SES/Intelsat - comment

We somehow struggle to see how a sovereign like Luxembourg will have itself diluted the way a US activist fund would like to see it. Management did emphasize on yesterday’s call that all excess cash flows would be prioritised for investors, comments that seem to have been addressed to Appaloosa. Taking the creditors’ perspective, we are not fans of such largesse. C-Band proceeds are effectively asset sales and should be reinvested to ensure value coverage at a time when the industry is going through a profound change and revenues are projected stable at best.

Luxembourg will prioritise control over dividends and so likely is throwing one bone to Appaloosa while keeping share classes as they are.