A special purpose acquisition company (SPAC) sponsored by investment bank Greenhill & Company has agreed a $591 million (€402 million) merger with satellite phone company Iridium Holdings.
If approved by a majority of shareholders in blank cheque company GHL Acquisition, current Iridium shareholders will receive roughly $77 million in cash and 36 million common shares of the combined entity, which GHL plans to rename Iridium Communications and list on the Nasdaq stock exchange, according to a statement issued by the SPAC.
GHL will also pay $324 million to retire Iridium’s current net indebtedness of $131 million, pay transaction related expenses including deferred compensation to GHL underwriters and be used for general corporate purposes and capital expenditures.
If the transaction is successfully completed, GHL existing stockholders will own roughly 55 percent of the
Iridium: largest satellite
combined entity’s common shares, while Iridium’s current shareholders will hold 42 percent.
Publicly-listed investment bank Greenhill, which owns roughly 17.5 percent of the stock in GHL, has separately agreed to invest $23 million in Iridium convertible debt prior to completion of the transaction, for which it will receive roughly 2.3 million common shares of the combined company.
It was unclear at press time from which internal unit Greenhill would make the investment. Greenhill's private equity arm, Greenhill Capital Partners, was established in 2000 and focuses on the financial services, energy and telecommunications industries. It manages two funds that together are worth approximately $1.3 billion.
Greenhill Capital Partners managing director Scott Bok sits on GHL's board of directors, and Robert Niehaus, founder of the private equity unit, is slated to become Iridium's chairman.
The deal is one of the largest SPAC acquisitions to be made in recent months, as the merger and acquisitions market has withered and hedge funds, typically the largest holders of blank cheque stock, have backed away from the vehicles.
Bethesda, Maryland-based Iridium specialises in global satellite voice and data communication services in areas were landlines and terrestrial-based wireless services are unavailable. The company, which boasts 305,000 subscribers, owns 66 low-earth orbiting satellites as part of its network, the largest commercial satellite constellation in world.
Iridium’s wireless technology has been used in the maritime, aviation, mining, forestry, oil and gas, humanitarian services, and utilities industries.
Greenhill debuted GHL on the New York Stock Exchange in February, raising $400 million in gross proceeds. Banc of America Securities underwrote the initial public offering.
Greenhill has avoided most of the panic in the public markets that has brought down many of its larger investment banking brethren in recent weeks.
At press time, the New York-based company was trading at $73 per share, up roughly 7 percent over the last 30 days.