Stratos to be Acquired by CIP Canada Investment Inc.


BETHESDA, MD, March 19 -- Stratos Global Corp. (TSX: SGB), the leading provider of advanced mobile and fixed-site remote communications solutions, today announced that it has entered into a definitive agreement to be acquired by CIP Canada Investment Inc. ("CIP Canada"), a wholly owned subsidiary of Communications Investment Partners Limited ("CIP"), a professional investment company with a focus on satellite services. Until at least April 2009, an independent Canadian trust established by CIP Canada will hold the Stratos shares and exercise sole voting control over Stratos.

Under the terms of the agreement, CIP Canada would acquire beneficial ownership of 100 percent of Stratos Global ("Stratos") through a Plan of Arrangement under the Canada Business Corporations Act for a cash purchase price of C$6.40 per share. The purchase price represents a premium of 7 percent compared with the closing price of Stratos shares on March 8 (the "unaffected price"), the day before an article appeared in The Globe & Mail highlighting the possibility of a sale of Stratos. The premium is 15 percent compared with the most recent 30-day average through March 8 and 25 percent compared with the 90-day average through that date. The total transaction value, including the assumption of net debt, is US$576 million at current exchange rates.

The transaction will be indirectly financed by a wholly owned subsidiary of Inmarsat plc, Inmarsat Finance III Limited ("Inmarsat Finance"). There is no financing condition to the obligations of CIP Canada to consummate the transaction. Arrangements and plans are in place from third parties and Inmarsat Finance to address any debt refinancing requirements at Stratos. Inmarsat Finance will have a call option exercisable beginning in April 2009, and expiring in December 2010, to acquire 100 percent of Stratos from CIP, but will not have any legal ownership in, or managerial control of Stratos.

"After careful consideration, the Stratos Board of Directors unanimously concluded that this is the right transaction for Stratos' shareholders, customers, partners, and employees," said Charles Bissegger, Stratos' chairman of the Board of Directors. "This transaction will allow Stratos to remain as an independent company executing its strategy through April 2009, and will promote stability of our business in the post-April 2009 period when our existing distribution agreements with Inmarsat come up for renewal," added James Parm, Stratos' president and chief executive officer.

Following closing, Stratos will continue to have a Board of Directors comprised of a majority of independent, non-executive directors, and key management is expected to remain with Stratos. None of the directors will be selected by or affiliated with Inmarsat or CIP.

The Plan of Arrangement will require approval by an Ontario court and by 66-2/3 percent of votes cast at a special meeting of Stratos shareholders. A Stratos Management Proxy Circular detailing the terms of the transaction and the date of the special shareholders meeting is expected to be mailed to Stratos shareholders in late April 2007. The transaction will also be subject to customary conditions and regulatory approvals, including any applicable clearances under competition laws and the Federal Communications Commission. The transaction is expected to close in the third quarter of 2007.

Bear, Stearns & Co. Inc. acted as financial advisor to the Special Committee of the Board of Directors of Stratos and RBC Capital Markets acted as financial advisor to Stratos. Both firms provided fairness opinions to the Board of Directors indicating that the cash consideration to be received in the transaction is fair from a financial point of view to Stratos shareholders.

About Stratos

Stratos Corporation (www.stratosglobal.com) is a publicly traded company (TSX: SGB) and the leading global provider of a wide range of advanced mobile and fixed-site remote communications solutions for users operating beyond the reach of traditional networks. With its owned-and-operated infrastructure and extensive portfolio of industry-leading satellite and microwave technologies, including Inmarsat, Iridium, Globalstar, MSAT, VSAT, and others, Stratos serves the voice and high-speed data connectivity requirements of a diverse array of markets, including government, military, energy, industrial, maritime, aeronautical, enterprise, media, and recreational users throughout the world.

About CIP

Communications Investment Partners Limited ("CIP") is a professional investment company incorporated in 2006. The directors of CIP collectively have more than 50 years of experience as directors of and advisors to satellite services companies in both the mobile satellite and fixed satellite services sectors.

Source: Stratos Global Corporation

More from Agricultural & Farming Products

All Topics