Friday August 20, 2010
By TEE LIN SAY
linsay@thestar.com.my
Private ownership expected to develop satellite company
KUALA LUMPUR: Insights into the satellite industry and more explanation on the rationale and financial aspects of the proposed takeover of Measat Global Bhd were revealed in the formal offer document released yesterday.
The satellite industry is dominated by a small number of large global operators with the scale to support the needs of global customers.
These operators are able to leverage on their strong capital structures and large satellite fleets to continue to develop new markets, the document stated.
It added that Measat, with a unique portfolio of global orbital slots, is well-positioned to develop a global footprint, serving customers across different continents.
But to take advantage of this, Measat needs to implement an appropriate capital structure which would facilitate rapid expansion of its satellite fleet, the document said, adding that Measat’s loan covenants currently restrict its ability to raise further substantial capital funding.
Hence the party making the take-over offer to shareholders, namely Measat Global Network Systems Sdn Bhd (MGNS) reckons that private ownership at this stage of Measat’s development will faciliate this.
To recap, tycoon Ananda Krishnan, via MGNS, has offered to buy all the shares in Measat that it does not own at RM4.20 per share. The offer values the company at RM1.64bil.
As of Aug 11, which was the last practicable date before the posting of the offer document, MGNS owned 59.56% of Measat.
It is understood that the independent advise for shareholder will be issued next week.
Meanwhile analysts are generally positive on the deal and are advising shareholders to take up the offer.
“Previously the stock had such a thin shareholding spread. It was illiquid and there was hardly any interest. That was why, it was always trading below its book value,” said one analyst who used to track Measat.
As at March 31, Measat’s book value was RM5.08.
“Measat’s fortunes may be turning with its new satellites. Still, without this deal, the share price would continue to be underwater,” added another fund manager who was involved in the original placement of Measat shares during its reverse takeover in 2002.
For investors who had picked up Measat shares that were hovering around RM1.80 to RM2 from late 2007 to February this year, they stand to at least double their returns from this takeover offer.
The offer document reveals that the offer price of RM4.20 represents a price earnings multiple of 9.22 times based on the audited earnings per share of 45.53 sen for Measat for its year ended Dec 31, 2009.
Measat has an enterprise value over ebitda (earnings before interest, taxation, depreciation and amotisation) multiple of 15.54 times, based on 2009 figures.
On a price to book ratio, Measat was trading at 3.82 times based on its 2009 figures. Over the last five years, no dividends have been paid.
Measat operates a network of four satellites with footprints over Asia and Africa serving customers in the broadcasting and telecommunications sector.
Based on its 2009 annual report, 63% of its revenue was derived from the broadcasting sector while the remainder from telecommunications.
Approximately 60% of Measat’s revenue came from Malaysia.
The history of Measat traces back to 1992 when Binariang Sdn Bhd – now Maxis Communications Bhd – brought together a team of experts to develop and launch Malaysia’s first communications satellite system.
Binariang Satellite Systems Sdn Bhd, a subsidiary of Binariang, was granted a licence in 1993 to develop the Malaysia East Asia Satellite (Measat) system.
In 1996, the Measat-1 and Measat-2 communications satellites were launched, providing satellite service across Southeast Asia. The third and fourth satellites Measat3 and Measat-3a were launched in 2006 and 2009, respectively, both serving the African continent and parts of Europe and the Middle East.
http://biz.thestar.com.my/news/story.asp?file=/2010/8/20/business/6886810&sec=business
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