Attachment ex parte

ex parte

Ex PARTE PRESENTATION NOTIFICATION LETTER submitted by Inmarsat

ex parte

2004-06-21

This document pretains to SAT-MSC-20040210-00027 for Miscellaneous on a Satellite Space Stations filing.

IBFS_SATMSC2004021000027_380876

EX PARTE OR LATE FILED 555 Eleventh Street, N.W.. Suite 1000 Washington, D.C. 20004-1304 Tel: (202) 637-2200 Fax: (202) 637-2201 www.Iw.com FIRM I AFFILIATE OFFICES Boston New Jersey Brussels New York Chicago Northern Virginia RECEIVED Frankfurt Orange County Hamburg Paris Hong Kong San Diego June 10,2004 JUN 1 0 2004 London San Francisco Los Angeles Silicon Valley VtDERAL COMMUNICATIONS COMMIsioN Singapore Marlene H. Dortch OFFICE OF THE SECRETARY Moscow Tokyo Secretary Federal Communications Commission 445 12th Street, S.W. Washington, D.C. 20554 r Re: Ex Parte Submission File No. SAT-MSC-20040210-00027 Dear Ms. Dortch: In its exparte presentations in this proceeding, Inmarsat has explained that both the company and its board of directors had obligations under The City Code on Takeovers and Mergers (“U.K. Takeover Code” or “Code”)’ when presented with takeover proposals. The purpose of this letter is to briefly explain the application of the Code in Inmarsat’s case, and the means by which the takeover proposal was effectuated. Inmarsat Ventures was registered in the U.K. as a “plc,” a public limited company, in anticipation of its planned initial public offering of securities.2 In the U.K., all such “public companies,” regardless whether they have securities listed on an exchange, are subject to the Code.3 As a result, Inmarsat Ventures was subject to the Code when approached by private equity firms with takeover proposals. The Code seeks to establish standards of commercial behavior in the U.K. and provides a framework for the regulation of takeovers. It is designed to ensure fair and equitable 1 See http://www.thetakeoverpanel.org.uk. 2 See In the Matter of Comsat Corporation d/b/a Comsat Mobile Communications, et a]., 16 FCC Rcd. 21,661 at $I 8 (2001). As part of the U.K. court-approved takeover arrangement described below, and because Inmarsat Ventures became a wholly-owned subsidiary of Inmarsat Investments Limited, it was re-registered as Inmarsat Ventures Limited, a private company, effective as of December 17,2003. Inmarsat Finance plc, a wholly-owned finance subsidiary of Inmarsat Group Limited, was identified instead as the Inmarsat entity to issue public securities as part of the takeover transaction. 3 Code at A8.

Marlene H. Dortch June 10,2004 Page 2 L A T H A M & WAT K I N SLLP treatment of all shareholders, and to provide an orderly framework in which takeovers are c o n d ~ c t e d .A~ principal requirement of the Code is that directors, and their financial advisors, have a duty, above all, to act in the best interests of the shareholders of the corn pan^.^ The Code also mandates that any person who would acquire at least 30% of the voting shares of a company must also make offers to acquire the voting shares of all other shareholders on comparable terms.6 The Code provides for an offer to be made only when the offeror has every reason to believe that it will be able to implement its offer, and specifies that this responsibility also applies to the offeror's financial advisor. The Code further requires that an offer be fully funded, and include confirmation by the financial advisor (or another appropriate party) that financial resources are available to satisfy the offer if it is fully a ~ c e p t e d . ~ The Code expressly recognizes that its requirements will impinge on the freedom of boards in their actions related to takeover offers, and that it limits the manner in which the pursuit of the best interests of shareholders can be carried out.* Among other things, the Code prohibits taking certain actions during the course of an offer or if a bona fide offer is believed to be imminent, without the approval of shareholders in a general meeting, that could effectively result in any bona fide takeover offer being frustrated, or in the shareholders being denied the opportunity to make their own decision about a takeover offer on the merits.' The panel of experts that administers the Code cooperates with other regulatory bodies in the U.K., such as the Department of Trade and Industry, London Stock Exchange, the Bank of England, and the Financial Services Authority. This cooperation involves reporting breaches of the Code, conducting investigations, and enforcing sanctions." Sanctions can include, among other things, loss of access to the securities markets in the U.K., and loss of access to the services of financial professionals, such as investment bankers.'' Thus, in the U.K., under the Code, once Inmarsat's board approved and announced the Apax Partners and Permira final takeover offer, a series of events were set in motion to ensure that shareholders were able to make a prompt and informed decision, that the 4 Code at AI. 5 Code at B 1-2. 6 Code at F1. 7 Code at D5-6. 8 Code at B1. 9 Code at B2. IO Code at A3. II Code at AI -2,

Marlene H. Dortch June 10,2004 Page 3 L AT H A M a W AT K I N 5 LLP interests of all the shareholders were taken into account, and that the shareholders were able to realize the benefits of that offer if they so choose. As part of their offer, Apax Partners and Permira established a number of companies that would serve as the vehicle through which they would acquire control of Inmarsat. These entities, known as Duchessgrove Limited, Lavenderview Limited, Grapedrive Limited, and Grapeclose Limited (the latter being the “Takeover Entity” and together known as the “Takeover Entities”) are described in greater detail in the Scheme ofArrangement previously submitted into the record.I2 The Takeover Entities entered into various contractual commitments (i) establishing the terms of the takeover offer by the Takeover Entity as well as the means by which it would be financed, and (ii) constituting part of the documentation through which the takeover offer was made and the takeover would be effectuated, if approved. First, certain of the Takeover Entities executed financing arrangements with various lenders to fund the proposed acquisition, the adequacy of which was confirmed by their financial advi~0r.I~ Among those executed arrangements was the Mezzanine Loan Facility, dated October 10,2003, with Credit Suisse First Boston, and other in~tituti0ns.l~ That agreement provided for the $365 million bridge loan that would be used to fund, in part, the proposed takeover. That agreement also contractually committed the Takeover Entities to refinance the bridge loan through a public offering of high yield notes (debt securities) that would be managed by the lenders.I5 To ensure the lenders received the benefit of their bargain, that agreement imposed significant financial consequences if the Takeover Entities did not effectuate such a public offering of securities.16 As mentioned above, this funding was required by the Code to be in place on the making of the firm offer by Apax Partners and Pennira. Second, the Takeover Entities and Inmarsat Ventures plc (now Inmarsat Ventures Limited), among others, executed a Shareholders Agreement, on October 16, 2003,17 which committed Inmarsat Ventures plc to take the various actions required by the financing See Inmarsat Scheme of Arrangement at 20 attached to Ex parte Submission, File No. SAT-MSC-200402 10-00027 (filed May 26,2004) (“Scheme ofArrangernent”), These entities were renamed Inmarsat Group Holdings Limited, Inmarsat Holdings Limited, Inmarsat Group Limited, and Inmarsat Investments Limited, respectively. l3 See Scheme of Arrangement at 91-92. 14 See Mezzanine Loan Facility Agreement attached to Exparte Submission, File No. SAT- MSC-20040210-00027 (filed June 8, 2004) (“Mezzanine Loan Facility”). l5 Mezzanine Loan Facility $9 21.3 and 21.4. 16 Mezzanine Loan Facility 9 I 1.2. l7 See Shareholders Agreement attached to Ex parte Submission, File No. SAT-MSC- 200402 10-00027 (filed May 26, 2004) (the “Shareholders Agreement”).

Marlene H. Dortch June I O , 2004 Page 4 L AT H A M& W AT K I N S LLP arrangements, including the Mezzanine Loan Facility,” and specifically required Inmarsat Ventures plc to comply with the covenants regarding the issuance of the high yield notes.” Next, consistent with this established U.K. process, within a week after having established the terms of the Apax Partners and Permira offer, on October 22,2003, the Inmarsat Board provided the requisite notice to its shareholders, describing the terms of the takeover, and expressing its determination that, upon advice from Morgan Stanley & Co. Limited, the price offered was fair. A requisite court meeting was set for December 1,2003 at which the shareholders had the opportunity pass a resolution approving, or disapproving, the takeover offer. Following that court meeting, an extraordinary general meeting of Inmarsat shareholders was scheduled where the shareholders needed to pass a special resolution if they approved the takeover offer. The requisite shareholder consent was received in each case. About two weeks thereafter, on December 16,2003, a formal court hearing was held approving the means by which the takeover would be implemented. On December 30, 2003, the transaction fully funded, and funds under the Mezzanine Loan Facility, together with other funds sources, were drawn down to pay the consideration due under the terms of the takeover. Five weeks later, on February 3, 2004, Inmarsat fulfilled its obligations regarding the Mezzanine Loan Facility by repaying its bridge loan with the proceeds from its sale of high yield notes,20which were listed for trading on the Luxembourg Stock Exchange as of February 27,2004. The Inmarsat Board was unable, however, to make a full assessment of the ORBIT Act issues, and meaningful guidance from the Commission could not be obtained, until early 2004, because all of the relevant details would not be known until such time as the Inmarsat shareholders decided whether to approve the transaction and whether to reinvest in new Inmarsat, after the U.K. court approval was obtained, and after the terms of the lnmarsat public debt securities were finally established. Until then, the Inmarsat Board could not know the level of dilution that would be achieved,*’ or be sure about the stock exchange on which the See Shareholders Agreement 3 3.16. l9 See Shareholders Agreement 0 2.4.9. 2o See Inmarsat’s February 10,2004 letter to Marlene H. Dortch, Secretary, Federal Communications Commission, File No. SAT-MSC-200402 10-00027, Attachment B at 36. 21 Prior to the planned December 2003 vote, three shareholders had given irrevocable undertakings and statements of intent to support the takeover offer, subject to certain conditions. But they did not commit to sell their shares if the offer was not approved by the other shareholders. The offer provided that they retained the option to “rollover” their interests into new Inmarsat, as one of those three did.

Marlene H. Dortch June 10,2004 Page 5 L A T H A M& W A TK I N SLLP forthcoming debt securities would be listed, or the nature of securities regulation to which Inmarsat would be subject. All of this information was promptly provided to the Commission in Inmarsat’s February 10, 2004 letter informing the Commission of this transaction. Respectfully submitted, I John P. Janka Alexander D. Hoehn-Saric LATHAM& WATKINS LLP 555 1 ~ t Street, h N.w., Suite 1000 Washington, D.C. 20004 (202) 637-2200 (phone) (202) 637-2201 (fax) Counselfor INMARSAT VENTURES LIMITED cc: Neil Dellar Stephen Dual1 Eliot Greenwald Dan Harrold Bruce Henoch David Horowitz Bruce Jacobs Andrea Kelly Karl Kensinger Selina Khan JoAnn Lucanik Alfred Mamlet Marilyn Simon Phil Spector Cassandra Thomas Tom Tycz Qualex International

CERTIFICATE OF SERVICE I hereby certify that on this lothday of June, 2004, I caused a true copy of the foregoing ''EXParte Submission" to be served by first-class mail and, where noted, by hand (*) on the following: Neil Dellar" Office of General Counsel Federal Communications Commission 445 1 2 ' ~Street, S.W. Washington, DC 20554 Stephen Duall* Satellite Division International Bureau Federal Communications Commission 445 1 2 ' ~Street, S.W. Washington, DC 20554 Dan Harrold * Office of General Counsel Federal Communications Commission 445 1 2 ' ~Street, S.W. Washington, DC 20554 David Horowitz* Office of General Counsel Federal Communications Commission 445 1 2 ' ~Street, S.W. Washington, DC 20554 Andrea Kelly* Satellite Division International Bureau Federal Communications Commission 445 lYh Street, S.W. Washington, DC 20554 Karl Kensinger* Satellite Division International Bureau Federal Communications Commission 445 1 2 ' ~Street, S.W. Washington, DC 20554

Selina Khan* Satellite Division International Bureau Federal Communications Commission 445 1 2 ' ~Street, S.W. Washington, DC 20554 JoAnn Lucanik* Policy Division International Bureau Federal Communications Commission 445 1 2 ' Street, ~ S.W. Washington, DC 20554 Marilyn Simon" Satellite Division International Bureau Federal Communications Commission 445 lYh Street, S.W. Washington, DC 20554 Cassandra Thomas* Satellite Division International Bureau Federal Communications Commission 445 1 2 ' Street, ~ S.W. Washington, DC 20554 Tom Tycz* Satellite Division International Bureau Federal Communications Commission 445 lYhStreet, S.W. Washington, DC 20554 Eliot Greenwald Swidler Berlin Shereff Firedman, LLP 3000 K Street, N.W., Suite 300 Washington, DC 20006 Counselfor Deere & Company 2

Bruce Henoch Assistant General Counsel Telenor Satellite Services, Inc. 1101 Wootton Parkway, 1Oth Floor Rockville, MD 20852 Counselfor Telenor Satellite Services, Inc. Bruce D. Jacobs Shaw Pittman LLP 2300 N Street, N.W. Washington, DC 20037 Counself o r Mobile Satellite Ventures Subsidiary LLC Alfred M. Mamlet Steptoe & Johnson LLP 1330 Connecticut Avenue, N.W. Washington, DC 20036-1795 Counsel for Stratos Mobile Networks Inc. and Stratos Communications, Inc. Phillip L. Spector Paul, Weiss, Rifkind, Wharton & Garrison LLP 1615 L Street, N.W. Suite 1300 Washington, DC 20036 Counsel for SES Americom Qualex International" Portals I1 Room CY-B402 445 1 2 ' ~Street, S.W. Washington, DC 20554 3


Document Created: 2004-06-21 16:58:17
Document Modified: 2004-06-21 16:58:17
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