SoftBank's (9984.T) bid to merge its satellite technology startup with Intelsat SA (I.N) teetered on Wednesday, as some Intelsat creditors held up the deal and a few made a last-minute offer to rescue it, people familiar with the matter said.
The merger is contingent upon an offer to Intelsat creditors to accept a $3.6 billion haircut on their bonds, which is set to expire on Thursday. Enough bondholders oppose the size of the haircut to block the deal, the sources said.
Late on Wednesday, a handful of Intelsat bondholders who were previously resisting the deal were putting together a counter proposal that would see them accept a haircut on their holdings, albeit smaller that what Intelsat and OneWeb had proposed, according to one of the sources.
It is unclear if this effort will salvage the deal. OneWeb and Intelsat will announce on Thursday if they are willing to extend their offer to Intelsat creditors any further or amend it, the sources said. OneWeb could decide to walk away from the deal and pursue another acquisition target, the sources added.
The sources asked not to be identified because the deliberations are confidential. SoftBank and OneWeb declined to comment, while Intelsat did not respond to requests for comment.
Luxembourg-based satellite operator Intelsat faces a deadline of May 29 to get its bondholders to trim some of the value of its $15 billion pile, under the terms of its original agreement with OneWeb in February.
Intelsat would have to launch an improved swap to its debt investors by next week to meet this deadline. It has already agreed to extend the offer to the creditors once before. The offer was previously due to expire April 20.
To be successful in consummating a deal with OneWeb, the company needs holders of at least 85 percent of the total face value of each series of Intelsat bonds to participate in the exchanges.
As part of the current deal, SoftBank will buy voting and non-voting shares in the combined company for $1.7 billion in cash and take a 39.9 percent voting stake. Shares that the Japanese conglomerate will buy in the combined company will be purchased for $5 per share.
OneWeb is among a handful of startups planning to build, launch and operate thousands of small satellites to provide internet access worldwide.
A merger of OneWeb and Intelsat, a satellite pioneer which broadcast Neil Armstrong's moon walk, could create a combined network of hundreds or even thousands of satellites in high and low altitudes around Earth.
(Reporting by Jessica DiNapoli in New York; Editing by Miral Fahmy)