Primstar buys ASkyB
"A PRIMESky B"
PRIMESTAR reports that a binding letter has been signed
for the restructuring of PRIMESTAR Partners L.P.
Simultaneously, PRIMESTAR Partners, L.P. has entered into an
agreement to combine the assets of PRIMESTAR, Inc. with
According to terms of the agreements, each partner
company involved in PRIMESTAR, including TSAT, Time Warner
Satellite Services, Newhouse, Cox, Comcast, MediaOne
(formerly Continental) and GE Americom, will contribute
their PRIMESTAR customers and partnership interests into the
newly formed, public entity of PRIMESTAR, Inc.
Additionally, ASkyB will contribute its two satellites
currently under construction as well as the license to
operate at the 110 degree West Longitude orbital location
using 28 transponder channels.
Primestar and Tempo Satellite have agreed to dispose of
their rights in the license to operate 11 transponder
channels at the 119 West Longitude orbital slot.
Concurrently, ASkyB has agreed to sell its Gilbert,
Arizona satellite uplink facility to Tele-Communications,
Inc. for a purchase price which represents ASkyB's
investment in the facility, plus related interest expense.
ASkyB will independently sell two additional satellites
which are under construction.
Current TSAT shareholders will retain approximately 37
percent ownership of PRIMESTAR, Inc., with Time Warner
Satellite Services/Newhouse (approximately 30 percent),
Comcast (approximately 10 percent), MediaOne (approximately
10 percent), Cox (approximately 9 percent), and GE Americom
(approximately 4 percent) rounding out the ownership group.
ASkyB, in return for its contribution of assets, will
receive non-voting convertible securities with a total
liquidation value of approximately $1.1 billion; comprised
of approximately $600 million liquidation value of non-
voting convertible preferred stock (convertible into
approximately 52 million shares of non- voting common,
subject to adjustment) and approximately $500 million of
convertible subordinated notes (convertible into
approximately 43 million shares of non-voting common,
subject to adjustments).
Existing TSAT shareholders will exchange their current
TSAT shares for shares of the new PRIMESTAR, Inc. on a one-
to-one basis. For other contributing partners,
approximately 132 million new shares of stock are expected
be issued to meet the terms of the agreement, combined with
approximately 67 million TSAT shares currently outstanding
(76 million on a fully diluted basis). Each contributing
partner will receive a combination of equity ownership of
PRIMESTAR, Inc. and cash, with TSAT shareholders receiving
equity in PRIMESTAR, Inc., all subject to closing
The board of directors of the newly-structured
PRIMESTAR, Inc. will consist of eleven representatives;
three chosen by TSAT's series B shareholders, three chosen
by Time Warner Satellite Services, one each chosen by Cox,
Comcast, and MediaOne and two independent members.
Jim Gray, PRIMESTAR Partners' current Chairman and CE0
will be appointed Chairman and CE0 of PRIMESTAR, Inc. until
the transition to the new company has been completed. An
executive search will commence immediately for a new CEO to
lead the venture. Dan O'Brien, current President of Time
Warner Satellite Services, has been named to the position of
President and COO of PRIMESTAR, Inc.
John Goddard, formerly CEO of Viacom Cable and
currently serving on TSAT's board of directors, will lead a
transition committee including Mr. Howard, Mr. Gray and Mr.
O'Brien, which has been charged with determining the final
management structure for PRIMESTAR, Inc., as well as the
location of the business offices.
Completion of the agreement is contingent on approval by
TSAT shareholders and all necessary government and
(c) Satellite Journal International 1991-97
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