr. Falcone and Raymond Harbert, both of whom are U.S. citizens, have ultimate control of the

funds.

Harbinger currently holds approximately 29% of the issued and

outstanding voting shares of Inmarsat and holds convertible bonds in Inmarsat. Harbinger also

holds approximately a 35% equity and an approximately 48% voting interest in SkyTerra, plus

warrants for additional voting shares of SkyTerra; and the right to acquire additional voting

shares of SkyTerra out of escrow. 7 In addition, Harbinger owns approximately 31% of the

7
This percentage includes approximately 3% of SkyTerra’s voting common stock and 14% of SkyTerra’s equity
which is currently owned by the Partners Fund and which, as indicated in note 1 hereto, is contemplated to be
distributed to the Master Fund and the Special Situations Fund.

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voting/equity shares of TerreStar Corporation, which holds approximately 28% of the equity

(none of it voting) in SkyTerra, as well as non-voting preferred stock and debt instruments in

TerreStar. TerreStar Corporation’s (approximately) 88% subsidiary, TerreStar Networks Inc.,

holds an FCC letter of intent (“LOI”) authorization for the launch and operation in the United

States of TerreStar-1, a Canadian-licensed S-band MSS satellite that will serve the United States

and Canada. Harbinger does not control TerreStar, nor would any of the proposed transactions

give Harbinger control of TerreStar.

In addition to their interests in Inmarsat and TerreStar, the Harbinger

Capital Partners Funds have interests in many companies, including minority interests in the

following telecommunications and media companies in which Harbinger holds an equity

interest 8 of 10% or more (and, in each case, less than 25%): Satelites Mexicanos Sa de CV; Leap

Wireless; The New York Times Company; and Media General Communications, Inc.

B. The Transactions

The transfer of control of SkyTerra/MSV to Harbinger would occur by the

exercise by Harbinger of warrants and/or by other stock acquisition. If Harbinger is allowed to

acquire all of the shares to which it currently has rights, it will hold in excess of 60% of the

voting common stock of SkyTerra. Harbinger anticipates that in January 2009 and April 2009 it

will receive warrants to acquire an additional 25,000,000 shares of the voting common stock of

SkyTerra (pursuant to a $500 million financing facility that Harbinger has made available to

MSV LP). Exercising these warrants would result in Harbinger holding approximately 75% of

the voting common stock of SkyTerra.

8
Although neither a voting nor equity interest, for the completion of the record, we note that Harbinger also holds
approximately 51 million dollars (face value) in bonds in ICO Global, whose affiliate holds an LOI authorization
from the Commission to operate an S-band MSS satellite in the United States.

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offeror must proceed within 28 days of the announcement to make an offer at a price no less than

the price stated in the Rule 2.5 announcement. For this reason, the financial adviser to the

offeror will go through a “cash confirmation” process prior to the Rule 2.5 announcement, where

the financial adviser performs due diligence to assure itself that the offeror has obtained the

committed financing required to implement the offer. This financing is for all practical purposes

unconditional - unlike the normal financings for U.S. tender offers.

Following a Rule 2.5 announcement, the Code normally allows 109 days for an

offer to complete. The Code does, however, explicitly provide for circumstances where the offer

is referred “unexpectedly” for a lengthy review by the European Union (“EU”) or U.K.

competition authorities, with any offer being required to lapse under these circumstances (any

committed financing also being permitted to lapse at the same time). If the EU/U.K. competition

authorities approve the deal, the offeror has 21 days to make up its mind whether to announce a

new offer, which is allowed its own period of 109 days in which to successfully complete.

However, as noted, this process applies explicitly to offers referred to the EU or U.K.

competition authorities, and does not apply to applications to other regulators (on the basis that

such application processes are less familiar to market participants in the U.K.).

A variant of this approach would be to employ a trust structure as the acquisition

vehicle for an offer for Inmarsat. Under this approach, Harbinger and SkyTerra would announce

a firm offer under Rule 2.5, as described above, but with a trust as the initial acquiring entity that

(following regulatory approvals) would transfer control to Harbinger/SkyTerra. Such a structure

could benefit from the FCC’s expedited review procedures for the initial step of transferring

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control to a trustee to facilitate tender offers. 12 Under these procedures, there would be no need

for the offer to lapse, or for Harbinger and SkyTerra’s offer price and financial commitments to

be left in place for a protracted period or lapsed and then re-committed, as the offer could be

completed, by transferring control to a trustee, within the allotted 109 days. However, Harbinger

and SkyTerra did not believe that the trust structure would be commercially feasible for the offer

that they propose to make for Inmarsat for the reasons described below and did not wish to

progress an offer for Inmarsat using this structure.

The particular concern with the Commission’s tender offer mechanism is that a

trustee would be required to operate Inmarsat, which is a very substantial company in the U.K. 13

whose services and customer base are viewed by U.K. authorities as sensitive, and the operation

of the company by a trustee pursuant to the Commission’s tender offer mechanism would

effectively place Inmarsat in “hibernation” for an extended period of time.

Moreover, as noted above, any tender offer for Inmarsat will be subject to the

rules of the Code. One of the six General Principles of the Code is that “…holders of securities

of an offeree company must have sufficient time and information to enable them to reach a

properly informed decision on the bid.” 14 This General Principle is, in turn, reflected in the

specific Rules of the Code: “Shareholders must be given sufficient information and advice to

enable them to reach a properly informed decision as to the merits or demerits of an offer.” 15

It is contemplated that under any tender offer for the shares of Inmarsat, the

shareholders of Inmarsat would be given the choice of cash or of shares in SkyTerra, so that they

12
In Re Tender Offers and Proxy Contests, Policy Statement, 59 R.R.2d 1536 (1986).
13
Inmarsat is a constituent member of the FTSE 100 Index, which is comprised of the 100 largest U.K.-listed
companies.
14
U.K. Takeover Code, General Principle 2.
15
U.K. Takeover Code, Rule 23.

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could, if they so wished, continue to participate in the combined business of the companies.

However, if Inmarsat were subjected to a trustee mechanism, Harbinger and SkyTerra had

questions as to their ability to give shareholders the information needed to reach a properly

informed decision, as the companies would be required to do by the General Principles and Rules

of the Code referred to above, given: (i) Harbinger/SkyTerra’s lack of direct management control

over the business of Inmarsat during the pendency of the trustee mechanism; and (ii) the

fact that such a large part of the combined SkyTerra/Inmarsat business would be subject to the

trustee mechanism for an extended period and there would be the potential risk of forced

divestiture of that part if the FCC transfer of control application were not approved.

These concerns were reinforced by the fact that the new SkyTerra shares also

would need to be covered by a prospectus to be issued under the U.K.’s Prospectus Rules.

Pursuant to those Rules, a prospectus is required to contain all “…information necessary to

enable investors to make an informed assessment of…the assets and liabilities, financial position,

profits and losses, and prospects of the issuer….” 16 The issues as to the companies’ ability to

comply with this standard were exacerbated by the guidance given by the U.K.’s Financial

Services Authority (FSA) that, in order to enable prospective investors to make a reasonable

assessment of its future prospects (i.e., one element of the prospectus standard recited above), an

issuer must demonstrate that it controls the majority of its assets; 17 SkyTerra would not satisfy

this test during the entire period that Inmarsat would be subject to the Commission’s trustee

mechanism.

16
U.K. Financial Services and Market Act of 2000 at Section 87A(2).
17
U.K. Listing Rules 6.1.4 and 6.1.6.

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obligations under the Code, SkyTerra and Harbinger did not approach any of the relevant

regulatory authorities on a named basis prior to the public announcement of their intention to

make an offer for Inmarsat, SkyTerra and Harbinger believed that use of the Commission’s

trustee mechanism might complicate the approval process in a number of these jurisdictions.

Another option under the Code would have been for Harbinger and SkyTerra to

make a Rule 2.5 announcement of a ‘pre-conditional offer’. This is an offer the making of which

(as contrasted with the closing of which) is expressly conditioned upon (i) achieving approval

(on acceptable terms) from the FCC; and (ii) (with the consent of the Panel) obtaining financing.

As such, under this structure, the firm offer would only formally be made once such pre-

conditions had been satisfied (when the normal 109 day timetable would commence).

However, with such a ‘pre-conditional offer’ Harbinger and SkyTerra would be

committed on announcement to the offer price stated in their offer announcement and to

proceeding at that offer price in the event that the stated conditions were satisfied.

In the United States, the right of the offeror to withdraw from an offer on the basis

of a material adverse change affecting the offeree company is a matter of contractual negotiation.

In contrast, in the U.K., for an offeror to be permitted to withdraw from an offer under the Code

on the grounds of a material adverse change affecting the offeree company “…requires an

adverse change of very considerable significance striking to the heart of the transaction in

question, analogous…to something that would justify frustration of a legal contract…” (Panel

Statement 2001/15). Having a pre-conditional offer open for an extended period to allow for

regulatory approval processes to be undertaken can therefore be particularly problematic in the

U.K.

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As to financing commitments, Harbinger, SkyTerra and their financial advisers

would have had to confirm in writing to the Panel at the time of announcement that they were not

aware of any reason why financing should not be available within 21 days of receiving FCC

approval on satisfactory terms. Given that the announcement of a ‘pre-conditional offer’ would

be made immediately prior to the initiation of the FCC consent process, such a confirmation

could have been very difficult to obtain; moreover, the Panel might not have permitted Harbinger

and SkyTerra to later invoke the financing condition should the finance market deteriorate and

financing terms become less attractive, or should Inmarsat have suffered a material adverse

change, during the period of the FCC approval process. Accordingly, under this option

Harbinger and SkyTerra would have been tied both to an offer price (in the face of highly

uncertain equity markets) and to the potential requirement to proceed with such an offer in spite

of a material worsening in available financing terms or in the financial position of Inmarsat.

Notwithstanding their current intention to acquire Inmarsat, Harbinger and SkyTerra believe that

the risk involved in announcing an immediate offer, even pre-conditioned on FCC consents

being obtained, is too great, given the length of time that will likely be required for the FCC

review.

For this reason, although Harbinger and SkyTerra ultimately intend to seek the

recommendation of the Board of Inmarsat for a firm offer following receipt of FCC clearances,

they have yet to propose a firm offer to the Board.

Another approach under the provisions of the Code is for an offeror to make a

Rule 2.4 announcement of a “possible offer” for the target company. Such announcements are

relatively commonplace in U.K. takeover practice, for example during deal discussions between

offeror and offeree (particularly following leaks), and generally serve to update the market as to

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the progress of these discussions. Such announcements do not compel a potential offeror to

proceed with a firm offer; however, a Rule 2.4 announcement will set a price “floor” for any

subsequent firm offer if the Rule 2.4 announcement alludes to a price (at the option of the

offeror).

During Harbinger and SkyTerra’s discussions with the Panel seeking to reconcile

the time required for the U.S. regulatory process with the requirements of the Code, the Panel

suggested the possible offer approach that was used in the case of the announcement of a

possible offer by Lyonnaise des Eaux for the Northumbrian Water Group, which is set forth in

Attachment C. In this approach, the possible offer (for which no potential offer price is stated) is

made explicitly subject to the obtaining of specified regulatory clearances, enabling the relevant

regulatory approval process to be completed satisfactorily prior to an offer being made (in the

case of the Northumbrian Water offer, this was a lengthy U.K. Water Act reference process: anti-

trust clearances were in fact requested and obtained after the firm offer was made, within the

normal Code timetable). Harbinger and SkyTerra have followed that suggestion, as reflected in

the public announcement regarding Harbinger and SkyTerra’s possible offer for Inmarsat which

was released on July 25, 2008.

The attraction to Harbinger and SkyTerra of this approach is that (a) no offer price

needs to be either agreed with Inmarsat or unilaterally proposed to its shareholders in the

immediate term and (b) no financing commitment needs to be kept in place and no letters

expressing confidence in obtaining financing need to be provided to the Panel, meaning that

Harbinger and SkyTerra are not exposed to volatile equity and financing markets, or any

potential material adverse change affecting Inmarsat, during the lengthy FCC review process. If

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the FCC review process is completed successfully, Harbinger and SkyTerra will then be able to

launch a firm offer that will need to complete by the usual 109-day Code deadline.

In the absence of receiving a firm offer at a price that can be recommended by the

Board of the offeree and agreement on other key offer terms, it would not be usual U.K. practice

for a company to pro-actively facilitate a possible offer. Accordingly, Inmarsat has indicated

that it is not prepared to sign the applications seeking the Commission’s consent to transfer

control of FCC authorizations held by subsidiaries of Inmarsat, nor to collaborate in any way

with Harbinger and SkyTerra regarding pre-offer regulatory clearances. However, Inmarsat has

stated in its announcement of July 25, 2008 that it intends to maintain a constructive relationship

with Harbinger and SkyTerra throughout the regulatory review process and will consider

carefully any future offer that may maximise value for Inmarsat’s shareholders as a whole.

Given the decision of Harbinger and SkyTerra to utilise the Northumbrian Water Group-style

announcement to initiate regulatory clearances, for the reasons provided above, such an offer

will not be forthcoming from Harbinger and SkyTerra unless the FCC (and HSR) approval

process can first be completed satisfactorily.

To facilitate the process described above, Harbinger and SkyTerra request,

pursuant to Section 1.3 of the Commission’s rules, 18 that the Commission grant the two waivers

described below. Waiver of the Commission’s rules is warranted when good cause is shown. 19

A waiver may be granted if the grant “would not undermine the underlying policy objectives of

the rule in question” and would serve the public interest. 20 All of these conditions are satisfied

in connection with the two waivers requested below because the waivers are consistent with the

18
47 C.F.R. § 1.3.
19
47 C.F.R. § 1.3; see also WAIT Radio v. FCC, 418 F.2d 1153, 1157 (D.C. Cir. 1969).
20
GE American, 15 FCC Rcd 3385, 3391 (1999).

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purposes of the underlying rules and absent waivers Harbinger and SkyTerra would be unable to

obtain approval for and consummate transactions that are in the public interest.

(1) Waiver of the Commission’s Signature Requirement

Inmarsat has informed the parties that it is not prepared to sign the

applications seeking the Commission’s consent to transfer control of FCC authorizations held by

subsidiaries of Inmarsat. For similar reasons, it is not possible at this time to secure any

signature on the applications on behalf of the current shareholders of Inmarsat. The parties,

therefore, seek a waiver of Section 1.743, 21 which requires that applications filed by corporations

be signed by an officer or duly authorized employee of that corporation, and a waiver, to the

extent necessary, of any requirement that the applications be signed on behalf of the current

shareholders of Inmarsat.

The Commission has allowed the filing of applications without signature

in similar circumstances. In its Tender Offers Notice of Inquiry, the Commission cited with

approval previous cases in which the signature requirement had been waived, stating that it

“cannot reasonably allow the technical requirements of the application to make it impossible for

an outside party seeking control to file for and obtain prior approval.” 22 This principle applies

here. If Harbinger/SkyTerra were unable to file applications for transfer of control of Inmarsat’s

subsidiaries because Inmarsat’s signature is lacking, then the “technical requirements of the

application” will have made it “impossible” for them “to file for and obtain prior approval.”

21
47 C.F.R. § 1.743.
22
In Re Tender Offers and Proxy Contests, Notice of Inquiry, 1985 FCC LEXIS 2759, FCC 85-349 at ¶ 12 (rel.
Aug. 20, 1985) (quoting Continental Telephone Corporation, 41 F.C.C.2d 957, 959 (1973)). See also Continental
Telephone, 41 F.C.C.2d at 959 (“[W]e must act on such contingent applications so that a qualified buyer can legally
assume control in the event the tender offer is successful.”)

-18-

Accordingly, and in keeping with its precedents, the Commission should waive the signature

requirement in connection with these applications.

(2) Waiver of the Time by Which the Transaction Must be
Consummated

In addition, the Commission requires notification of the consummation of

a transfer of control within a specified number of days after the FCC consents to the transfer of

control. 23 For reasons that are discussed above, however, it is not feasible for

Harbinger/SkyTerra to commence a tender offer for Inmarsat in the U.K. until after FCC consent

has been obtained, and it is likely that the tender offer process will take significantly longer than

the amount of time parties typically are given by the Commission to consummate transfers of

control. Harbinger and SkyTerra, therefore, request that the FCC’s consent to a transfer of

control of Inmarsat’s subsidiaries run through the end of the period needed to complete the

tender offer process in the U.K. (or to complete the court-approved cancellation scheme of

arrangement if the offer is implemented by way of scheme).

III. STANDARD FOR REVIEW

The Commission will grant an application for transfer of control when, after considering

the benefits and harms to the public interest, on balance grant of the application will serve the

public interest, convenience and necessity. 24 The Commission first must assess whether the

proposed transaction complies with the applicable parts of the Communications Act of 1934 and

23
See, e.g., FCC Form 312, Schedule A, certification page (“The undersigned represents … that control will not be
transferred until the Commission’s consent has been received, but that transfer of control or assignment of license
will be completed within 60 days of Commission consent.”).
24
See 47 U.S.C. § 310(d) (requiring that transfer of control applications demonstration that the transaction will serve
the public interest, convenience and necessity).

-19-

with any other applicable statutes, and with the Commission’s rules. 25 If so, then the

Commission considers whether the transaction would result in any public interest harms “by

substantially frustrating or impairing the objectives or implementation of the Act or related

statutes.” 26 Finally, the Commission engages in a balancing test that weighs the potential public

interest benefits against the potential public interest harms of the proposed transaction. 27

Notably, in conducting its public interest review, the Commission considers “the broad

aims of the Communications Act,” including such matters as “enhancing competition in the

relevant markets, accelerating private sector deployment of advanced services, ensuring a

diversity of information sources and services to the public, and generally managing the spectrum

in the public interest.” 28 As the Commission has recognized, today’s telecommunications

marketplace is extraordinarily dynamic, 29 as is the satellite industry. 30 The Commission has

25
See In the Matter of Application of News Corporation and The DirectTV Group, Inc., Transferors, and Liberty
Media Corporation, Transferee, for Authority to Transfer Control, Memorandum Opinion and Order, 23 FCC Rcd
3265, 3276 (2008) (“Liberty Media/Direct TV Order”); see also SBC Communications Inc. and AT&T Corp.
Applications for Approval of Transfer of Control, 20 FCC Rcd 18290, 18300 (2005) (“SBC-AT&T Order”); Verizon
Communications, Inc. and MCI, Inc. Applications for Approval of Transfer of Control, 20 FCC Rcd 18433, 18442-
43 (2005) (“Verizon-MCI Order”); Applications for Consent to the Assignment of Licenses Pursuant to Section
310(d) of the Communications Act from NextWave Personal Communications, Inc., Debtor-in-Possession, and
NextWave Power Partners, Inc., Debtor-in-Possession, to Subsidiaries of Cingular Wireless LLC, 19 FCC Rcd
2570, 2580-81 (2004); EchoStar Communications Corp., General Motors Corp. and Hughes Electronics Corp., and
EchoStar Communications Corp., Hearing Designation Order, 17 FCC Rcd 20559, 20574 (2002) (“EchoStar-
DIRECTV HDO”).
26
Liberty Media/Direct TV Order, 23 FCC Rcd at 3277.
27
Id. If the Commission determines that it cannot find that the transaction would serve the public interest, or if
substantial and material facts remain that must be resolved, the Commission will designate the application for a
hearing pursuant to Section 309(e) of the Act. 47 U.S.C. § 309(e).
28
See Liberty Media/Direct TV Order, 23 FCC Rcd at 3277-3278.
29
Review of the Section 251 Unbundling Obligations of Incumbent Local Exchange Carriers, Report and Order and
Order on Remand and Further Notice of Proposed Rulemaking, 18 FCC Rcd 16978, 17372 (2003) (noting the
“continually evolving and dynamic nature of telecommunications networks”).
30
See generally The Satellite Industry Association, 2008 State of the Satellite Industry Report (June 2008)
(providing comprehensive satellite industry statistics), available at www.sia.org; In the Matter of Implementation of
Section 6002(b) of the Omnibus Budget Reconciliation Act of 1993; Annual Report and Analysis of the Competitive
Market Conditions with Respect to Commercial Mobile Services, Twelfth Report, 23 FCC Rcd 2341, 2350 and
2345-2347 (2008) (summarizing use of mobile satellite services in the United States); and FCC Report and Analysis
of Competitive Market Conditions with Respect to Domestic and International Satellite Communications Services,
First Report, FCC 07-34, IB Docket No. 06-67 at ¶ 2 (rel. March 26, 2007) (concluding that “the market for
commercial communications satellite services is effectively competitive.”).

-20-

found that it should proceed cautiously prior to imposing regulatory burdens during periods of

technological change. 31

IV. COMPLIANCE WITH THE COMMUNICATIONS ACT AND THE
COMMISSION’S RULES

SkyTerra already holds a controlling interest in MSV, which has been approved by the

Commission. 32 The FCC qualifications of SkyTerra as presently owned, therefore, are a matter

of public record. The qualifications of Harbinger are set forth in the applications with which this

Narrative is associated, which are listed in Attachment A hereto, and in the Declaratory Ruling

Petition discussed below.

Certain FCC authorizations held by MSV Sub are common carrier radio licenses that are

subject to the foreign ownership limits of Section 310(b)(4) of the Communications Act. In

connection with these common carrier licenses, the Commission has granted Harbinger interim

authority pursuant to Section 310(b)(4) to hold a non-controlling interest of up to 49.99 percent

equity and voting interests in SkyTerra. 33 This interim authority is subject to Commission action

upon a pending petition for a declaratory ruling seeking the same authority on a permanent

31
See, e.g., Implementation of Section 17 of the Cable Television Consumer Protection and
Competition Act of 1992; Compatibility Between Cable Systems and Consumer Electronics
Equipment, First Report and Order, 9 FCC Rcd 1981, 1987 (1994) (“[T]he potential for [regulation to result in] a
constraining effect is substantially greater…where there is rapid development of new communications technologies
and services”); IP-Enabled Services, Notice of Proposed Rulemaking, 19 FCC Rcd 4863, 4867 (2004) (noting that
in competitive, evolving markets, the Commission should rely “wherever possible on competition and apply[ ]
discrete regulatory requirements only where such requirements are necessary to fulfill important policy
objectives.”).
32
In the Matter of Motient Corporation and Subsidiaries, Transferors, and SkyTerra Communications, Inc.,
Transferee, Application for Authority to Transfer Control of Mobile Satellite Ventures Subsidiary LLC,
Memorandum Opinion and Order and Declaratory Ruling, 21 FCC Rcd 10198 (2006).
33
In the Matter of Mobile Satellite Ventures Subsidiary LLC and SkyTerra Communications, Inc.; Petition for
Declaratory Ruling under Section 310(b) of the Communications Act of 1934, as Amended; Harbinger Capital
Partners Master Fund I, Ltd. and Harbinger Capital Partners Special Situations Fund, L.P.; Petition for Expedited
Action for Declaratory Ruling under Section 310(b) of the Communications Act, as Amended, Order and Declaratory
Ruling, 2008 FCC Lexis 2181 (rel. March 7, 2008).

-21-

basis. 34 Attachment B hereto is a new petition for declaratory ruling (the “Declaratory Ruling

Petition”) seeking authority pursuant to Section 310(b)(4) for Harbinger to hold interests in

SkyTerra in excess of the 49.99 percent equity and voting interests that are presently authorized

on an interim basis. 35

Subject to a favorable Commission ruling on the Declaratory Ruling Petition and on the

waiver requests set forth in Section II.C herein, the proposed transfers of control will be in

conformity with all applicable provisions of the Communications Act and the Commission’s

rules. We note in this regard that the L-band spectrum authorized to Inmarsat is and will remain

coordinated by the U.K. The proposed transaction does not add to the amount of U.S.

coordinated or licensed spectrum. Accordingly, no issue with regard to how much U.S.

coordinated L-band spectrum might be licensed to a single entity is raised.

The proposed transactions raise no national security or law enforcement concerns.

Inmarsat and MSV (and SkyTerra) have a long history of cooperating with the United States

government on issues of national security, and under Harbinger and Sky Terra’s control, the

parties will continue to do so. The parties understand the importance of Executive Branch

concurrence that matters of national security and law enforcement will not be compromised by

the proposed transactions and the deference the Commission gives to such agencies relative to

the same. 36 The parties intend forthwith to initiate discussions with Executive Branch agencies

with respect to the proposed transactions and have every expectation that they will be able to

satisfy any concerns that these agencies may raise.

34
Id. at 2008 FCC Lexis *28.
35
No Section 310(b)(4) is sought in connection with the proposed transfer of control of Inmarsat, because Inmarsat
holds no FCC licenses or authorizations that are subject to Section 310(b)(4).
36
See Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, Report and Order and
Order on Reconsideration, 12 FCC Rcd 23891, 23919-21 (1997).

-22-

That leaves then a more general public interest analysis of the transactions which the

Commission must undertake. As demonstrated below, the proposed transactions will yield

substantial public interest benefits, allowing the parties to increase the efficient use of L-band

spectrum and to achieve otherwise unattainable savings and efficiencies in the provision of

integrated MSS and ATC services, operational efficiencies in satellite fleet operation, a

ubiquitous high-speed mobile telecommunication resource for national defense agencies, public

safety entities, and rural areas, and a strong foundation for continued development of new

technologies. These benefits would be achieved, moreover, as demonstrated below, without

competitive harm, because MSV and Inmarsat focus on substantially different applications and,

where there is apparent overlap, they face thriving competition.

V. THE PROPOSED TRANSACTION WILL YIELD SUBSTANTIAL
PUBLIC INTEREST BENEFITS

The combination of MSV and Inmarsat will generate significant public interest benefits

that flow first and foremost from their ability to achieve more efficient use of L-band spectrum

and other assets. As the Commission previously has found, mergers of satellite operators can

and do promote the “broad aims of the Communications Act” by generating public interests such

as more efficient spectrum use, 37 fleet optimization and management 38 and the deployment of an

essential communication system for public safety, first responders and emergency preparedness

37
See Constellation, LLC, Carlyle PanAmSat I, LLC, Carlyle PanAmSat II, LLC, PEP PAS, LLC, and PEOP PAS,
LLC, Transferors, and Intelsat Holdings, Ltd., Transferee, Consolidated Application for Authority to Transfer
Control of PanAmSat Licensee Corp. and PanAmSat H-2 Licensee Corp., Memorandum Opinion and Order, 21
FCC Rcd 7368, 7391 (2006) (“PanAmSat/Intelsat Merger Order”).
38
Id. at 7390-7391; BCE Inc. and Loral Skynet Corp., Transferors/Assignors, and 4363205 Canada Inc., 4363213
Canada Inc., and Skynet Satellite Corp., Transferees/ Assignees, Application to Transfer Control or Assignment of
Licenses and Authorizations held by Telesat Canada, Able Infosat Communications, Inc., Loral Skynet Corp., and
Loral Skynet Network Servs., Inc. and Petition for Declaratory Ruling, Order, 22 FCC Rcd 18049, 18055-18056
(2007) (“BCE/Loral Skynet Merger Order”).

-23-

agencies. 39 The Commission has approved satellite transactions because they enable the

merging firms to realize economies of scale and scope, 40 increase innovation 41 and generate

significant cost savings. 42 Moreover, the Commission has concluded that such mergers can

enable satellite companies to achieve the scale, expertise, and resources required to provide new

and enhanced services at competitive prices. 43 As detailed below, the consolidated operation of

MSV and Inmarsat will result in all of these pro-competitive benefits and then some.

A. The Proposed Merger Will Unlock the Full Promise of L-Band
Spectrum for MSS-ATC Services to Benefit Public Safety
Entities, People in Rural Areas, and the Public at Large
The L-band spectrum in which each of MSV and Inmarsat currently operate

holds extraordinary promise, but full development of this valuable resource has yet to be

realized. Not the least of the new developments resulting from this transaction will be to

enhance and accelerate the creation of an integrated MSS-ATC network that will provide new

seamless and cost-effective wireless communications services. As the Commission has

recognized, such an integrated network would “enhance the ability of national and global

telecommunications systems to protect the public by offering ubiquitous service to law

39
PanAmSat/Intelsat Merger Order, 21 FCC Rcd at 7391 and 7394.
40
General Electric Capital Corp. and SES Global S.A., Application for Consent to Transfer Control of Licenses and
Authorizations Pursuant to Sections 214(a) and 310(d) of the Communications Act and Petition for Declaratory
Ruling Pursuant to Section 310(b)(4) of the Communications Act, Order, 16 FCC Rcd 18878, (2001) (“GE/SES
Merger Order”); BCE/Loral Skynet Merger Order, at 18055; In the Matter of SBC Communications Inc. and AT&T
Corp. Applications for Approval of Transfer of Control, 20 FCC Rcd 18290,(2005) (“SBC/AT&T Merger Order”).
41
PanAmSat/Intelsat Merger Order, 21 FCC Rcd at 7386; SBC/AT&T Merger Order, 20 FCC Rcd at 18389.
42
Motient Corp. and Subsidiaries, Transferors, and Skyterra Communications, Inc., Transferee, Application for
Authority to Transfer Control of Mobile Satellite Ventures Subsidiary LLC, Order, 21 FCC Rcd 10198 (2006)
(“Motient/SkyTerra Order”).
43
E.g., PanAmSat/Intelsat Merger Order,21 FCC Rcd at 7375 (The merger would create a satellite company “with
the scale, expertise, and resources needed to pursue development of broadband by satellite at affordable prices that
are competitive with today’s cable model and DSL services.”); BCE/Loral Skynet Merger Order, 22 FCC Rcd at
18156 (determining that the merger would have a positive effect in terms of the quality of services or the provision
of new or additional services to consumers); see generally New Skies Satellites Holdings Ltd., Transferor, and SES
Global S.A., Transferee, Application to Transfer Control of Authorizations and Notification of Change to Permitted
Space Station List, Public Notice, 21 FCC Rcd 3194 (Int’l Bureau 2006) (“New Skies/SES Merger Order”).

-25-

spectrum as a margin of error. Coordination agreements address these kind of issues, but are

imperfect mechanisms for doing so.

The impending introduction of MSS-ATC services obviously makes the complexity and

cost of coordination issues even more acute. Among other things, the successful introduction of

efficient, cost-effective MSS-ATC services that will give first responders and rural residents

access to high speed voice and data services requires large contiguous blocks of spectrum, unlike

the numerous small “slices” that resulted from prior coordination efforts. More efficient use of

the L-band will put MSV and Inmarsat in a position to preserve and improve traditional MSS

services, as the net effect will be more usable spectrum.

While MSV and Inmarsat certainly made progress in achieving a new Cooperation

Agreement to alleviate some of the contention that has existed between the companies in the past

over the use of the L-band spectrum, 47 that Agreement cannot compare in time, cost or

necessarily the outcome to the efficiency that can be achieved by a combined enterprise with

unified objectives. For example, while the Cooperation Agreement seeks to address coordination

issues in a forward-looking manner, technological advances, innovation, and public safety and

consumer requirements are constantly changing in ways that cannot possibly be entirely

foreseen.

The Commission recognized this problem in adjusting its rules in 2005 to facilitate the

development of ATC in the band. 48 In explaining the limitations as to what it could accomplish

by specific rules to foster ATC while protecting existing MSS services, the Commission stated,

“[w]e cannot predict what techniques may be invented or where such techniques will prove most

47
Cooperation Agreement at 29.
48
MSS Flexibility Order 2005, 20 FCC Rcd 4616.

-26-

effective, in the MSS component or the ATC component of an MSS-ATC system.” 49 The

Commission therefore encouraged further private negotiations among the operators in an effort

to produce more “efficient interference levels than regulations based on largely hypothetical

cases.” 50

The parties have achieved much from the negotiations fostered by the Commission,

including agreement to use their best commercial efforts to negotiate revised satellite

coordination agreements as necessary to address changing technology and operational

requirements. 51 But as the experience of the Mexico City Memorandum of Understanding

demonstrates, 52 such ongoing arrangements among parties sharing use of spectrum with

divergent commercial interests are difficult to successfully implement long term and do not

necessarily ensure the most efficient outcome will result. Moreover, they do not lend themselves

to prompt resolution of pressing needs, as when emergency responders require an immediate

adjustment in spectrum assignments within the L-band or even when new technology creates a

window of opportunity.

While the parties have attempted to address the rebanding that will be necessary to

support ATC in their Cooperation Agreement, the complex mechanisms in that Agreement, the

associated financial and other conditions, and the multiple phased options and deadlines 53 reflect

at once the progress that has been made by such negotiations and the limitations that are inherent

to such agreements. As noted above, it is almost impossible to map out today the most efficient

49
Id. at 4633.
50
Id.
51
Cooperation Agreement at p. 29.
52
Under the Mexico City Memorandum of Understanding, the L-band operators are supposed to meet annually to
adjust spectrum assignments to meet changing requirements, but such negotiations have not occurred since 1999.
MSS Flexibility Order 2005, at 4629 and n. 90.
53
Cooperation Agreement at pgs. 6-15.

-27-

path for transition to meet each party’s requirements, and even more so the public need, as those

requirements and needs, and technologies themselves are constantly and rapidly evolving.

In contrast, the proposed transaction will enable a combined enterprise, working in

concert with the respective administrations, to quickly make more efficient use of the L-band,

including as necessary for the rapid, cost-effective and price competitive deployment of MSS-

ATC and other future broadband solutions. Rather than trying to negotiate the path and pace of

that technology, the combined entity will have a unified incentive and ability to optimize the use

of all spectrum and orbital resources, along with the flexibility to manage spectrum and

resources most effectively. As such, the proposed transaction will enable the parties to achieve

far greater efficiencies than those achievable by the Cooperation Agreement or any other means.

B. The Proposed Transaction Will Create More Rapid, Lower Cost
Deployment of ATC to the Benefit of Rural and Public Safety Users as
well as Traditional Terrestrial Wireless Consumers

The successful introduction of MSS-ATC requires the development of integrated

satellite and terrestrial technologies on standard wireless handsets and other consumer devices

that are substantially similar to current PCS/cellular handsets in terms of aesthetics, cost, form

factor and functionality. To develop and bring the costs of such units down to the level enjoyed

by existing terrestrial wireless network operators and their customers, achieving economies of

scale in chipset and device manufacturing is a must.

The proposed transaction creates a unique ability to achieve scale economies necessary to

be price competitive with terrestrial wireless service. In particular, the consolidation of the

operations of MSV and Inmarsat will provide instant credibility with chip and handset

manufacturers. The point is that, as a combined operation, MSV and Inmarsat can dedicate

spectrum for particular purposes, without the uncertainty that can exist when spectrum is shared

-28-

among entities and without being subject to future shifts in assigned spectrum depending upon

the implementation of existing agreements, option exercises, and future coordination, etc.

Further, like other satellite transactions approved by the Commission, the proposed transaction

will result in an entity with a sufficiently large anticipated customer base to better attract chipset,

handset, and other equipment vendors interested in negotiating reasonable contracts as a result of

the creation of efficiencies in production costs. 54 Combined, the parties will be able to secure

larger volume discounts from suppliers, and pass those lower costs through to consumers in the

form of lower end-user prices. As the Commission has recognized, large buyers typically are

able to negotiate significant discounts from hardware and software vendors. 55 In this way, the

transaction holds the potential to bring costs down for public safety users and speed the

deployment of MSS-ATC in rural areas across the nation.

MSS services will also benefit by creating a sufficient market to support the development

of more consumer friendly handsets at reduced cost. The Commission has acknowledged that

this expansion of satellite phone service into the mass market will “lead [ ] to economies of scale

and lower prices for consumers” 56 and also will “eliminate operational and transactional

difficulties and costs for MSS operators in negotiating separate terrestrial roaming

agreements.” 57 As a result of the anticipated “[u]rban penetration capability, lower-priced

54
PanAmSat/Intelsat Merger Order, 21 FCC Rcd at 7391; see generally SBC/AT&T Merger Order, 20 FCC Rcd at
18388; see generally BCE/Loral Skynet Merger Order, at 18055; MSS Flexibility R&O 2003, 18 FCC Rcd at 1975
(recognizing that a handset that combines MSS and ATC functionality results in a “larger consumer market [which]
would, in turn allow providers to order larger production volumes, which further reduce the costs of producing
phones”).
55
See generally MSS Flexibility R&O 2003, 18 FCC Rcd at 1976.
56
MSS Flexibility Order 2005, 20 FCC Rcd at 4619.
57
Id.

-29-

phones, unified numbering, unified billing, and reduced transaction costs could reasonably be

expected to result in lower retail prices and greater consumer demand for MSS.” 58

C. The Transaction Will Generate Additional Operating Efficiencies

(1) More Efficient Use of Satellites and Orbital Resources

MSV’s and Inmarsat’s anticipated fleet management activities would

create the opportunity to generate substantial efficiencies by transferring services to newer

satellites, optimizing usage of satellite network assets, and deploying higher-powered,

ATC-enhanced new satellites. Such efficiencies will, as the Commission has recognized in other

recent transactions involving the merger of satellite operators, allow for “greater redundancy”

and permit MSV and Inmarsat to “maximize back-up capabilities” by repositioning their fleets. 59

In addition to providing such enhanced back-up capabilities, unified management of the parties’

satellites would eliminate unnecessary investment in duplicative infrastructure and ensure that

their future satellite launches will support both parties’ most innovative technologies, including

an integrated MSS-ATC network.

(2) Administrative, R&D, and Other Cost Savings

The Commission has recognized that mergers can facilitate an increased

ability to conduct research and development (“R&D”), and this will be true here. 60 Because the

returns on investment in telecommunications innovations have positive economies of scale, the

merged firm will be able to justify R&D that would not have been profitable for a smaller entity,

for the same reasons recently found by the Commission to hold for the SBC/AT&T merger. 61

Here, the proposed transaction will enhance R&D activities and innovation, allowing the parties

58
MSS Flexibility R&O 2003, 18 FCC Rcd at 1977.
59
See generally PanAmSat/Intelsat Merger Order, 21 FCC Rcd at 7390.
60
E.g., SBC/AT&T Merger Order, 20 FCC Rcd at 18388-18389.

-31-

More generally, the more efficient use of the L-band will make the combined

MSV and Inmarsat better able to offer and make technologically more advanced traditional MSS

business and governmental communications products, while at the same time introducing MSS-

ATC services. That is because, by optimizing the use of the total spectrum and orbital resources

that MSV and Inmarsat together would have available to their combined operation, they would

have greater resources, effectively more usable spectrum, than the two would have as separately

operated entities.

VI. THIS TRANSACTION WILL NOT HARM COMPETITION

A. The Commission’s Method of Analysis: Identify Where the Parties
Compete and Analyze Whether the Combination Would Adversely
Affect That Competition

The Commission analyzes the competitive effects of mergers of satellite operators

by examining the services provided by each and the markets in which they operate. The

Commission then determines whether the merger would adversely affect competition in the

provision of those services in markets served by both parties. 64 As the Commission has

explained in previous orders granting mergers, the relevant market concept is used to identify the

product and geographic markets in which the competitive implications of the transaction must be

assessed. 65

The Commission begins its analysis by identifying the services sold by each of the

merging parties to various types of consumers. 66 It considers the capability or functionality of

64
PanAmSat/Intelsat Merger Order, 21 FCC Rcd at 7383 (competitive effects analysis “begin[s] by defining the
relevant markets”); see generally Motient/SkyTerra Application, 21 FCC Rcd at 10209; In the Matter of Annual
Report and Analysis of Competitive Market Conditions with Respect to Domestic and International Satellite
Communications Services, 22 FCC Rcd 5954 (2007) (“FSS Annual Report”).
65
PanAmSat/Intelsat Merger Order, 21 FCC Rcd at 7383 and n.83.
66
See generally PanAmSat/Intelsat Merger Order, 21 FCC Rcd at 7382-7386 (citing the Merger Guidelines, §§ 1.11
and 1.12).

-34-

significant capital and technical development still is required, the Commission easily can find

that this transaction will have no adverse effect on such vibrant competition.

Then delving more specifically into the parties’ offerings, Inmarsat is a global provider of

MSS with a majority of its reported 2007 revenue from maritime and aeronautical services.

Inmarsat also provides bulk capacity, with much of its bulk capacity revenue generated by the

U.S. Navy, again for maritime communications. In addition, Inmarsat provides significant

global service in aeronautical and land mobile high-speed data applications.

By contrast, MSV operates primarily in North America, 76 including surrounding coastal

waters, where it currently provides only narrowband land mobile services, including voice,

packet data and private network services. MSV does not provide trans-oceanic maritime

services, nor do its services include comparable aeronautical 77 or high-speed data services.

Thus, in primary segments served by Inmarsat, MSV is not even a participant.

While MSV and Inmarsat both support land-mobile services in North America, they

generally focus on different applications and operate in a highly competitive marketplace. For

example, MSV’s voice service is enhanced by a push-to-talk feature for dispatch

communications among multiple users, which Inmarsat does not offer. As noted, MSV terminals

support only low data speeds of 4.8 Kbps, suitable for faxes and text messages.

Inmarsat’s principal current-generation land-mobile service in North America is

”Broadband Global Area Network,” or “BGAN,” a high speed data service offering speeds up to

492 Kbps. BGAN is designed for internet access, multimedia file sharing, video broadcasting,

74
Stratos-Trust Order, 22 FCC Rcd at n.197 (quoting Satellite Competition Report, 22 FCC Rcd at 6011, ¶ 188).
75
Id.
76
MSV also provides limited service in northern South America, Central America, the Caribbean and Hawaii.
77
MSV understands that a very few aeronautical units in North America may be served by its private network
service customers.

-36-

providers, to develop a new asset tracking/fleet management terminal over Iridium’s network.

Consequently, this transaction will not adversely impact the vigorous competition for

satellite-based voice, fleet management/asset tracking and other data services among numerous

service providers and satellite operators. The companies identified above, as well as terrestrial

wireless providers, will continue to provide consumers with a wide range of options for such

services. 79 Similarly as to private network capacity, there is a wide range of providers including

Iridium, Globalstar, Orbcomm and FSS operators.

In sum, with respect to those applications where MSV and Inmarsat offer similar

services, comparable and substitutable services are offered by numerous other operators in either

MSS or other spectrum bands (i.e., Ku-, C- and VHF and UHF bands). In this regard, MSS

providers are facing increasing competition from FSS operators. As noted above, smaller

antennas and advanced technology are increasingly used by FSS/VSAT services to support

vehicle mounted services. Announcements of new services, based upon the use of other MSS

and FSS satellites, are reported almost weekly. 80 Existing and new services coming on line will

communications over the Ku-band to approximately 400 vehicle-mounted antennas. See In the Matter of Raysat
Antenna Systems, LLC, Order and Authorization, 23 FCC Rcd 1985 (2008).
79
For example, companies like Numerex, Jasper Wireless and Aeris Communications all provide asset tracking
services similar to those provided by Qualcomm, Orbcomm, and others by using GSM and CDMA wireless
networks together with GPS. See Product information on the Numerex Network, available at
http://www.numerex.com/M2M-Solutions/Numerex-Networx.aspx; product information sheet on the Jasper
Wireless Network, available at http://www.jasperwireless.com/services.php; and product information on the Aeris
network system, available at http://www.aeris.net/m2m_services.html. Numerex offers asset tracking over both
terrestrial wireless and satellite networks, using Globalstar’s Simplex service for the satellite component. See
http://www.numerex.com/M2M-Solutions/Numerex-Networx.aspx (describing satellite services through Orbit-One
division); http://www.orbit-one.com/PDF/GSP-Simplex%20Coverage.pdf (showing coverage map for services
offered by Numerex’s Orbit-One division).
80
See, e.g., VT iDirect Helps with Panasonic’s Fly High Broadband, Satnews Daily (Jul. 9, 2008) (representing a
nexgen in-flight broadband solution over Intelsat’s global Ku-band system); Insight… The Times, They Are A
Changin’… FAST! SatMagazine.com (Jul. 2008) (covering mobile solutions offered by Thuraya, Intelsat, and SES
Global); Alaska Airlines and Southwest Airlines Support Row 44’s Application, Communications Daily at 12 (Jul. 2,
2008) (proposing use of Ku-band capacity from Horizons I, AMC 2 and AMC 9 to provide in-flight broadband
service); SingTel Signs SES New Skies Capacity Deal, Satellite Today (Jun. 18, 2008) (extending suite of maritime
VSAT solutions over New Skies’ NSS-7, NSS-703, and NSS-5 satellites); Transforming Satellite Broadband,
SatMagazine.com (Jun. 2008) (discussing significant increases in satellite broadband capacity); Iridium and Vizada
(footnote cont’d on next page)

-38-

MSV’s MSS-ATC service will instead face competition from the three other satellite

operators who are pursuing MSS-ATC, as well as from terrestrial wireless providers. The

satellite operators planning on developing ATC networks that would compete with MSV include.

Globalstar which already holds an authorization to provide ATC, and both ICO which recently

launched a new satellite, and TerreStar, 82 which has a satellite under construction, have

applications for ATC authorizations pending before the Commission. As prices of such services

are reduced, they are anticipated to be competitive with terrestrial wireless services, with each

acting as a competitive constraint on the other service.

By contrast, Inmarsat has not pursued ATC on its satellite network. First, Inmarsat does

not have a license to construct an ATC network, nor has it applied for one. Second, Inmarsat’s

fleet, including a number of recently launched satellites, is not designed with sufficiently large

antennae or with the ability to concentrate satellite signal power over sufficiently small land

areas to provide services to wireless handsets the size of conventional cell phones, an essential

feature for mass market appeal.

In short, Inmarsat and MSV not only face vibrant competition from numerous other

providers today, indeed more competition from other players than they do from each other, but

they will continue to do so in the future. Thus, a combination of Inmarsat and MSV will not

adversely affect competition.

81
See Inmarsat plc, 2007 Annual Report at 6.
82
As noted in Section II.A (3) of this Narrative, Harbinger has a minority, non-controlling interest in TerreStar.
TerreStar does and would continue to operate independently of MSV and Inmarsat.

-39-

VII. PROCEDURAL MATTERS

A. Pending Applications and Petitions

During the Commission’s consideration of these applications and the period

required for the consummation of the proposed transactions following approval, the entities

control of which is to be transferred may file additional applications or petitions, and the

Commission may grant currently pending applications or petitions (the “Interim Period”).

Accordingly, consistent with Commission precedent, the applicants request that the Commission,

in acting upon these applications, include authority for the transfer of control to Harbinger or

SkyTerra, as the case may be, of (i) all applicable authorizations issued during the Interim

Period; and (ii) all applicable applications (including applications for STA), petitions, or other

filings that are pending at the time of consummation of the proposed transfer of control; except

that this request does not apply to the extent stated herein to applications for transfer of control

of Stratos or TVCC, each such matter to be addressed in separate amendments/applications, as

appropriate, as already indicated herein. 83

B. Request for Permit-But-Disclose Ex Parte Status

The applicants request that the Commission designate the ex parte status of the

consolidated application proceedings as “permit-but-disclose” under the Commission’s rules.

See 47 C.F.R. §§ 1.1200 et seq. Doing so will facilitate the development of a complete record

and is consistent with Commission decisions in other similar transactions. 84

83
See Note 4 to this Narrative.
84
See, e.g., Stratos Transfer of Control Proceeding, 2008 FCC Lexis 5360, DA 08-1659.

-40-

VIII. CONCLUSION

For the foregoing reasons, Commission consent to the transfer of control of MSV Sub,

Inmarsat Hawaii Inc. and Inmarsat, Inc. each to Harbinger is hereby requested.

Attachment A – List of Licenses

SkyTerra and Harbinger request approval for the transfer of control of the
following licenses and authorizations held by Mobile Satellite Ventures Subsidiary LLC
(“MSV Sub”) and Inmarsat plc (“Inmarsat”).

Licenses Held by MSV Sub:

Licensee Authorization
Space Station
MSV Sub AMSC-1 (including ATC authority)
MSV Sub S2358
Earth Station (Mobile)
MSV Sub E990133
MSV Sub E980179
MSV Sub E930367
Earth Station (Fixed)
MSV Sub E940374
MSV Sub E930124
Section 214 Authorizations
MSV Sub Domestic 214
MSV Sub ITC-214-19951215-00023
MSV Sub ITC-214-19950314-00022
Experimental Licenses
MSV Sub WC9XRS XD
MSV Sub WE2XIF XD
MSV Sub WE2XJW XD
MSV Sub WD2XNL XD
MSV Sub WE2XOD XD
MSV Sub WE2XOW XD
MSV Sub WE2XPD XD
Mobile Itinerant
MSV Sub WQHL596

Licenses Held by Inmarsat:

Licensee Authorization
Special Temporary Authority (Earth
Station)
Inmarsat Hawaii Inc. SES-STA-20080616-00787
SES-STA-20080311-00275
Experimental License
Inmarsat, Inc. WD2XWM

ATTACHMENT B

PETITION FOR DECLARATORY RULING

Introduction and Summary

This petition for declaratory ruling (“PDR”) accompanies applications seeking the

Commission’s consent to transfer control of Mobile Satellite Ventures Subsidiary LLC (“MSV

Sub”) from SkyTerra Communications, Inc. (“SkyTerra”) to Harbinger Capital Partners Master

Fund I, Ltd. (“Master Fund”) and Harbinger Capital Partners Special Situations Fund, L.P.

(“Special Situations Fund”) (collectively referred to as “Harbinger” or the “Harbinger Funds”). 1

The parties to the applications respectfully request a declaratory ruling from the Commission,

pursuant to Section 310(b)(4) of the Communications Act of 1934, as amended, that it is

consistent with the public interest for Harbinger and any commonly-controlled funds 2 to own,

directly or indirectly, up to 100% of the issued and outstanding stock of SkyTerra, which has a

controlling interest in MSV Sub. 3

In addition, in order to account for the possibility that Harbinger and commonly-

controlled funds will hold less than 100% of the issued and outstanding stock of SkyTerra

following consummation of the proposed transfer of control, 4 the parties request a declaratory

1
The applications also seek the Commission’s consent to transfer control of Inmarsat Hawaii Inc.
and Inmarsat, Inc.
2
As stated in the transfer of control applications, it is possible that Harbinger Capital Partners Fund
I, L.P. and Harbinger Co-Investment Fund, L.P., which are under the same control as the Master Fund and the
Special Situations Fund, will have an ownership interest in SkyTerra.
3
SkyTerra has an equity interest of 99.29% and a voting interest of 100% in MSV Sub, which holds
various common carrier licenses as well as authorizations to provide common carrier services pursuant to Section
214 of the Communications Act. The parties are not requesting a declaratory ruling in connection with the transfer
of control of Inmarsat Hawaii Inc. and Inmarsat, Inc. because neither of those companies holds a common carrier
authorization that is subject to the foreign ownership limits of Section 310(b).
4
It is likely that Harbinger’s interest in SkyTerra will be below 100% and that some or all of the
current non-Harbinger shareholders of SkyTerra will continue to have an interest in the company. The precise level
of Harbinger’s post-closing interest, however, will depend on market conditions and other factors at closing and
therefore cannot be determined at this time. For similar reasons, it is unknown at present what the relative levels of
ownership will be as between the Master Fund and the Special Situations Fund. Out of an abundance of caution, the

ruling permitting ownership, subject to the qualification in the sentence that follows, of up to

25% of SkyTerra’s equity and voting stock by foreign investors that are not identified in this

PDR. The parties are not, however, seeking authority that would permit any foreign investor that

is not identified in this PDR to acquire control of SkyTerra, or to acquire an equity and/or voting

interest in SkyTerra that exceeds 25%, without obtaining additional approval from the

Commission.

The Commission already has made a preliminary determination that it is consistent with

the public interest for Harbinger to have a substantial interest in SkyTerra. Earlier this year, the

Commission released an Order and Declaratory Ruling granting Harbinger interim authority

pursuant to Section 310(b) to have an up to 49.99% equity interest and an up to 49.99% voting

interest in SkyTerra. 5 Harbinger has a pending request for the same relief on a permanent basis. 6

The parties demonstrate below that their proposal for Harbinger to increase its interest in

SkyTerra to up to 100% is supported by good cause. In particular, they show that the requested

declaratory ruling is warranted under the Commission’s policies because: (1) U.S. citizens

control the Master Fund and the Special Situations Fund; (2) the principal place of business of

the Special Situations Fund is the United States and the principal place of business of the Special

Situations Fund is the Cayman Islands, which is a WTO member country; and (3) all but a de

minimis portion of the investments in the Harbinger Funds are made by investors from the

United States and other WTO Member countries.

In support of this PDR, the parties are attaching the following:

parties are seeking authority herein for the range of possible foreign ownership levels associated with Harbinger’s
ownership of up to 100 percent of SkyTerra.
5
Mobile Satellite Ventures Subsidiary LLC and SkyTerra Communications, Inc., Order and
Declaratory Ruling, FCC 08-77 (March 7, 2008).
6
See ISP-PDR-20080129-00002.

2

• Annex 1 provides information concerning the citizenship of investors in the Harbinger

Funds.

• Annex 2 provides principal place of business showings.

• Annex 3 consists of diagrams depicting the ownership of the Harbinger Funds.

• Annex 4 describes the control that Harbinger’s management has over sales of interests in

the Master Fund and the Special Fund so that management can monitor and enforce

continuing compliance with Section 310(b).

• Annex 5 depicts the ownership structure of MSV Sub that is proposed in the transfer of

control applications.

Legal Standard

Section 310(b)(4) limits the ownership interests that foreign investors may have in any

corporation that controls the licensee of a common carrier radio station. Under Section

310(b)(4), no more than 25% of the capital stock of the corporation controlling the licensee may

be owned or voted by foreign citizens and their representatives, foreign governments and their

representatives, and corporations organized under the laws of a foreign country. However,

Section 310(b) authorizes the Commission to permit foreign investment in excess of this 25%

limit if the Commission determines that the foreign investment is not inconsistent with the public

interest.

The Commission has adopted a presumption that foreign investment by individuals or

entities from WTO Member countries should be permitted without limit under Section

3

310(b)(4). 7 It uses a “principal place of business” test to determine whether the nationality or

“home market” of a foreign investor is a WTO Member. 8

Ownership of Harbinger Funds

The diagrams in Annex 3 depict the ownership of the Master Fund and the Special

Situations Fund. This ownership is summarized below.

Master Fund. The Master Fund is a Cayman Islands Exempted Company. Because the

Cayman Islands are a British protectorate, they are deemed to be a WTO signatory. Harbinger

Capital Partners Offshore Fund I, Ltd. (“Offshore Feeder”), a Cayman Islands entity, owns

84.05% of the voting shares of Master Fund. The remaining 16.10% of the voting shares of

Master Fund are owned by Harbinger Capital Partners Fund I, L.P., a Delaware limited

partnership.

Annex 1 provides information concerning the citizenship of investors in the Master Fund.

All of the direct and indirect holders of the Master Fund are either U.S. citizens or citizens of

WTO signatories, except for five investors from the Bahamas holding in the aggregate limited

partnership interests amounting to 0.33% in the Offshore Feeder.

Special Situations Fund. The Special Situations Fund is a Delaware limited partnership.

The general partner of the Special Situations Fund is Harbinger Capital Partners Special

Situations GP, LLC, a Delaware limited liability company, which has management control over

the Special Situations Fund. All of the limited partners are U.S. citizens, except for: (1)

Harbinger Capital Partners Special Situations Offshore Fund, L.P. (“Special Offshore Fund”),

7
See Rules and Policies on Foreign Participation in the U.S. Telecommunications Market, Report
and Order and Order on Reconsideration, FCC 97-398, 12 FCC Rcd 23891, 23896 ¶ 9, 23913 ¶ 50, and 23940 ¶¶
111-112 (1997) (“Foreign Participation Order”), Order on Reconsideration, FCC 00-339, 15 FCC Rcd 18158
(2000).
8
Foreign Participation Order, 12 FCC Rcd at 23941 ¶ 116 (citing Market Entry and Regulation of
Foreign-Affiliated Entities, Report and Order, FCC 95-475, 11 FCC Rcd 3873, 3951 ¶ 207 (1995)).

4

which is a Cayman Islands limited partnership holding a 62.80% equity interest in the Special

Situations Fund; and (2) Harbinger Capital Partners SSF CFF, Ltd., which is a Cayman Islands

Exempted Company holding a 1.54% equity interest in the Special Situations Fund. The general

partner of Special Offshore Fund is a Delaware limited liability company, which, in turn, is

controlled by a corporation organized under the laws of the United States. The limited partners

of the Special Offshore Fund are widely dispersed and all have a less than 10% interest in the

Special Situations Fund.

Annex 1 provides information concerning the citizenship of investors in the Special

Situations Fund. All of the ownership interests are held by U.S. citizens or citizens of WTO

signatories.

Control of Harbinger Funds

Two U.S. citizens, Philip A. Falcone and Raymond J. Harbert, have ultimate control of

the Harbinger Funds. As described in detail below, Mr. Falcone exercises his control as an

individual and Mr. Harbert exercises his control through his ownership of over 50% of the voting

interests of Harbert Management Corporation and HMC Investors LLC.

Master Fund. Over 80% of the Master Fund’s shares, all of which are voting shares, are

held by Harbinger Capital Partners Offshore Fund I, Ltd. (the “Offshore Feeder”). No investor

owns more than 50% of the Offshore Feeder’s voting securities.

Three persons – a US citizen, a UK citizen, and a citizen of Ireland - serve as the

directors of both the Master Fund and the Offshore Feeder. Any director can be removed and

replaced by majority vote of either the shareholders or the directors.

The Master Fund’s Board of Directors has delegated broad investment management

authority under an Investment Management Agreement to Harbinger Capital Partners Offshore

5

Manager, LLC, a Delaware LLC (the “Offshore Manager”). Two members have voting control

of the Offshore Manager: (1) HMC Investors, LLC (“HMC Investors”), a Delaware LLC, is the

Managing Member and has a 50% voting interest comprised of a 0.50% voting interest in its own

right and a 49.5% voting interest based on irrevocable proxies that other members of the

Offshore Manager have granted to HMC Investors; and (2) Philip A. Falcone is the Senior

Managing Director and has a 50% voting interest. HMC Investors is controlled by Raymond J.

Harbert, who has a voting interest in the company in excess of 50%.

Special Situations Fund. The Special Fund is a Delaware limited partnership whose

General Partner is Harbinger Capital Partners Special Situations GP, LLC (“SSGP”), a Delaware

LLC. Two members have voting control of SSGP: (1) HMC-New York, Inc. (“HMC-NY”), a

New York corporation, is the Managing Member and has a 50% voting interest; and (2) Philip A.

Falcone is the Senior Managing Director and also has a 50% voting interest. HMC-NY is a

wholly-owned subsidiary of Harbert Management Corporation, an Alabama corporation.

Harbert Management Corporation is controlled by Raymond J. Harbert, a U.S. citizen, who has a

voting interest in the company in excess of 50%. The limited partners of the Special Situations

Fund have no ability to control or be involved in the day-to-day business operations, activities or

decisions of Special Situations Fund.

Principal Places of Business

Annex 2 consists of principal place of business showings for the Master Fund, the Special

Situations Fund, Harbinger Capital Partners Offshore Fund I, Ltd., and Harbinger Capital

Partners Special Situations Offshore Fund, L.P. In every case, the principal place of business is

either the United States or a country that is a WTO signatory.

6

Conclusion

Under the Commission’s policies and precedents implementing Section 310(b)(4) of the

Communications Act, up to 100% ownership of SkyTerra by Harbinger would be consistent with

the public interest because: (1) U.S. citizens control the Master Fund and the Special Situations

Fund; (2) each of the Harbinger Funds has its principal place of business in the United States or a

WTO member country; and (3) all but a de minimis portion of the investments in the Harbinger

Funds are made by investors from the United States and other WTO Member countries.

7

Annex 1 to Petition for Declaratory Ruling:
Investor Interests in the Harbinger Funds
Harbinger Capital Partners Offshore Fund I, Ltd.
Category of Investor Aggregate Country of Citizenship/Country of
% Equity Organization/Principal Place of Business of
Beneficial Owner of Equity Interest
Individuals that are citizens of the 0.05% United States
United States
Individuals that are citizens of 0.37% Canada, , China, South Africa,
foreign countries United Kingdom, Switzerland
Banks, insurance companies, pension 4.20% United States
plans and foundations/endowments
organized in the United States and
controlled by U.S. citizens
Banks, insurance companies, pension 19.46% Australia, Bermuda, Cayman
plans and foundations/endowments Islands, Channel Islands, China,
controlled by foreign citizens or Finland, Hong Kong, Ireland, Isle
organized in foreign countries of Man, Luxembourg, Norway,
Sweden, Switzerland, , France,
The Netherlands, United
Kingdom
Private equity and mutual funds that 0.0% United States
are organized in the United States
and have their principal place of
business in the U.S.
Private equity and mutual funds that 0.0%
are organized in a foreign country or
have their principal place of business
in a foreign country
Any investors that do not fall into 0.66% United States
one of the foregoing categories that
are organized in the United States
and have their principal place of
business in the U.S.
Any investors that do not fall into 75.26% Arab Emirates, Australia,
one of the foregoing categories that Bermuda, Brazil, British Virgin
are organized in a foreign country or Islands, Canada, Cayman
have their principal place of business Islands, Channel Islands, Chile,
in a foreign country China, France, Hong Kong, Italy,
Isle of Man, Ireland, Japan,
Luxembourg, Norway, Panama,
Portugal, Singapore, Spain,
Sweden, Switzerland,
Netherlands Antilles, The
Bahamas, The Netherlands,
United Kingdom

Annex 1 to Petition for Declaratory Ruling:
Investor Interests in the Harbinger Funds

Harbinger Capital Partners Fund I, L.P.
Category of Investor Aggregate Country of Citizenship/Country of
% Equity Organization/Principal Place of
Business of Beneficial Owner of
Equity Interest
Individuals that are citizens of the 6.74% United States
United States
Individuals that are citizens of 0.0%
foreign countries
Banks, insurance companies, pension 13.01% United States
plans and foundations/endowments
organized in the United States and
controlled by U.S. citizens
Banks, insurance companies, pension 0.0%
plans and foundations/endowments
controlled by foreign citizens or
organized in foreign countries
Private equity and mutual funds that 0.0%
are organized in the United States
and have their principal place of
business in the U.S.
Private equity and mutual funds that 0.0%
are organized in a foreign country or
have their principal place of business
in a foreign country
Any investors that do not fall into 80.25% United States
one of the foregoing categories that
are organized in the United States
and have their principal place of
business in the U.S.
Any investors that do not fall into 0.0%
one of the foregoing categories that
are organized in a foreign country or
have their principal place of business
in a foreign country

2

Annex 1 to Petition for Declaratory Ruling:
Investor Interests in the Harbinger Funds

Harbinger Capital Partners Special Situations Fund, L.P.
Category of Investor Aggregate Country of Citizenship/Country of
% Equity Organization/Principal Place of
Business of Beneficial Owner of
Equity Interest
Individuals that are citizens of the 5.90% United States
United States
Individuals that are citizens of 0.0%
foreign countries
Banks, insurance companies, pension 3.98% United States
plans and foundations/endowments
organized in the United States and
controlled by U.S. citizens
Banks, insurance companies, pension 0.0%
plans and foundations/endowments
controlled by foreign citizens or
organized in foreign countries
Private equity and mutual funds that 0.0% United States
are organized in the United States
and have their principal place of
business in the U.S.
Private equity and mutual funds that 0.0%
are organized in a foreign country or
have their principal place of business
in a foreign country
Any investors that do not fall into 25.77% United States
one of the foregoing categories that
are organized in the United States
and have their principal place of
business in the U.S.
Any investors that do not fall into 64.35% Cayman Islands 1
one of the foregoing categories that
are organized in a foreign country or
have their principal place of business
in a foreign country

1 Information regarding the investors in this fund is set forth on p. 4 of this Annex 1.

3

Annex 1 to Petition for Declaratory Ruling:
Investor Interests in the Harbinger Funds

Harbinger Capital Partners Special Situations Offshore Fund, L.P.
Category of Investor Aggregate Country of Citizenship/Country of
% Equity Organization/Principal Place of
Business of Beneficial Owner of
Equity Interest
Individuals that are citizens of the 0.12% United States
United States
Individuals that are citizens of 0.36% Channel Islands, Germany,
foreign countries Switzerland
Banks, insurance companies, pension 14.04% United States
plans and foundations/endowments
organized in the United States and
controlled by U.S. citizens
Banks, insurance companies, pension 17.44% Cayman Islands, Finland,
plans and foundations/endowments Luxembourg, Netherland
controlled by foreign citizens or Antilles, Switzerland, The
organized in foreign countries Netherlands,
Private equity and mutual funds that 0.0% United States
are organized in the United States
and have their principal place of
business in the U.S.
Private equity and mutual funds that 0.0%
are organized in a foreign country or
have their principal place of business
in a foreign country
Any investors that do not fall into 1.97% United States
one of the foregoing categories that
are organized in the United States
and have their principal place of
business in the U.S.
Any investors that do not fall into 66.07% British Virgin Islands, Channel
one of the foregoing categories that Islands, , Canada, Cayman
are organized in a foreign country or Islands, Finland, Germany,
have their principal place of business Gibraltar, Guernsey, Ireland,
in a foreign country Italy, Liechtenstein, Luxembourg,
Norway, Panama, Switzerland,
The Netherlands

4

Annex 1 to Petition for Declaratory Ruling:
Investor Interests in the Harbinger Funds

Harbinger Capital Partners SSF CFF Fund, LTD
Category of Investor Aggregate Country of Citizenship/Country of
% Equity Organization/Principal Place of
Business of Beneficial Owner of
Equity Interest
Individuals that are citizens of the 0.0%
United States
Individuals that are citizens of 0.0%
foreign countries
Banks, insurance companies, pension 0.0%
plans and foundations/endowments
organized in the United States and
controlled by U.S. citizens
Banks, insurance companies, pension 20.41% Cayman Islands
plans and foundations/endowments
controlled by foreign citizens or
organized in foreign countries
Private equity and mutual funds that 0.0%
are organized in the United States
and have their principal place of
business in the U.S.
Private equity and mutual funds that 0.0%
are organized in a foreign country or
have their principal place of business
in a foreign country
Any investors that do not fall into 35.45% United States
one of the foregoing categories that
are organized in the United States
and have their principal place of
business in the U.S.
Any investors that do not fall into 44.14% Cayman Islands
one of the foregoing categories that
are organized in a foreign country or
have their principal place of business
in a foreign country

5

Annex 2 to Petition for Declaratory Ruling:
PRINCIPAL PLACE OF BUSINESS SHOWINGS

Harbinger Capital Partners Master Fund I, Ltd.

(i) Country of organization:
CAYMAN ISLANDS

(ii) Citizenship of investment principals, officers and directors:
UNITED STATES, IRELAND, UNITED KINGDOM

(iii) Location of world headquarters:
IRELAND

(iv) Location of tangible properties:
N/A

(v) Location of greatest sales and/or revenues:
N/A

Harbinger Capital Partners Special Situations Fund, L.P.

(i) Country of organization:
UNITED STATES

(ii) Citizenship of investment principals, officers and directors:
UNITED STATES

(iii) Location of world headquarters:
UNITED STATES

(iv) Location of tangible properties:
N/A

(v) Location of greatest sales and/or revenues:
N/A

-2-

Harbinger Capital Partners Offshore Fund I, Ltd.

(i) Country of organization:
CAYMAN ISLANDS

(ii) Citizenship of investment principals, officers and directors:
UNITED STATES, IRELAND, UNITED KINGDOM

(iii) Location of world headquarters:
IRELAND

(iv) Location of tangible properties:
N/A

(v) Location of greatest sales and/or revenues:
N/A

Harbinger Capital Partners Special Situations Offshore Fund, L.P.

(i) Country of organization:
CAYMAN ISLANDS

(ii) Citizenship of investment principals, officers and directors:
UNITED STATES

(iii) Location of world headquarters:
IRELAND

(iv) Location of tangible properties:
N/A

(v) Location of greatest sales and/or revenues:
N/A

-3-

Harbinger Capital Partners SSF CFF, Ltd.

(i) Country of organization:
CAYMAN ISLANDS

(ii) Citizenship of investment principals, officers and directors:
UNITED STATES, IRELAND, UNITED KINGDOM

(iii) Location of world headquarters:
IRELAND

(iv) Location of tangible properties:
N/A

(v) Location of greatest sales and/or revenues:
N/A

Annex 3
MASTER FUND OWNERSHIP DIAGRAM
Less Than 10% Equity
Raymond J. Harbert** Michael D. Luce Less Than 10% Owners
and Voting** Owners
U.S. Citizen U.S. Citizen All U.S. Citizens
All U.S. Citizens
54.98% 11.40% 11.40%

Harbert Management Corporation
(Alabama Corporation)
100.00% 54.98%
11.98% Equity
14.98% Vote**
HMC – New York, Inc. HMC Investors, LLC* Philip A. Falcone*
(New York Corporation) (Delaware LLC) (U.S. Citizen)

40.00% Equity 53.00% Equity 53.00% Equity
No Vote 50.00% Vote 50.00% Vote
Managing Member
0.40% Equity
50.00% Vote*** Managing Member
< 1% Equity;
50.00% Vote
Limited Partners are Widely
Harbinger Capital Partners Offshore Manager, LLC Harbinger Capital Partners GP, LLC Dispersed U.S. Citizens
(Delaware LLC) (Delaware LLC) All Below 10%

Five Investment Funds Ownership is Widely Directors
From the Bahamas Dispersed (U.S. and WTO William R. Lucas, Jr. (U.S. Citizen)
General
(Non-WTO) Citizens) All Below 10% Martin Byrne (Cayman Islands 86.80%
Partner
Resident; Irish Citizen) 13.20%
Ian Goodall (Cayman Island
Investment Resident; United Kingdom Citizen)
0.33% Manager 99.67%
No Equity

Harbinger Capital Partners Offshore Fund I, Ltd. Harbinger Capital Partners Fund I, L.P.
(Cayman Islands Exempted Company) (Delaware Limited Partnership)

84.05% 15.95%

Harbinger Capital Partners Master Fund I, Ltd.
(Cayman Islands Exempted Company)
* As the asset value of the fund increases, Philip A. Falcone’s proportion of profit allocation increases, and HMC Investors, LLC’s proportion of profit allocation decreases.
** These members have granted irrevocable proxies to HMC Investors, LLC to vote their respective membership interests, resulting in HMC Investors, LLC having 50.00% of the vote of
Harbinger Capital Partners Offshore Manager, LLC.
*** Comprised of a 0.50% voting interest in its own right and a 49.5% voting interest based on irrevocable proxies.
72523074.2

Annex 3
SPECIAL SITUATIONS FUND OWNERSHIP DIAGRAM

Raymond J. Harbert Michael D. Luce Less Than 10% Owners
U.S. Citizen U.S. Citizen All U.S. Citizens

54.98% 11.40%

Harbert Management Corporation
(Alabama Corporation)

100.00% 54.98% 11.40%

HMC – New York, Inc. HMC Investors, LLC* Philip A. Falcone*
(New York Corporation) (Delaware LLC) (U.S. Citizen)

Managing Member
< 1% Equity; 50.00% Vote 40.00% Equity 53% Equity
100.00% No Vote 50.00% Vote

Harbinger Capital Partners Special Situations Offshore GP, LLC Harbinger Capital Partners Special Situations GP, LLC
(Delaware LLC) (Delaware LLC)

Limited Partners
Widely Dispersed U.S. and WTO Citizens Limited Partners
All Below 10% Interest in Special Fund Widely Dispersed U.S. Citizens
All Below 10% in Special Fund

General Partner 100.00% 25.99% Harbinger Capital Partners
No Equity SSF CFF, Ltd.
General (Cayman Islands Exempted Company)
Harbinger Capital Partners Special Situations Offshore Fund, L.P. Partner
(Cayman Islands Limited Partnership) 9.67% 1.54%

62.80% Limited Partner * As the asset value of the fund increases,
Philip A. Falcone’s proportion of profit
Harbinger Capital Partners Special Situations Fund, L.P. allocation increases, and HMC Investors,
(Delaware Limited Partnership) LLC’s proportion of profit allocation decreases.

72523086.2

Annex 4 to Petition for Declaratory Ruling:
SALE RESTRICTIONS

Harbinger’s management has the ability to prevent limited partners from selling

their interests in the Master Fund and the Special Fund to third parties if the sales

would cause foreign ownership to exceed the levels permitted under Section 310(b) of

the Communications Act and declaratory rulings issued thereunder. Sales of limited

partnership interests in any of the following companies, and such sales are rare, are

subject to approval by Harbinger: Harbinger Capital Partners Fund I, L.P.; Harbinger

Capital Partners Special Situations Fund I, L.P.; and Harbinger Capital Partners Special

Situations Offshore Fund, L.P. Similarly, sales of shares in Harbinger Capital Partners

Offshore Fund I, Ltd. are subject to approval by Harbinger.

Annex 5 to Petition for Declaratory Ruling:
PROPOSED CONTROL OF MSV SUB BY THE HARBINGER FUNDS

Master Fund
Special Fund

Controlling Interest
Up to
100% Equity
100% Voting

SkyTerra

100% Equity
100% Voting
99.29% Equity
0% Voting

MSV GP

0% Equity
100% Voting

0.71% Equity
0% Voting
Other Members MSV LP

100% Equity
100% Voting

MSV Sub

Attachment C – U.K. Panel Case

Lyonnaise des Eaux for the Northumbrian Water Group

Document Created: 2008-08-22 15:41:58
Document Modified: 2008-08-22 15:41:58

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