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The Federal Communications Commission is weighing whether to force Inmarsat Ventures plc and Intelsat Ltd. to complete initial public offerings, a move that could complicate investment plans by U.S. and European private equity firms that have lavished billions of dollars to acquire the satellite operators. At issue is how the agency should interpret a law — called the Open-Market Reorganization for the Betterment of International Telecommunications Act — that ordered partially state-owned shareholders of Intelsat and Inmarsat to sell their stakes to private owners. Congress passed Orbit in 2000 to remedy concerns that Inmarsat and Intelsat had an unfair competitive advantage over private satellite companies, which were mostly owned by former telecom monopolies such as France T�l�com SA, Telenor ASA and Deutsche Telekom. The act, however, did not anticipate deals by private equity firms to buy the satellite companies. Apax Partners Worldwide LLP and Permira Advisers Ltd. acquired London-based Inmarsat last year for $1.5 billion. Apax, Permira, Apollo Management LP and Madison Dearborn Partners LLC earlier this year agreed to acquire Bermuda-based Intelsat for $5 billion, including $2 billion in debt. The FCC must rule on whether these transactions fulfill the requirement that Inmarsat and Intelsat stage IPOs. Each company contends that it complies with Orbit because their former government-controlled owners no longer hold a majority stake. It is unclear whether the statute requires either Inmarsat or Intelsat to take the entire company public. In other words, their PE owners could satisfy the law by launching an IPO only for a minority stake. Intelsat, formed in 1964, provides global Internet, television broadcasting and cellular telecommunications services. Inmarsat, formed in 1979, supplies communications systems for maritime, aeronautical and fleet industries. Inmarsat in February petitioned the FCC to rule that the company’s sale to Apax and Permira puts it in compliance with Orbit. If the agency rejects that request, Inmarsat would have to complete an IPO by Dec. 31. Intelsat, which filed for a public offering in May but abandoned the plan to gauge the interest of private buyers, is expected to file a similar petition, although it doesn’t need to complete an offering until December 2005. The FCC’s International Bureau is reviewing Inmarsat’s petition. But agency commissioners must vote on any final decision because the issue raises “new and novel” concerns, said agency spokeswoman Jacki Ponti. Inmarsat and Intelsat argue that recent debt offerings each has arranged fulfill Orbit’s requirements. Intelsat issued $1.1 billion in senior notes in November, according to the company’s second-quarter report. Inmarsat in the second quarter issued $102.5 million in senior notes and has roughly $478 million in notes outstanding. But critics, including rival satellite telecommunications companies such as SES Americom Inc. of Princeton, N.J., argue that debt offerings are insufficient and that Congress expected to make the companies more widely held through an IPO. Under Orbit, they noted, “The shares of any successor entities and separated entities shall be listed for trading on one or more major stock exchanges with transparent and effective securities regulation.” Rebecca Arbogast, an analyst at Legg Mason Inc. in Washington, said FCC officials are expected to contact the satellite companies in the next month if they are ruled to be in violation of Orbit. “In that instance, Inmarsat needs time to convince Congress to grant another extension,” she said. Copyright �2004 TDD, LLC. All rights reserved.

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