There is a perhaps surprisingly strong underlying first quarter performance from British satellites designer and network operator Inmarsat (ISAT).
The headline figures show earnings before interest, tax, depreciation and amortisation (EBITDA) falling 13% to $152.4m on revenue that nudged up a fraction (1.5%) to $346.9m.
But strip out a lower contribution anticipated from Ligado, the former Lightsquared US business Inmarsat is tied into, underlying EBITDA increased 18.7% to $169.4m on an 11% rise in revenue.
INTERNET IN THE AIR
This is all being propped up by ongoing strong demand in the aviation arm, where it provides airline passengers with internet access, and reliable growth from government work. Maritime and enterprise services continue to fall.
Positive free cash flow of $96.2m in the three months to 31 March is a marked set-up from the $13.2m of cash burned through during the first quarter of 2018.
Yet the shares are virtually unchanged today, slipping 3.2p to 542p, leaving the business on a market value around the £2.53bn mark.
INVESTOR ATTENTION ELSEWHERE
The fact is that trading has become something of a sideshow for Inmarsat, which in the middle of being taken over by an assortment of private equity players.
In late March a consortium of private equity houses Apax, Warburg Pincus, the Canada Pension Plan Investment Board and Ontario Teachers' Pension Plan made an offer for the business worth 546p per share. It was recommended by Inmarsat’s board.
The deal is subject to a shareholder vote due to take place on 10 May, with completion likely sometime late this year.
That followed a failed takeover attempt last summer.
RIVAL BUYOUT?
There is a chance that the takeover is voted down, after all the shares have traded as high at £11 over the past few years, but that looks pretty unlikely. The other possible wild card could come if an alternative buyer emerges, offering a better deal to shareholders.
This possibility seemed to gather some momentum last week reports suggested that a counterbid was being mulled by another private equity consortium, comprising Centerbridge, Cerberus and Fortress. This appeared to rest largely on this group being large debt holders in Ligado, so any buyout would have been seen as a defensive, cover their backs-type move.
Ligado is ‘on the hook to Inmarsat for circa $12.1bn over the 89 years, or $58.4bn factoring in the 3% annual increase', calculate analysts at Megabuyte.
That offer has failed to materialise inching Inmarsat increasingly closer to equity investor irrelevance.
