PRER14A
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AMENDMENT NO. 1

TO

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

 

 

Filed by the Registrant  ☒                            Filed by a Party other than the Registrant  ☐

Check the appropriate box:

 

  Preliminary Proxy Statement
  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
  Definitive Proxy Statement
  Definitive Additional Materials
  Soliciting Material under Rule 14a-12

 

 

LOGO

VIASAT, INC.

(Name of Registrant as Specified in its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

  No fee required.
  Fee paid previously with preliminary materials.
 

Fee computed on table in exhibit required by Item 25(b) per Exchange Act Rules 14a-6(i)(1) and 0-11.

 

 

 


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LOGO    NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

Meeting Information

 

DATE:

[●], 2022

 

TIME:

[●] [a.m.] Pacific Time

  

PLACE:

Virtual Meeting

  

RECORD DATE:

[●], 2022

Dear Fellow Stockholder:

You are cordially invited to attend a special meeting of stockholders, which will be held on [●], 2022 at [●] [a.m.] Pacific Time. This special meeting will be a completely virtual meeting of stockholders. We are hosting the special meeting exclusively online via live webcast to safeguard the health and well-being of our stockholders and employees in light of the ongoing public health impact of the coronavirus (COVID-19) pandemic. To participate, vote or submit questions during the special meeting via live webcast, please visit: www.virtualshareholdermeeting.com/VSAT2022SM. There will not be a physical location for the special meeting.

On November 8, 2021, we entered into a Share Purchase Agreement (the Purchase Agreement), which provides for, among other things, our acquisition of all of the issued and outstanding ordinary shares of Connect Topco Limited, a private company limited by shares and incorporated in Guernsey (Inmarsat Holdings), for consideration comprising $850.0 million in cash, subject to adjustments, and approximately 46.36 million shares of Viasat common stock (the Transaction).

On the terms and pursuant to the conditions contained in the Purchase Agreement, the existing shareholders of Inmarsat Holdings and management and employees who hold options and shares of a subsidiary of Inmarsat Holdings (collectively, the Sellers) will sell to us, and we will purchase, accept and pay for, in each case, at the consummation of the transactions contemplated by the Purchase Agreement, all of the issued and outstanding shares of Inmarsat Holdings, free and clear of all encumbrances. The purchase price that we will pay for the Inmarsat Holdings shares is approximately $3.95 billion consisting of: (i) an amount in cash equal to $850.0 million (the Base Cash Consideration), subject to adjustments, and (ii) 46,363,636 fully paid, validly issued and non-assessable shares of Viasat common stock (the Stock Consideration), valued at approximately $3.1 billion based on the closing price of $67.00 per share of Viasat common stock on the Nasdaq Stock Market LLC (Nasdaq) on November 5, 2021 (the last trading day prior to the execution of the Purchase Agreement). The Base Cash Consideration is subject to certain adjustments, including for certain dividends, distributions, certain payments to or other transactions with the Sellers and their affiliates, Seller transaction costs and retention bonuses in excess of specified aggregate amounts, transaction bonuses (if any), certain taxes and similar items, as set forth in the Purchase Agreement.

Viasat common stock is listed on Nasdaq under the ticker symbol “VSAT.” As a result, we are subject to Rule 5635(a) of the Nasdaq Stock Market Rules, pursuant to which stockholder approval is required prior to the issuance of securities in connection with certain acquisitions of stock or assets of another company where the issuance equals 20% or more of the common stock or voting power outstanding before such issuance. We expect that the shares of Viasat common stock to be issued pursuant to the Purchase Agreement will represent approximately 38% of outstanding Viasat common stock upon issuance (or approximately 37% on a fully diluted basis).

Accordingly, we are holding the special meeting for stockholders to consider and vote upon the following:

 

  1.

A proposal to approve, for purposes of complying with Rule 5635(a), the issuance of shares of Viasat common stock in connection with the Transaction that equal more than 20% of the total issued and outstanding Viasat common stock (the Stock Issuance Proposal).

 

  2.

A proposal to approve an amendment to our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance from 100,000,000 to 200,000,000 (the Charter Amendment Proposal).


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  3.

A proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal (the Adjournment Proposal).

These items are fully described in the proxy statement, which is part of this notice.

We are providing the accompanying proxy statement and accompanying proxy card to our stockholders in connection with the solicitation of proxies to be voted at the special meeting (including following any adjournments or postponements of the special meeting). Information about the special meeting, the Transaction and other related business to be considered by our stockholders at the special meeting is included in this proxy statement. Whether or not you plan to attend the special meeting, we urge all stockholders to read this proxy statement, including the Annexes and the accompanying financial statements of Inmarsat Holdings and pro forma financial information, carefully and in their entirety. In particular, we urge you to read carefully the section entitled “Risk Factors” beginning on page 22 of this proxy statement.

After careful consideration, our Board of Directors (the Board) has unanimously approved the Purchase Agreement and the transactions contemplated therein, including the issuance of the Stock Consideration to the Sellers and the amendment to our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance, and unanimously recommends that our stockholders vote “FOR” the approval of the Stock Issuance Proposal, the Charter Amendment Proposal and the Adjournment Proposal. When you consider the Board’s recommendation of these proposals, you should keep in mind that our directors and officers have interests in the Transaction that may conflict with your interests as a stockholder. Please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Transaction—Interests of Certain Persons in the Transaction” for additional information.

The Stock Issuance Proposal and the Adjournment Proposal each requires the affirmative vote of a majority of the votes cast by holders of outstanding shares of Viasat common stock present in person or represented by proxy, assuming a quorum is present. The Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of Viasat common stock entitled to vote thereon, assuming a quorum is present.

Your vote is very important. Whether or not you plan to attend the special meeting, please vote as soon as possible by following the instructions in this proxy statement to make sure that your shares are represented at the special meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the special meeting. The transactions contemplated by the Purchase Agreement and the closing of the Transaction will be consummated only if the Stock Issuance Proposal and Charter Amendment Proposal are approved at the special meeting. It is important for you to note that if either the Stock Issuance Proposal or the Charter Amendment Proposal does not receive the requisite vote for approval, we will not be able to consummate the transactions contemplated by the Purchase Agreement. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement and no proposal is conditioned on the approval of the Adjournment Proposal.

If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the special meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the special meeting virtually, the effect will be that your shares will not be counted for purposes of determining whether a quorum is present at the special meeting. In addition, your failure to vote by proxy or to vote in person at the special meeting (or failure to instruct your bank, broker or other nominee how to vote) will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.


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All stockholders of record as of [●], 2022, the record date, are entitled to vote at the special meeting. Your vote is very important. Whether or not you expect to attend the virtual special meeting, please vote via one of the methods specified below as soon as possible to ensure that your shares are represented at the special meeting.

How to Vote Prior to the Special Meeting

 

LOGO   LOGO   LOGO
Call the telephone number specified on your proxy card or voting instruction form provided by your bank or broker   Sign, date and return your proxy card or voting instruction form in the postage-paid envelope provided  

Follow the instructions in your proxy card or voting instruction form to vote at www.proxyvote.com prior to 11:59 p.m. Eastern Time on

[●], 2022

 

 

By Order of the Board of Directors

 

 

/s/ Richard Baldridge

Richard Baldridge

President, Chief Executive Officer and Board Director

Carlsbad, California

[●], 2022

YOUR VOTE IS IMPORTANT.

WHETHER OR NOT YOU PLAN TO ATTEND THE VIRTUAL SPECIAL MEETING,

PLEASE SIGN, DATE AND RETURN THE ACCOMPANYING PROXY CARD.


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TABLE OF CONTENTS

 

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

     1  

SUMMARY TERM SHEET

     1  

QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

     4  

About the Special Meeting and Voting

     4  

PROXY STATEMENT SUMMARY

     12  

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

     21  

RISK FACTORS

     22  

Risks Relating to the Transaction

     22  

Risks Relating to Our Business

     30  

Risks Relating to Inmarsat Group’s Business

     30  

PROPOSAL 1: STOCK ISSUANCE PROPOSAL

     35  

Overview

     35  

The Purchase Agreement

     35  

Related Agreements

     45  

The Transaction

     47  

Why We Need Stockholder Approval

     82  

Effect of Proposal on Current Stockholders

     83  

Vote Required for Approval

     83  

Recommendation of Our Board

     83  

PROPOSAL 2: CHARTER AMENDMENT PROPOSAL

     84  

Overview

     84  

Vote Required for Approval

     84  

Recommendation of Our Board

     84  

PROPOSAL 3: ADJOURNMENT PROPOSAL

     85  

Overview

     85  

Vote Required for Approval

     85  

Recommendation of Our Board

     85  

INFORMATION ABOUT VIASAT

     86  

Overview

     86  

Satellite Services

     86  

Commercial Networks

     87  

Government Systems

     88  

Additional Information

     89  

INFORMATION ABOUT INMARSAT GROUP

     90  

Overview

     90  

Operations

     90  

INMARSAT MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     93  

UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS

     112  

OWNERSHIP OF SECURITIES

     128  

Beneficial Ownership Table

     128  

APPRAISAL RIGHTS

     130  

HOUSEHOLDING INFORMATION

     130  

TRANSFER AGENT AND REGISTRAR

     130  

SUBMISSION OF STOCKHOLDERS PROPOSALS

     130  

OTHER MATTERS

     131  

WHERE YOU CAN FIND ADDITIONAL INFORMATION; INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

     131  

INDEX TO CONSOLIDATED FINANCIAL INFORMATION

     F-1  

ANNEX A: PURCHASE AGREEMENT

     A-1  

ANNEX B: OPINION OF OUR FINANCIAL ADVISOR

     B-1  

ANNEX C: FORM OF STOCKHOLDERS AGREEMENT

     C-1  

ANNEX D: FORM OF REGISTRATION RIGHTS AGREEMENT

     D-1  

ANNEX E: FORM OF VOTING AGREEMENTS

     E-1  

ANNEX F: FORM OF AMENDMENT TO CERTIFICATE OF INCORPORATION

     F-1  
 

 

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LOGO    PROXY STATEMENT

6155 El Camino Real

Carlsbad, California 92009

The Board of Directors of Viasat, Inc. is soliciting the enclosed proxy for use at the special meeting of stockholders to be held on [●], 2022 at [●] [a.m.] Pacific Time, and at any adjournments or postponements of the meeting, for the purposes set forth in the notice of special meeting of stockholders. This special meeting will be a completely virtual meeting of stockholders and will be accessible via the internet at www.virtualshareholdermeeting.com/VSAT2022SM.

SUMMARY TERM SHEET

This summary term sheet, together with the sections entitled “Questions and Answers About the Proposals for Stockholders” and “Proxy Statement Summary,” summarizes certain information contained in this proxy statement, but does not contain all of the information that is important to you. You should read carefully this entire proxy statement, including the attached Annexes, for a more complete understanding of the matters to be considered at the special meeting.

 

Meeting Information

 

Items to be Voted On

Meeting: Special meeting of stockholders

Date: [●], 2022

Time: [●] [a.m.] Pacific Time

Location: Virtual meeting only, accessible at www.virtualshareholdermeeting.com/VSAT2022SM

Record Date: [●], 2022

 

1.  Stock Issuance Proposal

•  Board recommendation: FOR

2.  Charter Amendment Proposal

•  Board recommendation: FOR

3.  Adjournment Proposal

•  Board recommendation: FOR

Viasat is a global communications company. We are an innovator in communications technologies and services, focused on making connectivity accessible, available and secure for all. Our end-to-end platform of high-capacity Ka-band satellites, ground infrastructure and user terminals enables us to provide cost-effective, high-speed, high-quality broadband solutions to enterprises, consumers, military and government users around the globe, whether on the ground, in the air or at sea. In addition, our government business includes a market-leading portfolio of military tactical data link systems, satellite communication products and services and cybersecurity and information assurance products and services. For more information about us, please see the section entitled “Information About Viasat.”

Inmarsat Holdings is the indirect parent company of Inmarsat Group Holdings Limited (formerly known as Inmarsat plc, which we refer to in this proxy statement as “Inmarsat”), which Inmarsat Holdings acquired on December 4, 2019. We use the term “Inmarsat Group” in this proxy statement to refer to Inmarsat Holdings and its subsidiaries for all periods from and after the acquisition of Inmarsat in December 2019, and to refer to Inmarsat and its subsidiaries for periods prior to the acquisition. Inmarsat Group is an innovative, global provider of mobile satellite services, serving the maritime, government, aviation and enterprise sectors through multiple owned and operated satellite networks comprised of 15 satellites as well as ground infrastructure and user terminals. Inmarsat Group has over 40 years’ experience in designing and operating satellite-based networks. Inmarsat Group specializes in connecting commercial mobility and government customers, particularly vessels, aircraft, vehicles and people, often in areas that conventional telecommunications networks cannot reach. Inmarsat Group offers a diverse portfolio of secure, resilient mobile satellite communications services across the globe, supporting mission critical operational systems, essential safety communications, core office applications, a growing range of Internet of Things (IoT) applications and in-flight connectivity. For information about Inmarsat Group, please see the section entitled “Information About Inmarsat Group.

 

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On November 8, 2021, we entered into a Share Purchase Agreement (the Purchase Agreement), which provides for, among other things, our acquisition of all of the issued and outstanding ordinary shares of Inmarsat Holdings for consideration comprised of $850.0 million in cash, subject to adjustments, and approximately 46.36 million shares of Viasat common stock, par value $0.0001 per share.

 

   

On the terms and pursuant to the conditions contained in the Purchase Agreement, the existing shareholders of Inmarsat Holdings (the Investor Sellers) and management and employees who hold options and shares of a subsidiary of Inmarsat Holdings (collectively, the Management Sellers, and together with the Investor Sellers, the Sellers) will sell to us, and we will purchase, accept and pay for, in each case, at the consummation of the transactions contemplated by the Purchase Agreement, all of the issued and outstanding shares of Inmarsat Holdings, free and clear of all encumbrances. The purchase price that we will pay for the Inmarsat Holdings shares is approximately $3.95 billion consisting of: (i) an amount in cash equal to $850.0 million (the Base Cash Consideration), subject to adjustments, and (ii) 46,363,636 fully paid, validly issued and non-assessable shares of Viasat common stock (the Stock Consideration), valued at approximately $3.1 billion based on the closing price of $67.00 per share of Viasat common stock on the Nasdaq Stock Market LLC (Nasdaq) on November 5, 2021 (the last trading day prior to the execution of the Purchase Agreement). The Base Cash Consideration is subject to certain adjustments, including for certain dividends, distributions, certain payments to or other transactions with the Sellers and their affiliates, Seller transaction costs and retention bonuses in excess of specified aggregate amounts, transaction bonuses (if any), certain taxes and similar items, as set forth in the Purchase Agreement. For more information about the Purchase Agreement, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement.”

 

   

It is anticipated that, upon completion of the Transaction: (i) our current stockholders will own approximately 62% of the total outstanding shares of Viasat common stock immediately after the Transaction and (ii) the Sellers will own approximately 38% of the total outstanding shares of Viasat common stock immediately after the Transaction (or approximately 37% on a fully diluted basis).

 

   

Our management and Board considered various factors in determining whether to approve the Purchase Agreement and the transactions contemplated thereby, including the Transaction. For more information about the Board’s reasons for approving the Transaction, see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Transaction—Our Board of Directors’ Reasons for the Approval of the Transaction and the Stock Issuance.”

 

   

At the special meeting, our stockholders will be asked to consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance of shares of Viasat common stock equal to more than 20% of the issued and outstanding Viasat common stock in connection with the Transaction (the Stock Issuance Proposal or Proposal No. 1). In addition to voting on the Stock Issuance Proposal at the special meeting, our stockholders will be asked to vote on a proposal to approve an amendment to our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance from 100,000,000 to 200,000,000 (the Charter Amendment Proposal or Proposal No. 2). Finally, our stockholders will be asked to vote on a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal (the Adjournment Proposal or Proposal No. 3). Please see the sections entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction,” “Proposal No. 2—Approval of the Charter Amendment to Increase the Number of Shares of Viasat Common Stock Authorized for Issuance,” and “Proposal No. 3—The Adjournment Proposal.” The Transaction is conditioned on, among other things, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal by our stockholders. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement, and no proposal is conditioned on the approval of the Adjournment Proposal.

 

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Unless waived by the parties to the Purchase Agreement, and subject to applicable law, the closing of the Transaction is subject to a number of conditions set forth in the Purchase Agreement, including, among others, receipt of certain regulatory (including telecom and antitrust) approvals and clearances and stockholder approval of the Stock Issuance Proposal and Charter Amendment Proposal. For more information about the closing conditions to the Transaction, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Conditions to Closing of the Transaction.”

 

   

The Purchase Agreement may be terminated at any time prior to the consummation of the Transaction upon agreement of the parties thereto, or by us or the Investor Sellers in specified circumstances. For more information about the termination rights under the Purchase Agreement, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Termination.”

 

   

The proposed Transaction involves numerous risks. For more information about these risks, please see the section entitled “Risk Factors.”

 

   

In considering the recommendation of our Board to vote for the proposals presented at the special meeting, including the Stock Issuance Proposal and the Charter Amendment Proposal, you should be aware that aside from their interests as stockholders, certain members of our management have interests in the Transaction that are different from, or in addition to (and which may conflict with), the interests of our stockholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating the Transaction and transaction agreements and in recommending to our stockholders that they vote in favor of the proposals presented at the special meeting, including the Stock Issuance Proposal and Charter Amendment Proposal. Stockholders should take these interests into account in deciding whether to approve the proposals presented at the special meeting, including the Stock Issuance Proposal and the Charter Amendment Proposal.

 

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QUESTIONS AND ANSWERS ABOUT THE PROPOSALS FOR STOCKHOLDERS

About the Special Meeting and Voting

Why am I receiving this proxy statement?

We sent you this proxy statement and the enclosed proxy card because our Board is soliciting your proxy to vote on proposals in connection with the proposed acquisition of Inmarsat Holdings. This proxy statement summarizes the information you need to know to vote at the special meeting. All stockholders who find it convenient to do so are cordially invited to attend the virtual special meeting. However, you do not need to attend the meeting to vote your shares. Instead, you may simply sign, date and return the enclosed proxy card or voting instruction form provided by your bank or broker, or follow the instructions specified in your proxy card or voting instruction form to vote by telephone or via the internet.

We intend to begin mailing this proxy statement, the attached notice of our special meeting and the enclosed proxy card on or about [●], 2022 to all stockholders who owned Viasat common stock on the record date, [●], 2022, and are thus entitled to vote at the special meeting. On this record date, there were approximately 74,420,670 shares of Viasat common stock outstanding. Common stock is our only class of stock entitled to vote.

What am I voting on?

The items of business scheduled to be voted on at the special meeting are:

 

   

Proposal 1: To consider and vote upon a proposal to approve, for purposes of complying with applicable Nasdaq listing rules, the issuance to the Sellers of shares of Viasat common stock that equal more than 20% of the issued and outstanding shares of Viasat common stock as consideration under the Purchase Agreement, a copy of which is attached to this proxy statement as Annex A (Proposal No. 1 or the Stock Issuance Proposal).

 

   

Proposal 2: To consider and vote upon a proposal to amend our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance from 100,000,000 to 200,000,000 (Proposal No. 2 or the Charter Amendment Proposal).

 

   

Proposal 3: To consider and vote upon a proposal to approve the adjournment of the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal. This proposal will only be presented at the special meeting in the event that there are not sufficient votes to approve the Stock Issuance Proposal and the Charter Amendment Proposal (Proposal No. 3 or the Adjournment Proposal).

How does the Board recommend that I vote?

Our Board unanimously recommends that you vote:

 

   

“FOR” the approval of the Stock Issuance Proposal (Proposal 1);

 

   

“FOR” the approval of the Charter Amendment Proposal (Proposal 2); and

 

   

“FOR” the approval of the Adjournment Proposal (Proposal 3).

How many votes do I have?

You are entitled to one vote for every share of Viasat common stock that you own as of [●], 2022.

 

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What will happen in the Transaction?

Pursuant to the Purchase Agreement, and upon the terms and subject to the conditions set forth therein, we will acquire all of the issued and outstanding shares of Inmarsat Holdings for consideration comprised of $850.0 million in cash, subject to adjustments, and approximately 46.36 million shares of Viasat common stock.

How will the Transaction impact the shares of Viasat common stock outstanding after the Transaction?

As a result of the Transaction, the amount of Viasat common stock outstanding will increase by approximately 62% to approximately 120.78 million shares of Viasat common stock outstanding. We anticipate that the Sellers in the Transaction will receive shares of Viasat common stock representing approximately 38% of the total outstanding shares of Viasat common stock immediately after the Transaction (or approximately 37% on a fully diluted basis), and that existing Viasat stockholders would collectively own approximately 62% of the total outstanding shares of Viasat common stock immediately after the Transaction.

Will Viasat obtain new financing in connection with the Transaction?

Yes. We have obtained financing commitments for an additional $1.6 billion of new debt facilities in connection with the Transaction (which may be secured and/or unsecured), which amount excludes the commitments with respect to the $700.0 million term loan facility that was entered into on March 4, 2022 to fund Viasat’s standalone growth expenditures (the Term Loan Facility). However, the total amount of indebtedness incurred under these commitments may change, including in the event available cash from other sources is higher than expected. We also plan to assume $2.1 billion in principal amount of Inmarsat Group’s senior secured bonds and the outstanding indebtedness under Inmarsat Group’s $2.4 billion senior secured credit facilities (of which $1.7 billion in aggregate principal amount was outstanding as of September 30, 2021). In addition, we obtained commitments of $3.2 billion to backstop certain amendments required under our $700.0 million revolving credit facility, our Ex-Im credit facility (under which we had $78.6 million outstanding as of December 31, 2021), and Inmarsat Group’s $2.4 billion senior secured credit facilities. As of the date of this proxy statement, the requisite amendments had been obtained under our $700.0 million revolving credit facility and Inmarsat Group’s $2.4 billion senior secured credit facilities.

What conditions must be satisfied to complete the Transaction?

There are a number of closing conditions in the Purchase Agreement, including the receipt of certain regulatory approvals and clearances and the approval by our stockholders of the Stock Issuance Proposal and the Charter Amendment Proposal. For a summary of the conditions that must be satisfied or waived prior to completion of the Transaction, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Conditions to Closing of the Transaction.”

Why is Viasat proposing the Stock Issuance Proposal?

We are proposing the Stock Issuance Proposal in order to comply with Rule 5635(a) of the Nasdaq Stock Market Rules, which requires stockholder approval prior to the issuance of securities in connection with the acquisition of the stock or assets of another company (other than a public offering for cash) where the issuance equals 20% or more of the common stock or 20% of the voting power outstanding before such issuance.

In connection with the Transaction, we expect to issue approximately 46.36 million shares of Viasat common stock, which we expect will represent approximately 38% of outstanding Viasat common stock after giving effect to the Transaction (or approximately 37% on a fully diluted basis). Because we are issuing 20% or more of the outstanding Viasat common stock in connection with the Transaction, we are required to obtain stockholder approval of such issuance pursuant to Rule 5635(a). For more information, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction.”

 

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Why is Viasat proposing the Charter Amendment Proposal?

In connection with the Transaction, we expect to issue approximately 46.36 million shares of Viasat common stock. Our Certificate of Incorporation currently authorizes 100,000,000 shares of Viasat common stock. As of February 25, 2022, there were 74,420,670 shares of Viasat common stock outstanding, 7,132,962 shares of Viasat common stock issuable upon the exercise of outstanding stock options or upon the vesting of outstanding restricted stock units, 3,970,816 shares of Viasat common stock reserved for issuance pursuant to future awards under our equity participation plan, and 2,252,576 shares of Viasat common stock reserved for future issuance pursuant to our employee stock purchase plan, leaving only 12,222,976 shares of Viasat common stock available for issuance. Therefore, in order to accommodate the issuance to the Sellers under the Purchase Agreement (as well as to provide for the continued ability to issue shares of Viasat common stock under our equity participation plan and employee stock purchase plan), we need to increase the number of authorized shares of Viasat common stock. For more information, please see the section entitled “Proposal No. 2—Approval of the Charter Amendment to Increase the Number of Shares of Viasat Common Stock Authorized for Issuance.”

Why is Viasat proposing the Adjournment Proposal?

We are proposing the Adjournment Proposal to allow our Board to adjourn the special meeting to a later date or dates to permit further solicitation of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal. Please see the section entitled “Proposal No. 3—The Adjournment Proposal” for additional information.

What interests do Viasat’s current officers and directors have in the Transaction?

Our officers and directors may have interests in the Transaction that are different from or in addition to (and which may conflict with) your interests. You should take these interests into account in deciding whether to approve the Transaction. These interests include, among other things, the expected continued leadership of the combined company by Mark Dankberg, our Executive Chairman, and Richard Baldridge, our President and Chief Executive Officer, the expected continued employment of other executive officers of Viasat by the combined company and the expected continued service of directors of Viasat as directors of the combined company. Our Board was aware of and considered these interests, among other matters, in evaluating the Purchase Agreement and the Transaction and in recommending to our stockholders that they vote in favor of the proposals presented at the special meeting, including the Stock Issuance Proposal and the Charter Amendment Proposal.

Did Viasat’s Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Transaction?

Yes. Although our Certificate of Incorporation does not require our Board to seek a third-party valuation or fairness opinion in connection with an acquisition, our Board received an opinion from PJT Partners LP (PJT Partners) as to the fairness, from a financial point of view and as of the date of such opinion, to us of the consideration to be paid by us for Inmarsat Holdings pursuant to the Purchase Agreement. PJT Partners’ written opinion has been provided by PJT Partners at our request to our Board and is subject to, among other things, the assumptions made, procedures followed, matters considered and conditions, qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion). Please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Transaction—Opinion of Our Financial Advisor” and the opinion of PJT Partners attached hereto as Annex B for additional information.

What are the material U.S. federal income tax consequences of the Transaction to me?

Because our stockholders will continue to own and hold their existing shares of Viasat common stock following the Transaction, the Transaction generally will not result in U.S. federal income tax consequences to our current stockholders.

 

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Do I have appraisal rights if I object to the proposed Transaction?

No. Appraisal rights are not available to holders of Viasat common stock in connection with the Transaction.

What happens if the Purchase Agreement is terminated and the Transaction is not consummated?

There are certain circumstances under which the Purchase Agreement may be terminated prior to the consummation of the Transaction. If the Purchase Agreement is terminated under specified circumstances, we may be obligated to pay a termination fee of either $150.0 million or $200.0 million or to reimburse certain out-of-pocket expenses of the Sellers up to $40.0 million. Please see the sections entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Termination” and “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Termination Fees” for information regarding the parties’ termination rights and the termination fees.

When is the Transaction expected to be completed?

The Transaction is currently expected to close in the second half of calendar year 2022, subject to the approval of our stockholders of the Stock Issuance Proposal and the Charter Amendment Proposal, the receipt of certain regulatory approvals and clearances and the satisfaction of other customary closing conditions. The Purchase Agreement may be terminated and the Transaction abandoned by either us or the Investor Sellers in certain circumstances if closing has not occurred within 18 months following the date of the Purchase Agreement (subject to Viasat’s right to extend such date to the date that is 24 months following the date of the Purchase Agreement in certain circumstances if additional time is needed to satisfy regulatory conditions). For a description of the conditions to the completion of the Transaction, see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Conditions to Closing of the Transaction.”

How do I vote by proxy?

Your vote is important. Whether or not you plan to attend the virtual special meeting, we urge you to sign, date and return the enclosed proxy card or voting instruction form provided by your bank or broker as soon as possible to ensure that your vote is recorded promptly. Returning the proxy card or voting instruction form will not affect your right to attend or vote your shares at the special meeting.

If you complete and submit your proxy card or voting instruction form, the persons named as proxies will vote your shares in accordance with your instructions. If you submit a proxy card or voting instruction form but do not fill out the voting instructions, your shares will be voted in accordance with the recommendations made by our Board (“FOR” each of the Stock Issuance Proposal, the Charter Amendment Proposal and the Adjournment Proposal).

May I revoke my proxy?

If you give us your proxy, you may revoke it at any time before your proxy is voted at the special meeting. You may revoke your proxy in any of the following three ways:

 

   

you may send in another signed proxy card bearing a later date;

 

   

you may deliver a written notice of revocation to Viasat’s Corporate Secretary prior to the special meeting; or

 

   

you may notify Viasat’s Corporate Secretary in writing before the special meeting and submit your vote at the virtual special meeting.

 

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If your shares are held in “street name,” which means your shares are held of record by a broker, bank or other financial institution, you must contact your broker, bank or financial institution to revoke any prior instructions.

What if my shares are held by a broker, bank or other financial institution?

If you are the beneficial owner of shares held by a broker, bank or other financial institution, then your shares are held in “street name” and the organization holding your shares is considered to be the stockholder of record for purposes of voting at the special meeting. As the beneficial owner, you have the right to direct your broker, bank or other financial institution regarding how to vote your shares. You are also invited to attend the virtual special meeting. However, you will need the control number included on your voting instruction form provided by your bank or broker to be able to vote your shares or submit questions.

Can I vote via the internet or by telephone?

You may vote your shares via the internet or by telephone by following the instructions provided on your proxy card or voting instruction form. If your shares are registered in the name of a broker, bank or other financial institution, you may also be eligible to vote your shares electronically over the internet or by telephone if your financial institution makes such options available.

How can I attend the special meeting?

We will be hosting the special meeting live via the internet and you will not be able to attend in person. We considered the appropriate format of this special meeting, and concluded that a virtual meeting would best promote the health and safety of stockholders, employees and directors at this time given the ongoing impact of the COVID-19 pandemic. Our virtual special meeting allows stockholders from around the world to participate and ask questions, and for us to give thoughtful responses.

You are entitled to attend the special meeting only if you were a Viasat stockholder or joint holder as of the record date, [●], 2022, or you hold a valid proxy for the special meeting. A stockholder can listen to and participate in the special meeting live via the internet at www.virtualshareholdermeeting.com/VSAT2022SM. Stockholders may begin submitting written questions at [●] [a.m.] Pacific Time on [●], 2022. Stockholders may also vote during the special meeting. You will need the control number included on your proxy card or voting instruction form provided by your bank or broker to be able to vote your shares or submit questions. Instructions on how to participate, ask questions and access technical support are available at www.virtualshareholdermeeting.com/VSAT2022SM.

What constitutes a quorum?

A quorum is present when at least a majority of the outstanding shares entitled to vote are represented at the special meeting either in person or by proxy.

Holders will be deemed present “in person” at the special meeting by visiting www.virtualshareholdermeeting.com/VSAT2022SM on the day of the special meeting and properly registering their attendance by using the control number provided on your proxy card or voting instruction form provided by your bank or broker. Approximately [●] shares must be represented to constitute a quorum at the meeting.

What vote is required to approve each proposal?

The Stock Issuance Proposal and the Adjournment Proposal each requires the affirmative vote of a majority of the votes cast by holders of outstanding shares of Viasat common stock present in person or represented by proxy, assuming a quorum is present. The Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of Viasat common stock entitled to vote thereon, assuming a quorum is

 

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present. Accordingly, a stockholder’s failure to vote by proxy or to vote in person at the special meeting, a broker non-vote, or an abstention will have no effect on the Stock Issuance Proposal or the Adjournment Proposal (except that abstentions are counted for purposes of determining if a quorum is present), but will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.

Voting results will be tabulated and certified by Broadridge Financial Solutions.

What will happen if I abstain from voting or fail to vote?

Shares held by persons attending the special meeting but not voting, and shares represented by proxies that reflect abstentions as to a particular proposal will be counted as present for purposes of determining the presence of a quorum.

If your shares are held in the name of a bank, broker or other nominee, you are considered the “beneficial holder” of the shares held for you in what is known as “street name.” You are not the “record holder” of such shares. If this is the case, this proxy statement has been forwarded to you by your bank, broker or other nominee. As the beneficial holder, unless your bank, broker or other nominee has discretionary authority over your shares, you generally have the right to direct your bank, broker or other nominee as to how to vote your shares. If you do not provide voting instructions, your shares will not be voted on any proposal on which your bank, broker or other nominee does not have discretionary authority. This is often called a “broker non-vote.” With respect to the special meeting, your bank, broker or other nominee does not have discretionary authority to vote on the Stock Issuance Proposal, the Charter Amendment Proposal or the Adjournment Proposal. You should therefore provide your bank, broker or other nominee with instructions as to how to vote your shares of Viasat common stock. “Broker non-votes” will not be counted as present for purposes of determining the presence of a quorum.

In tabulating the voting results for each proposal, neither abstentions nor shares that constitute broker non-votes are considered votes cast on that proposal. Because abstentions and broker non-votes will not be considered votes cast, abstentions and broker non-votes will not affect the outcome of the vote on the Stock Issuance Proposal and the Adjournment Proposal, assuming that a quorum is obtained. Because the Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of Viasat common stock entitled to vote thereon, abstentions and broker non-votes will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.

Where can I find the voting results of the special meeting?

We will file the final voting results of the special meeting with the SEC in a Current Report on Form 8-K within four business days after the date of the special meeting.

What are the costs of soliciting these proxies?

We will pay the entire cost of soliciting these proxies, including the preparation, assembly, printing and mailing of this proxy statement and any additional solicitation material that we may provide to stockholders. This proxy solicitation is being made by mail, but also may be made by telephone, by electronic communication or in person. We have also engaged MacKenzie Partners to assist in the solicitation of proxies for the special meeting. We will pay MacKenzie Partners a fee of $25,000, plus disbursements, reimburse MacKenzie Partners for its reasonable out-of-pocket expenses and indemnify MacKenzie Partners and its affiliates against certain claims, liabilities, losses, damages and expenses for their services as our proxy solicitor. Our directors, officers and employees may also solicit proxies in person, but will not receive any additional compensation for such solicitation activities. We will reimburse brokerage houses and other custodians, nominees and fiduciaries for forwarding proxy and solicitation materials to stockholders.

 

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I share an address with another stockholder, but we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?

If you share an address with another stockholder, you may receive only one set of proxy materials unless you have provided contrary instructions. The rules promulgated by the Securities and Exchange Commission, or SEC, permit companies, brokers, banks or other financial institutions to deliver a single copy of proxy statements and annual reports to households at which two or more stockholders reside. This practice, known as “householding,” is designed to reduce duplicate mailings, save significant printing and postage costs, and conserve natural resources. Stockholders will receive only one copy of our proxy statements and annual reports if they share an address with another stockholder, have been previously notified of householding by their broker, bank or other financial institution, and have consented to householding, either affirmatively or implicitly by not objecting to householding. If you would like to opt out of householding for future mailings, or if you currently receive multiple copies of our annual reports and proxy statements and would prefer to receive a single copy in the future, please contact your broker, bank or financial institution. You may also obtain a separate proxy statement or annual report without charge by sending a written request to Viasat, Inc., Attention: Investor Relations, 6155 El Camino Real, Carlsbad, California 92009, by email at ir@viasat.com or by telephone at (760) 476-2200. We will promptly send additional copies of this proxy statement upon receipt of such request.

What do I need to do now?

You are urged to read carefully and consider the information contained in this proxy statement, including the Annexes. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.

Who can help answer my questions?

If you have questions about the proposals or if you need additional copies of this proxy statement or the enclosed proxy card you should contact:

Viasat, Inc.

6155 El Camino Real

Carlsbad, California 92009

(760) 476-2200

Attention: Investor Relations

Email: ir@viasat.com

To help ensure timely delivery, please request any such additional copies no later than five business days prior to the special meeting.

You may also obtain additional information about us from documents filed with the SEC by following the instructions in the section entitled “Where You Can Find Additional Information; Incorporation of Certain Documents by Reference.”

The SEC has an informational website that provides stockholders with general information about how to cast their vote and why voting should be an important consideration for stockholders. You may access that information at www.sec.gov/spotlight/proxymatters.shtml or at www.investor.gov.

 

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Important notice regarding the availability of proxy materials for the Viasat special meeting of stockholders to be held on [], 2022

Under rules adopted by the SEC, we are also furnishing proxy materials to our stockholders via the internet. This process is designed to expedite stockholders’ receipt of proxy materials, lower the cost of the special meeting and help conserve natural resources. This proxy statement is available on the Investor Relations section of our website at investors.viasat.com. If you are a stockholder of record, you can elect to access future proxy statements and annual reports electronically by marking the appropriate box on your proxy card. Choosing to receive your future proxy materials electronically will help us conserve natural resources and reduce the costs of printing and distributing our proxy materials. If you choose this option, your choice will remain in effect until you notify our transfer agent, Computershare Trust Company, N.A., by mail that you wish to resume mail delivery of these documents. If you hold your shares in street name, please refer to the information provided by your broker, bank or other financial institution for instructions on how to elect this option.

 

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PROXY STATEMENT SUMMARY

This summary highlights selected information contained elsewhere in this proxy statement. This summary does not contain all of the information that may be important to you. You should read carefully this entire proxy statement, including the Annexes and accompanying financial statements of Inmarsat Holdings and pro forma financial information, to fully understand the proposed Transaction (as described below) before voting on the proposals to be considered at the special meeting (as described below). Please see the section entitled “Where You Can Find Additional Information; Incorporation of Certain Documents by Reference” beginning on page 131 of this proxy statement.

The Companies

Viasat, Inc.

We are a global communications company. For more than 35 years, we have helped shape how consumers, businesses, governments and militaries around the world communicate. Today, we are developing the ultimate global communications network to power high-quality, secure, affordable, fast connections to impact people’s lives anywhere they are—on the ground, in the air or at sea.

Our securities are traded on Nasdaq under the ticker symbol “VSAT.”

The mailing address of our principal executive office is 6155 El Camino Real, Carlsbad, California 92009 and our telephone number is (760) 476-2200.

For more information about us, please see the section entitled “Information About Viasat.”

Inmarsat Group

Inmarsat Group is an innovative, global provider of mobile satellite services, serving the maritime, government, aviation and enterprise sectors through multiple owned and operated satellite networks comprised of 15 satellites as well as ground infrastructure and user terminals. Inmarsat Group has over 40 years’ experience in designing and operating satellite-based networks.

The mailing address of Inmarsat Holdings’ principal executive office is 99 City Rd, London EC1Y 1AX, United Kingdom and its telephone number is +44 20 7728 1000.

For more information about Inmarsat Group, please see the section entitled “Information About Inmarsat Group” and “Inmarsat Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Purchase Agreement

On November 8, 2021, we entered into the Purchase Agreement with the Sellers. On the terms and pursuant to the conditions contained in the Purchase Agreement, the Sellers will sell to us, and we will purchase, accept and pay for, in each case, at the consummation of the transactions contemplated by the Purchase Agreement, all of the issued and outstanding shares of Inmarsat Holdings, free and clear of all encumbrances. The purchase price that we will pay for the Inmarsat Holdings shares is approximately $3.95 billion, consisting of: (i) an amount in cash equal to $850.0 million (which we refer to as the Base Cash Consideration), subject to adjustments, and (ii) 46,363,636 fully paid, validly issued and non-assessable shares of Viasat common stock (which we refer to as the Stock Consideration), valued at approximately $3.1 billion based on the closing price of $67.00 per share of Viasat common stock on Nasdaq on November 5, 2021 (the last trading day prior to the execution of the

 

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Purchase Agreement). The Base Cash Consideration is subject to certain adjustments, including for certain dividends, distributions, certain payments to or other transactions with the Sellers and their affiliates, Seller transaction costs and retention bonuses in excess of specified aggregate amounts, transaction bonuses (if any), certain taxes and similar items, as set forth in the Purchase Agreement.

Related Agreements

This section describes the material provisions of certain additional agreements entered into, or to be entered into, in connection with the Purchase Agreement, which we refer to as the Related Agreements, but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements. The Related Agreements include the Stockholders Agreement, the Registration Rights Agreement and the Voting Agreements, included as Annexes C, D and E, respectively. Stockholders and other interested parties are urged to read the Related Agreements in their entirety prior to voting on the proposals presented at the special meeting. Please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—Related Agreements” for additional information.

Stockholders Agreement

Concurrently with the Purchase Agreement, we and the Investor Sellers entered into a Stockholders Agreement (the Stockholders Agreement), the terms of which become effective at the closing of the Transaction.

Under the Stockholders Agreement, the Investor Sellers will have the right to designate (i) two individuals for nomination to our Board so long as the Investor Sellers collectively beneficially own at least 25% of the total outstanding shares of Viasat common stock and (ii) one individual for nomination to our Board so long as the Investor Sellers collectively beneficially own at least 15% of the total outstanding shares of Viasat common stock. Under the Stockholders Agreement, so long as the Investor Sellers collectively beneficially own at least 15% of the total outstanding shares of Viasat common stock, the Investor Sellers agree to vote their shares of Viasat common stock, subject to certain exceptions, including matters relating to significant corporate transactions and amendments of Viasat organizational documents which would materially, disproportionately and adversely affect the rights of the Investor Sellers, in accordance with the recommendations of our Board.

In addition, the Stockholders Agreement will impose certain transfer restrictions with respect to the shares of Viasat common stock issued to the Investor Sellers, including a prohibition on transfer during an initial 180-day lock-up period and on transfers to our competitors and certain other parties for so long as the Investor Sellers collectively beneficially own at least 10% of the total outstanding shares of Viasat common stock, as well as customary standstill limitations.

Registration Rights Agreement

At the closing, we and the Investor Sellers will enter into a Registration Rights Agreement (the Registration Rights Agreement) in substantially the form attached as Annex D to this proxy statement, pursuant to which, among other things and subject to certain restrictions, we will be required to file with the SEC a registration statement on Form S-3 registering for resale the shares of Viasat common stock issuable to the Investor Sellers upon the completion of the transactions contemplated by the Purchase Agreement and to conduct certain underwritten offerings or facilitate certain block trade transactions upon the request of holders of Registrable Securities (as defined therein). The Registration Rights Agreement also provides holders of Registrable Securities (as defined therein) with certain customary piggyback registration rights.

 

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Voting Agreements

Concurrently with the Purchase Agreement, Baupost Group Securities, L.L.C. (Baupost) and each of our executive officers and directors, in their respective capacities as stockholders of Viasat, entered into a Voting and Support Agreement with the Investor Sellers and Viasat (collectively, the Voting Agreements), pursuant to which Baupost and such individuals have agreed, among other things, to vote their respective shares of Viasat common stock (i) in favor of the Stock Issuance Proposal and the Charter Amendment Proposal, (ii) in favor of any proposal to adjourn or postpone the special meeting in the event that there are insufficient proxies to approve such matters, (iii) against any alternative acquisition proposal, (iv) against any action, proposal, transaction or agreement that would reasonably be expected to result in a breach in any material respect of any covenant or warranty of Viasat under the Purchase Agreement or of such stockholder under the Voting Agreement, and (v) against any other action, agreement or transaction that would reasonably be expected to impede, interfere with, delay, postpone, adversely affect or prevent the Transaction or the other transactions contemplated by the Purchase Agreement.

Baupost and the individuals that signed the Voting Agreements beneficially owned an aggregate of approximately 27% of the outstanding shares of Viasat common stock as of the record date. The forms of Voting Agreements entered into by Baupost and each of our executive officers and directors are included as Annex E.

Our Board Following the Transaction

If the Transaction is consummated, we will take all necessary action (but solely to the extent such actions are permitted by law) to cause two individuals designated by the Investor Sellers to be appointed to serve as directors of the combined company, in addition to our existing Board members. Thereafter, under the Stockholders Agreement, the Investor Sellers will have the right to designate (i) two individuals for nomination to our Board so long as the Investor Sellers collectively beneficially own at least 25% of the total outstanding shares of Viasat common stock and (ii) one individual for nomination to our Board so long as the Investor Sellers collectively beneficially own at least 15% of the total outstanding shares of Viasat common stock.

The Investor Sellers have designated Andrew Sukawaty as one of the initial Investor Directors and will designate an additional initial Investor Director prior to the closing of the Transaction.

The Stock Issuance Proposal

Pursuant to the Purchase Agreement, our stockholders will be asked to vote on a proposal to approve, for purposes of complying with Rule 5635(a) of the Nasdaq Stock Market Rules, the issuance of more than 20% of the issued and outstanding Viasat common stock in connection with the Transaction (Proposal No. 1). For more information about the issuance contemplated by the Purchase Agreement, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction.”

The Charter Amendment Proposal

Our stockholders will also be asked to vote on a proposal to approve an amendment to our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance from 100,000,000 to 200,000,000 (Proposal No. 2). For more information, please see the section entitled “Proposal No. 2—Approval of the Charter Amendment to Increase the Number of Shares of Viasat Common Stock Authorized for Issuance.”

 

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The Adjournment Proposal

In addition, our stockholders will be asked to vote on a proposal to adjourn the special meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal (Proposal No. 3). Please see the section entitled “Proposal No. 3—The Adjournment Proposal” for more information.

Date, Time and Place of Special Meeting

The special meeting will be held on [●], 2022 at [●] a.m. Pacific Time, or at such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the proposals. The special meeting will be a completely virtual meeting of stockholders and will be accessible via the internet at www.virtualshareholdermeeting.com/VSAT2022SM.

Voting Power; Record Date

Only stockholders of record at the close of business on [●], 2022, the record date for the special meeting, will be entitled to vote at the special meeting. You are entitled to one vote for each share of Viasat common stock that you owned as of the close of business on the record date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker, bank or other nominee to ensure that votes related to the shares you beneficially own are properly counted. On the record date, there were 74,420,670 shares of Viasat common stock outstanding and entitled to vote.

Accounting and Tax Treatment

The Transaction will be accounted for using the acquisition method of accounting for business combinations. The allocation of the preliminary estimated purchase price is based upon management’s estimates of and assumptions related to the fair value of assets to be acquired and liabilities to be assumed. We expect to finalize the allocation of the purchase consideration as soon as practicable after completion of the Transaction, but we are not required to finalize for one year from the closing date of the Transaction.

For U.S. federal income tax purposes, we expect to elect to treat the Transaction as an asset purchase (such that the tax bases in the assets of Inmarsat Group will generally reflect the allocated fair value at closing) and direct liability assumption.

Proxy Solicitation

We are soliciting proxies on behalf of our Board. Proxies may be solicited by mail. We have also engaged MacKenzie Partners to assist in the solicitation of proxies.

If a stockholder grants a proxy, it may still vote its shares at the special meeting if it revokes its proxy before the special meeting. A stockholder may also change its vote by submitting a later-dated proxy, as described on page 7 of this proxy statement.

Interests of Certain Persons in the Transaction

In considering the recommendation of our Board to vote for the proposals presented at the special meeting, including the Stock Issuance Proposal and the Charter Amendment Proposal, you should be aware that aside from their interests as stockholders, certain of our executive officers and directors have interests in the Transaction that are different from, or in addition to (and which may conflict with), the interests of our

 

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stockholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating the Transaction and transaction agreements and in recommending to our stockholders that they vote in favor of the proposals presented at the special meeting, including the Stock Issuance Proposal and the Charter Amendment Proposal. Please see the section entitled “Proposal No. 1—Approval of the Issuance of More Than 20% of the Issued and Outstanding Viasat Common Stock In Connection with Transaction—The Transaction—Interests of Certain Persons in the Transaction” for more information.

Reasons for the Transaction

Our Board considered the following positive factors, among others, although not weighted or in any order of significance, in approving the Purchase Agreement and the Transaction and the issuance of the Stock Consideration in connection with the Transaction:

 

   

Materially Accelerates Our Global Strategy. Inmarsat Group’s existing satellite fleet would provide global coverage and greater redundancy and resiliency for the combined company versus Viasat on a standalone basis. We believe that the Transaction would accelerate the expansion of our global revenue in both mobility and government, where our customers increasingly demand greater geographic coverage and redundancy, more bandwidth in high-demand locations, and, in some cases, the resilience of complementary narrowband services. In addition, the Transaction would also accelerate availability and customer choice for broadband and narrowband services, including IoT services.

 

   

Increases Exposure to a $1.6 Trillion Mobility-Focused TAM1 and Unlocks the IoT Market. Inmarsat Group has an established global distribution and partnership network across core mobility verticals, which would greatly expand the number of users served by our combined platform of vertically integrated, end-to-end solutions. Mobility and government verticals are “natural” users of satellite services because these users, including ships, planes, and military vehicles, spend significant time beyond the reach of terrestrial connectivity. The Transaction would materially increase our serviceable addressable market in both maritime and narrowband communications, including the IoT, where we have a limited presence today and lack the requisite narrowband satellite spectrum resources.

 

   

Increases Proportion of Revenue from Services and Growing Mobility Verticals. The combined company would have a more geographically diverse, services-focused revenue base grounded in core mobility verticals, as well as government. For the nine months ended December 31, 2021, the percentage of our total revenues derived from services was 56%, compared to 69% calculated on a pro forma basis after giving effect to the Transaction, with over two-thirds of the combined company’s revenue derived from mobility and government. This services and mobility rich revenue mix would provide a strong financial and operational foundation to support robust revenue growth.

 

   

Complements Our Existing Network to Better Serve Mobility with Improved Efficiency. In order to serve ships and planes in transit, Inmarsat Group brings strong oceanic coverage, which Viasat would not otherwise have on a standalone basis today. In contrast, Viasat’s existing satellites have strong coverage and ample bandwidth over certain land masses, including hubs where demand density is highest. The integration of our respective fleets—including existing and to-be-launched satellites—would also provide our respective customers with greater service assurance including polar reach, oceanic coverage and network density. In addition, the combined company’s global coverage would allow us to operate our existing and planned satellites more efficiently, thereby increasing the total capacity of our combined satellite fleet and enhancing customer experience.

 

   

Expands Global Spectrum Portfolio, Opening New Growth and Innovation Opportunities. By accelerating the expansion of our Ka-band spectrum resources from regional to global, while

 

 

1 

Represents estimated total addressable market in 2030, based on Viasat estimates incorporating data from NSR, Euroconsult, Frost & Sullivan and the FCC.

 

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simultaneously acquiring Inmarsat Group’s global L-band and regional S-band portfolio, the Transaction is expected to materially improve our long-term growth prospects as the combined company continues to build out its global next-generation, multi-layered hybrid network, with the ability to draw upon the best characteristics of each frequency band and orbit. Adding L-band and S-band capabilities would create new network development opportunities, including the potential for low-latency terrestrial, air-to-ground and hybrid solutions, as well as multi-orbit Ka- and L-/S-band constellations. Overall, we expect that the combined company’s complementary assets, when integrated, will better position the combined company for growth and will increase the pace and scale of innovation in the mobile communications sector, thereby delivering enhanced quality of service (including improved speed, flexibility, reliability, coverage and security) and offering greater value to existing and new customers.

 

   

Creates Substantial Synergy Opportunities. We project that the Transaction would result in approximately $190 million in combined cost and capital expenditure synergies on an annual run-rate basis, including annual run-rate cost synergies of $80 million from achieving greater operating efficiencies, capturing inherent economies of scale, and leveraging corporate resources, as well as annual run-rate capital expenditure synergies of $110 million from combining our existing satellite fleets. Anticipated cost and capital expenditure synergies alone represent a combined after-tax net present value of approximately $1.5 billion, net of expected costs to achieve such synergies. In addition, we expect that the combined company would achieve material revenue benefits not included in the current outlook from new tiered services enabled by a global multi-layer network and the revitalization of L-band services. These would include cross selling up-tier Ka-band broadband services to Inmarsat Group’s existing customer base, as well as cross selling L-band safety and IoT services and global Ka-band services to Viasat’s existing customer base.

 

   

Materially Increases Levered and Unlevered Free Cash Flow. We expect that the Transaction will more than double cumulative free cash flow on both a levered and unlevered basis over the calendar year 2023 to 2026 period relative to our prior stand-alone targets. Our Board also considered the accretive effect of the Transaction on free cash flow on a per share basis, recognizing that the magnitude of the increase in free cash flow on a percentage basis is projected to exceed the percentage increase in the number of shares of Viasat common stock outstanding as a result of the Transaction.

 

   

Reduces Execution Risk with Straightforward Integration. Inmarsat Group adds established retail and wholesale distribution capabilities, a broader technology supply chain and customer relationships in key target geographies and verticals that we would otherwise need to build from the ground up. We have proven experience integrating complementary businesses, including WildBlue, RigNet and Euro Broadband Infrastructure Sàrl. In addition to Inmarsat Group’s extensive engineering skillsets, we have a deep bench of engineering talent that is highly familiar with the satellite, terminal, ground equipment and software technologies utilized by Inmarsat Group today.

 

   

Strengthens Global Heritage and Platform for Space Safety and Sustainability. Inmarsat Group has a long heritage of international aviation and maritime safety, and like Viasat, is also committed to promoting space sustainability and international space cooperation. The cultures of both Inmarsat Group and Viasat are aligned in their commitment to continued investment in technical talent and space-related development in the UK, as well as building strong relationships with leading regional broadband satellite partners in Australia, Brazil, Europe and other key geographies. We believe our collective heritage and international relationships will enable the combined company to better advocate for space safety, sustainable space policy and international cooperation.

For more information about our decision-making process, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—Our Board of Directors’ Reasons for the Approval of the Transaction and the Stock Issuance.”

 

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Conditions to Closing of the Transaction

The respective obligations of us and the Sellers to consummate and effect the Transaction and the other transactions contemplated by the Purchase Agreement are subject to the satisfaction, at or prior to the closing of the Transaction, of each of the following conditions:

 

   

the satisfaction or receipt of certain regulatory approvals and clearances;

 

   

the required vote of our stockholders to approve the Stock Issuance Proposal and the Charter Amendment Proposal;

 

   

the completion of the exchange of the shares and options held by Management Sellers in a subsidiary of Inmarsat Holdings for shares of Inmarsat Holdings; and

 

   

the completion of a review by Inmarsat Group in respect of certain limited matters.

Regulatory Matters

The Transaction is subject to the satisfaction or receipt of certain regulatory approvals and clearances pursuant to the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, and the rules and regulations promulgated thereunder (the HSR Act), the United Kingdom’s Enterprise Act 2002, and certain other applicable antitrust, competition, communications, foreign investment or national security laws or regulations. At any time before or after consummation of the Transaction, applicable governmental agencies could take action under applicable antitrust, competition, communications, foreign investment or national security laws or regulations as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Transaction or conditioning the consummation of the Transaction on certain divestitures or other structural or behavioral remedies or commitments. Private parties may also seek to take legal action under such laws or regulations under certain circumstances. We cannot assure you that government authorities will not attempt to challenge the Transaction on antitrust, competition, communications, foreign investment or national security grounds, and, if such a challenge is made, we cannot assure you as to its result. Additionally, there can be no assurance that any required regulatory approvals or clearances will be obtained or that the Transaction can be consummated without certain divestitures or other structural or behavioral remedies or commitments.

Under the provisions of the HSR Act, the Transaction may not be completed until the expiration of a statutory 30-day waiting period, or the early termination of that waiting period, following the parties’ filing of their respective notification and report forms with the Federal Trade Commission (FTC) and the U.S. Department of Justice (DOJ). On December 13, 2021, Viasat and Inmarsat Holdings filed their respective HSR Act notification and report forms with the FTC and the DOJ. Viasat withdrew its HSR Act notification and report form on January 12, 2022 and refiled it on January 14, 2022, restarting the statutory 30-day waiting period. On February 14, 2022, Viasat and Inmarsat Holdings each received a request for additional information and documentary material (Second Request) from the DOJ in connection with the DOJ’s review of the Transaction. The effect of the Second Requests is to extend the waiting period imposed under the HSR Act until 30 days after both Viasat and Inmarsat Holdings have substantially complied with the Second Requests, unless the waiting period is terminated earlier by the DOJ. The DOJ could also seek to enjoin completion of the Transaction or impose conditions such as requiring the divestiture of assets, businesses and/or product lines of Viasat and/or Inmarsat Holdings.

Quorum and Required Vote for Proposals for the Special Meeting

A quorum of our stockholders is necessary to hold a valid meeting. A quorum will be present at the special meeting if the holders of a majority of the shares entitled to vote as of the close of business on the record date are present in person or represented by proxy. Abstentions will count as present for the purposes of establishing a quorum.

 

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The Stock Issuance Proposal and the Adjournment Proposal each requires the affirmative vote of a majority of the votes cast by holders of outstanding shares of Viasat common stock present in person or represented by proxy, assuming a quorum is present. The Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of Viasat common stock entitled to vote thereon, assuming a quorum is present. Accordingly, a stockholder’s failure to vote by proxy or to vote in person at the special meeting, a broker non-vote, or an abstention will have no effect on the Stock Issuance Proposal or the Adjournment Proposal (except that abstentions are counted for purposes of determining if a quorum is present), but will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.

The Transaction is conditioned on, among other things, the requisite stockholder approval of the Stock Issuance Proposal and the Charter Amendment Proposal. It is important for you to note that if either the Stock Issuance Proposal or the Charter Amendment Proposal does not receive the requisite vote for approval, we will not be able to consummate the Transaction. The Adjournment Proposal is not conditioned on the approval of any other proposal set forth in this proxy statement, and no proposal set forth in this proxy statement is conditioned on the approval of the Adjournment Proposal.

Opinion of Our Financial Advisor

We retained PJT Partners to act as our financial advisor in connection with the Transaction and, upon our request, to render a fairness opinion to our Board in connection therewith. We selected PJT Partners to act as our financial advisor in connection with the Transaction based on PJT Partners’ qualifications, expertise and reputation, its knowledge of our industry, and its knowledge and understanding of our business and affairs. At a meeting of our Board held on November 7, 2021, PJT Partners rendered its oral opinion, subsequently confirmed by its written opinion dated November 7, 2021, to our Board to the effect that, as of such date and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and conditions, qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the consideration to be paid by us in the Transaction was fair to us from a financial point of view. The term “consideration” collectively refers to the Base Cash Consideration, less the Aggregate Notified Leakage Amount and the Aggregate Pre-Completion Dividend Amount (each as defined in the Purchase Agreement), and 46,363,636 shares of Viasat common stock, as set forth in PJT Partners’ written opinion.

The full text of PJT Partners’ written opinion delivered to our Board, dated November 7, 2021, is attached as Annex B to this proxy statement and incorporated herein by reference in its entirety. PJT Partners’ written opinion has been provided by PJT Partners at our request to our Board and is subject to, among other things, the assumptions made, procedures followed, matters considered and conditions, qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion). You are encouraged to read PJT Partners’ written opinion carefully and in its entirety. PJT Partners provided its opinion to our Board, in its capacity as our financial advisor in connection with the Transaction, and in connection with and for purposes of our Board’s evaluation of the Transaction only. PJT Partners’ opinion does not constitute a recommendation as to any action our Board should take with respect to the Transaction or how any stockholder should vote or act with respect to the Transaction or any other matter. The summary of the PJT Partners opinion contained in this proxy statement is qualified in its entirety by reference to the full text of PJT Partners’ written opinion.

For more information, please see “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Transaction—Opinion of Our Financial Advisor” on page 64 of this proxy statement and Annex B to this proxy statement.

 

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Recommendation to Our Stockholders

Our Board believes that each of the Stock Issuance Proposal, the Charter Amendment Proposal and the Adjournment Proposal to be presented at the special meeting is in the best interests of Viasat and our stockholders and unanimously recommends that the stockholders vote “FOR” each of the proposals.

When you consider the recommendation of our Board in favor of approval of the Stock Issuance Proposal and the Charter Amendment Proposal, you should keep in mind that certain members of our Board and officers have interests in the Transaction that are different from or in addition to (and which may conflict with) your interests as a stockholder. Stockholders should take these interests into account in deciding whether to approve the proposals presented at the special meeting, including the Stock Issuance Proposal and Charter Amendment Proposal. Please see the section entitled “Proposal No. 1—Approval of the Issuance of More Than 20% of the Issued and Outstanding Viasat Common Stock In Connection with Transaction—The Transaction—Interests of Certain Persons in the Transaction” for more information.

Risk Factors

In evaluating the Transaction and the proposals to be considered and voted on at the special meeting, you should carefully review and consider the risk factors set forth under the section entitled “Risk Factors” beginning on page 22 of this proxy statement. The occurrence of one or more of the events or circumstances described in that section, alone or in combination with other events or circumstances, may have a material adverse effect on (i) the ability of us or the Sellers to complete the Transaction, and (ii) the business, cash flows, financial condition and results of operations of Inmarsat Group prior to the consummation of the Transaction and the combined company following consummation of the Transaction.

 

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CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

This proxy statement and the documents incorporated by reference herein contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the Securities Act) and Section 21E of the Securities Exchange Act of 1934, as amended (the Exchange Act). These statements are based on current expectations, estimates, forecasts and projections about the industries in which we and Inmarsat Group operate and the beliefs and assumptions of our respective management. We use words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “goal,” “intend,” “may,” “plan,” “project,” “seek,” “should,” “target,” “will,” “would,” variations of such words and similar expressions to identify forward-looking statements. In addition, statements that refer to the Transaction and any statements regarding the expected timing, benefits, synergies, growth opportunities and other financial and operating benefits thereof, the closing of the Transaction and timing or satisfaction of regulatory and other closing conditions, or the anticipated operations, financial position, liquidity, performance, prospects or growth and scale opportunities of the combined company; integration activities; the anticipated value of the combined business to us and our stakeholders; the expected performance of our and Inmarsat Group’s technologies; the expected impact of the Transaction on our results of operations and financial condition; anticipated growth and trends in the business or key markets; and other characterizations of future events or circumstances, are forward-looking statements. Readers are cautioned that actual results could differ materially from those expressed in any forward-looking statements. Factors that could cause actual results to differ include: risks and uncertainties related to the Transaction, including the failure to obtain, or delays in obtaining, required regulatory approvals or clearances; the risk that any such approval may result in the imposition of conditions that could adversely affect us, the combined company or the expected benefits of the Transaction; the failure to satisfy any of the closing conditions to the Transaction on a timely basis or at all; any adverse impact on the business of us or Inmarsat Group as a result of uncertainty surrounding the Transaction; the nature, cost and outcome of any legal proceedings related to the Transaction; the occurrence of any event, change or other circumstances that could give rise to the termination of the definitive agreement for the Transaction, including in circumstances requiring us to pay a termination fee; the risk that our stock price may decline significantly if the Transaction is not consummated; the failure to obtain the necessary debt financing arrangements set forth in the commitment letters received in connection with the Transaction; risks that the Transaction disrupts current plans and operations or diverts management’s attention from our ongoing business; the effect of the announcement of the Transaction on our ability to retain and hire key personnel and maintain relationships with our customers, suppliers and others with whom we do business; our ability to successfully integrate Inmarsat Group operations, technologies and employees; the ability to realize anticipated benefits and synergies of the Transaction, including the expectation of enhancements to our products and services, greater revenue or growth opportunities, operating efficiencies and cost savings; the possibility that the Transaction may result in us assuming unexpected liabilities; our ability to operate our business in light of the Transaction and the covenants contained in the Purchase Agreement; the ability to ensure continued performance and market growth of the combined company’s business; changes in the global business environment and economic conditions; the availability and cost of credit; risks associated with the construction, launch and operation of satellites, including the effect of any anomaly, operational failure or degradation in satellite performance; our or the combined company’s ability to successfully develop, introduce and sell new technologies, products and services; changes in relationships with key customers, suppliers, distributors, resellers and others as a result of the Transaction or otherwise; our and Inmarsat Group’s reliance on a limited number of third parties to manufacture and supply our respective products; the risk of litigation or regulatory actions to us and/or Inmarsat Group; inability to retain key personnel; the impact of the COVID-19 pandemic on our or Inmarsat Group’s business, suppliers, consumers, customers, and employees or the overall economy; our and the combined company’s level of indebtedness and ability to comply with applicable debt covenants; and other factors affecting the communications industry generally. In addition, please refer to the risk factors in the section entitled “Risk Factors,” as well as the risk factors contained in our SEC filings available at www.sec.gov, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q and such reports that are subsequently filed with the SEC. Readers are cautioned not to place undue reliance on any forward-looking statements, which speak only as of the date on which they are made. We undertake no obligation to update or revise any forward-looking statements for any reason.

 

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RISK FACTORS

You should carefully review and consider the following risk factors and the other information contained in this proxy statement, including the financial statements and notes to the financial statements included herein, in evaluating the Transaction and the proposals to be voted on at the special meeting. The following risk factors also apply to the business and operations of Inmarsat Group and will also apply to the business and operations of the combined company following the completion of the Transaction. The occurrence of one or more of the events or circumstances described in these risk factors, alone or in combination with other events or circumstances, may adversely affect the ability to complete or realize the anticipated benefits of the Transaction, and may have an adverse effect on the business, cash flows, financial condition and results of operations of the combined company. You should also carefully consider the following risk factors in addition to the other information included in this proxy statement, including matters addressed in the section entitled “Cautionary Note Regarding Forward-Looking Statements.” We or Inmarsat Group may face additional risks and uncertainties that are not presently known to us or Inmarsat Group, or that we or Inmarsat Group currently deem immaterial, which may also impair our or Inmarsat Group’s business or financial condition. The following discussion should be read in conjunction with the financial statements and notes to the financial statements included herein.

We have grouped the risks into three categories for ease of reading, and without any reflection on the importance of, or likelihood of, any particular category.

Risks Relating to the Transaction

The Transaction is subject to closing conditions and may not be completed, the Purchase Agreement may be terminated in accordance with its terms, and we may be required to pay a termination fee upon termination.

The Transaction is subject to customary closing conditions that must be satisfied or waived prior to the completion of the Transaction, including receipt of regulatory approvals and clearances and approval by our stockholders of both the issuance of shares of Viasat common stock in the Transaction and an amendment to our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance. Many of the closing conditions are not within our control. No assurance can be given that the required regulatory approvals and clearances and stockholder approvals will be obtained or that the required conditions to closing will be satisfied in a timely manner or at all. Any delay in completing the Transaction could cause the combined company not to realize, or to be delayed in realizing, some or all of the benefits that we expect to achieve if the Transaction is successfully completed within its expected time frame.

Additionally, either we or the Investor Sellers may terminate the Purchase Agreement under certain circumstances, including, among other reasons, if the Transaction is not completed by May 8, 2023 (subject to extension by six months at our option under certain circumstances). In addition, if the Purchase Agreement is terminated under specified circumstances, we may be obligated to pay a termination fee of either $150.0 million or $200.0 million or to reimburse certain out-of-pocket expenses of certain Sellers up to $40.0 million.

Moreover, if the Transaction is not completed for any reason, including because required regulatory approvals and clearances or stockholder approval of the Stock Issuance Proposal and the Charter Amendment Proposal are not obtained, our ongoing businesses may be adversely affected and, without realizing any of the expected benefits of having completed the Transaction, we would be subject to a number of risks, including the following:

 

   

we may experience negative reactions from the financial markets, including negative impacts on our stock price;

 

   

we may experience negative reactions from our customers, suppliers, distributors and employees;

 

   

we will be required to pay our costs relating to the Transaction, such as financial advisory, legal, financing and accounting costs and associated fees and expenses, whether or not the Transaction is completed;

 

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the Purchase Agreement places certain restrictions on the conduct of our business prior to completion of the Transaction and such restrictions, the waiver of which are subject to the consent of certain of the Sellers, may have prevented us from taking actions during the pendency of the Transaction that would have been beneficial; and

 

   

matters relating to the Transaction (including integration planning) will require substantial commitments of time and resources by management, which could otherwise have been devoted to day-to-day operations or to other opportunities that may have been beneficial to us as an independent company.

We must obtain certain regulatory approvals and clearances to consummate the Transaction, which, if delayed, not granted or granted with burdensome or unacceptable conditions, could prevent, substantially delay or impair consummation of the Transaction, result in additional expenditures of money and resources or reduce the anticipated benefits of the Transaction.

The completion of the Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances in various jurisdictions. Governmental and regulatory authorities in various jurisdictions may impose conditions on approvals and clearances as they deem necessary or desirable, including, but not limited to, seeking divestiture of substantial assets of the parties or requiring the parties to license, or hold separate, assets or to not engage in certain types of conduct, or seeking to enjoin the completion of the Transaction. Any conditions imposed in connection with regulatory approvals or clearances could jeopardize or delay the completion of the Transaction, have a material adverse effect on the combined company or reduce the anticipated benefits of the Transaction. There is no assurance that we and Inmarsat Group will obtain all required regulatory clearances or approvals on a timely or acceptable basis, or at all. Failure to obtain the necessary clearances and approvals in the United States or any other relevant jurisdictions could substantially delay or prevent the consummation of the Transaction, which could have a material adverse effect on us. Additionally, we may be required to pay a termination fee of $200.0 million if either we or the Investor Sellers terminate the Purchase Agreement due to the Transaction not being completed by the long-stop date and at the time of termination the regulatory conditions have not been satisfied.

Under the provisions of the HSR Act, the Transaction may not be completed until the expiration of a statutory 30-day waiting period, or the early termination of that waiting period, following the parties’ filing of their respective notification and report forms with the FTC and the DOJ. On December 13, 2021, Viasat and Inmarsat Holdings filed their respective HSR Act notification and report forms with the FTC and the DOJ. Viasat withdrew its HSR Act notification and report form on January 12, 2022 and refiled it on January 14, 2022, restarting the statutory 30-day waiting period. On February 14, 2022, Viasat and Inmarsat Holdings each received a Second Request from the DOJ in connection with the DOJ’s review of the Transaction. The effect of the Second Requests is to extend the waiting period imposed under the HSR Act until 30 days after both Viasat and Inmarsat Holdings have substantially complied with the Second Requests, unless the waiting period is terminated earlier by the DOJ. The DOJ could also seek to enjoin completion of the Transaction or impose conditions such as requiring the divestiture of assets, businesses and/or product lines of Viasat and/or Inmarsat Holdings.

The consideration payable under the Purchase Agreement is fixed and will not be adjusted based on our performance or that of Inmarsat Group.

Under the Purchase Agreement, the total consideration payable by us consists of $850.0 million in cash, subject to adjustments, and approximately 46.36 million shares of Viasat common stock. The purchase price will not be adjusted for changes in the market price of our common stock or the economic performance of Viasat or Inmarsat Group. If the market price of Viasat common stock increases or the economic performance of Inmarsat Group relative to Viasat declines (or the economic performance of Inmarsat Group relative to Viasat improves), the consideration will not be adjusted to account for any such changes or any effective increase or decrease in the value of the shares of our common stock issued to the Sellers under the Purchase Agreement.

 

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The opinion of our financial advisor does not and will not reflect changes in circumstances after the date of such opinion.

On November 7, 2021, PJT Partners delivered an opinion to our Board to the effect that, as of such date and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and conditions, qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the consideration to be paid by us in the Transaction was fair to us from a financial point of view. Changes in the operations and prospects of Viasat or Inmarsat Group, general market and economic conditions and other factors that may be beyond our control, and on which the opinion of PJT Partners was based, may alter our or Inmarsat Group’s value or the price at which shares of Viasat common stock are traded by the time the Transaction is completed. We have not obtained, and we do not expect to request, an updated opinion from our financial advisor. PJT Partners’ opinion does not speak to the time when the Transaction will be completed or to any date other than the date of such opinion. As a result, the opinion does not and will not address the fairness, from a financial point of view, of the consideration to be paid by us in the Transaction at the time the Transaction is completed or at any time other than the date when the opinion was rendered. For a more complete description of the opinion, please refer to “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Transaction—Opinion of Our Financial Advisor” on page 64 of this proxy statement and the full text of such written opinion included as Annex B to this proxy statement.

We will be subject to business uncertainties and contractual restrictions, including the risk of litigation, while the Transaction is pending that may cause disruption and may make it more difficult to maintain relationships with employees, suppliers or customers.

Uncertainty about the effect of the Transaction on employees, suppliers and customers may have an adverse effect on Viasat and/or Inmarsat Group, which uncertainties may impair our or Inmarsat Group’s ability to attract, retain and motivate key personnel until the Transaction is completed and for a period of time thereafter, and could cause customers, suppliers and others that deal with Viasat or Inmarsat Group to seek to change existing business relationships with either of us.

Employee retention and recruitment may be challenging before the completion of the Transaction, as employees and prospective employees may experience uncertainty about their future roles following the Transaction. Key employees may depart or prospective key employees may fail to accept employment with us or Inmarsat Group because of issues relating to the uncertainty and difficulty of integration or a desire not to remain with the combined company following the Transaction, any of which could have a material adverse effect on our business, financial condition and results of operations.

The pursuit of the Transaction and the preparation for the integration may place a significant burden on management and internal resources. The diversion of management’s attention away from day-to-day business concerns and any difficulties encountered in the transition and integration process could have a material adverse effect on our business, financial condition and results of operations.

Until the completion of the Transaction or the termination of the Purchase Agreement in accordance with its terms, we are prohibited from entering into certain transactions and taking certain actions that might otherwise be beneficial to us and our stockholders.

During the period between the date of the Purchase Agreement and completion of the Transaction (which, under the Purchase Agreement, could take up to 18 months (or up to 24 months, if we elect to extend the long-stop date in order to satisfy regulatory conditions under the Purchase Agreement and satisfy certain conditions)), the Purchase Agreement restricts us from taking specified actions or from pursuing what might otherwise be attractive business opportunities or making other changes to our business, in each case without the consent of certain of the Sellers. These restrictions may prevent us from taking actions during the pendency of the

 

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Transaction that would have been beneficial. Adverse effects arising from these restrictions during the pendency of the Transaction could be exacerbated by any delays in consummation of the Transaction or termination of the Purchase Agreement.

The Transaction Agreement limits our ability to pursue alternatives to the Transaction and may discourage other companies from trying to acquire us.

The Transaction Agreement contains non-solicitation restrictions that, subject to limited exceptions, restrict our ability to solicit, initiate, take any action, or knowingly facilitate or knowingly encourage, or provide any non-public information relating to Viasat with regard to, alternative acquisition proposals. In addition, if we receive any alternative acquisition proposals, we are required to promptly notify the Investor Sellers. If our Board determines to act with respect to a Superior Proposal, as more fully described in the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Covenants of the Parties—Covenants of Viasat—Exceptions to Our Change of Recommendation Restrictions” beginning on page 42 of this proxy statement, we must negotiate in good faith with the Investor Sellers regarding potential amendments to the Transaction Agreement if requested by the Investor Sellers such that the alternative acquisition proposal would no longer constitute a Superior Proposal. In addition, in the event that the Transaction Agreement is terminated, we may be required to pay a termination fee to the Sellers in connection with a Change in Recommendation or the consummation of an alternative transaction or the execution of an alternative definitive agreement with respect to an alternative transaction prior to the first anniversary of such termination. For more information, please see the sections entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Covenants of the Parties—Covenants of Viasat” beginning on page 38 of this proxy statement and “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement—Termination Fees” beginning on page 45 of this proxy statement.

In addition, certain stockholders of Viasat that beneficially own approximately 27% of the outstanding shares of Viasat common stock have agreed to vote in favor of the Stock Issuance Proposal and the Charter Amendment Proposal and against alternative proposals unless our Board makes a Change of Recommendation in accordance with the Transaction Agreement. Refer to the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—Related Agreements—Voting Agreements” beginning on page 46 of this proxy statement for more information regarding the Voting Agreements.

These provisions and agreements, among others described in this proxy statement, (i) could discourage a potential competing acquiror that might have an interest in acquiring all or a significant part of Viasat from considering or proposing an acquisition, even one that may be deemed of greater value to Viasat stockholders than the Transaction, or (ii) might result in a potential competing acquiror proposing to pay a lower price than it might otherwise have proposed to pay because of the added expense of the termination fee that may become payable in certain circumstances.

The Transaction will involve substantial costs.

We have incurred and expect to incur non-recurring costs associated with the Transaction and combining the operations of the two companies, as well as transaction fees and other costs related to the Transaction. Based on information available as of the date of this proxy statement, we currently estimate that Viasat may incur approximately $250 million in Transaction costs (including financing costs) through the closing of the Transaction, including (but not limited to) fees paid to investment banking, legal and accounting advisors, regulatory and public relations advisors, rating agency fees, filing fees, printing costs and other costs and expenses, although actual amounts could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs. A significant

 

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portion of these Transaction costs is contingent upon the closing of the Transaction occurring, although some have been and will be incurred regardless of whether the Transaction is consummated.

In addition, the combined company will also incur significant restructuring and integration costs in connection with the integration of Viasat and Inmarsat Group and the execution of our business plan, including costs relating to formulating and implementing integration plans and eliminating duplicative costs, as well as potential employment-related costs. The costs related to restructuring will be expensed as a cost of the ongoing results of operations of either us or the combined company. There are processes, policies, procedures, operations, technologies and systems that must be integrated in connection with the Transaction and the integration of Inmarsat Group. Based on information available as of the date of this proxy statement, we currently estimate that we will incur approximately $50 million in integration costs and investments to realize synergies and efficiencies during each of the first two years following the closing of the Transaction. While we have assumed a certain level of expenses would be incurred to integrate Viasat and Inmarsat Group and achieve synergies and efficiencies and we continue to assess the magnitude of these costs, many of these expenses are, by their nature, difficult to estimate accurately and there are many factors beyond our control that could affect the total amount or timing of these costs. Although we expect that the elimination of duplicative costs, as well as the realization of strategic benefits, additional income, synergies and other efficiencies, should allow the combined company to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

Lawsuits may be filed against us, or against our directors, challenging the Transaction, and an adverse ruling in any such lawsuit may prevent the Transaction from becoming effective or from becoming effective within the expected time frame.

Acquisitions like the Transaction are frequently subject to litigation or other legal proceedings, including actions alleging that our board of directors breached their fiduciary duties to our stockholders by entering into the Purchase Agreement. We cannot provide assurance that such litigation or other legal proceedings will not be brought. If litigation or other legal proceedings are in fact brought against us, or against our board of directors, we will defend against it, but might not be successful in doing so. An adverse outcome in such matters, as well as the costs and efforts of a defense even if successful, could have a material adverse effect on the business, results of operation or financial position of us or the combined company, including through the possible diversion of company resources or distraction of key personnel.

We will incur significant additional indebtedness in connection with the Transaction, and the combined company’s debt may limit its financial flexibility.

In addition to our existing indebtedness under our credit facilities and indentures (including the $700.0 million Term Loan Facility we entered into in March 2022), we have obtained financing commitments for an additional $1.6 billion of new debt facilities in connection with the Transaction (which may be secured and/or unsecured). We also plan to assume $2.1 billion in principal amount of Inmarsat Group senior secured bonds and the outstanding indebtedness under Inmarsat Group’s $2.4 billion senior secured credit facilities as part of the Transaction.

The combined company’s level of indebtedness following completion of the Transaction could have important consequences. For example, it could:

 

   

increase our vulnerability to general adverse economic and industry conditions;

 

   

impair our ability to obtain additional debt or equity financing in the future for working capital, capital expenditures, product development, satellite construction, acquisitions or general corporate or other purposes;

 

   

require us to dedicate a material portion of our cash flows to the payment of principal and interest on our indebtedness, thereby reducing the availability of our cash flows to fund working capital needs,

 

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capital expenditures, product development, satellite construction, acquisitions and other general corporate purposes;

 

   

expose us to variable interest rate risk to the extent we make borrowings under our revolving credit facility;

 

   

limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;

 

   

place us at a disadvantage compared to our competitors that have less indebtedness; and

 

   

limit our ability to adjust to changing market conditions.

Any of these risks could materially impact our ability to fund our operations or limit our ability to expand the combined business, which could have a material adverse effect on the combined business, financial condition and results of operations.

Combining the businesses of Viasat and Inmarsat Group may be more difficult, costly or time-consuming than expected and the combined company may fail to realize the anticipated synergies and other benefits of the Transaction, which may adversely affect the combined company’s business results and negatively affect the value of the combined company’s common stock.

Viasat and Inmarsat Group have operated and, until the completion of the Transaction will continue to operate, independently. The success of the Transaction will depend on, among other things, the ability of Viasat and Inmarsat Group to combine their businesses in a manner that facilitates growth opportunities and realizes expected cost savings. We have entered into the Purchase Agreement because we believe that the transactions contemplated by the Purchase Agreement are fair to and in the best interests of our stockholders and that combining the businesses of Viasat and Inmarsat Group will produce benefits as well as cost savings and other cost and capital expenditure synergies.

Following the closing of the Transaction, Viasat and Inmarsat Group must successfully combine their respective businesses in a manner that permits these benefits to be realized. For example, the following issues, among others, must be addressed in integrating the operations of the two companies in order to realize the anticipated benefits of the Transaction:

 

   

combining the companies’ operations and corporate functions;

 

   

combining the businesses of Viasat and Inmarsat Group and meeting the capital requirements of the combined company, in a manner that permits the combined company to achieve any cost savings or other synergies anticipated to result from the Transaction, the failure of which would result in the anticipated benefits of the Transaction not being realized in the time frame currently anticipated or at all;

 

   

integrating personnel from the two companies;

 

   

integrating the companies’ technologies and technologies licensed from third parties;

 

   

integrating and unifying the offerings and services available to customers;

 

   

identifying and eliminating redundant and underperforming functions and assets;

 

   

harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

 

   

maintaining existing agreements with customers, suppliers, distributors and vendors, avoiding delays in entering into new agreements with prospective customers, suppliers, distributors and vendors, and leveraging relationships with such third parties for the benefit of the combined company;

 

   

addressing possible differences in business backgrounds, corporate cultures and management philosophies;

 

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consolidating the companies’ administrative and information technology infrastructure;

 

   

coordinating distribution and marketing efforts;

 

   

managing the movement of certain positions to different locations;

 

   

coordinating geographically dispersed organizations; and

 

   

effecting actions that may be required in connection with obtaining regulatory or other governmental approvals.

It is possible that the integration process could result in the loss of key Viasat or Inmarsat Group employees, the loss of customers, the disruption of either company’s or both companies’ ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs and an overall post-completion integration process that takes longer than originally anticipated. In addition, the actual integration may result in additional and unforeseen expenses. If the combined company is not able to adequately address integration challenges, we may be unable to successfully integrate operations and the anticipated benefits of the integration plan may not be realized.

In addition, the combined company must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth. If the combined company is not able to successfully achieve these objectives, the anticipated synergies and other benefits of the Transaction may not be realized fully, or at all, or may take longer to realize than expected. Additionally, we may inherit from Inmarsat Group legal, regulatory, and other risks that occurred prior to the Transaction, whether known or unknown to us, which may be material to the combined company. Actual growth, cost and capital expenditure synergies and other cost savings, if achieved, may be lower than what we expect and may take longer to achieve than anticipated. Moreover, at times the attention of the combined company’s management and resources may be focused on the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial to such company, which may disrupt the combined company’s ongoing business.

An inability to realize the full extent of the anticipated benefits of the Transaction, as well as any delays encountered in the integration process, could have an adverse effect upon the revenues, level of expenses and operating results of the combined company, which may adversely affect the value of the common stock of the combined company. Moreover, if the combined company is unable to realize the full strategic and financial benefits currently anticipated from the Transaction, Viasat stockholders will have experienced substantial dilution of their ownership interests without receiving any commensurate benefit, or only receiving part of the commensurate benefit to the extent the combined company is able to realize only part of the strategic and financial benefits currently anticipated from the Transaction.

Inmarsat Group may have liabilities that are not known to us and Sellers may not be required to indemnify us for such liabilities.

Inmarsat Group may have liabilities that we failed or were unable to discover in the course of performing due diligence investigations into Inmarsat Group. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition and results of operations. Moreover, the Sellers’ liability for warranties relating to the Inmarsat Group business is generally capped at $1.00, except in the case of fraud. Further, we have not performed all of the valuations necessary to ascertain the fair value of the identifiable assets to be acquired and the liabilities to be assumed and the related allocation of the purchase price. The purchase price allocation for the Transaction may result in significant adjustments to the historical values of property, plant and equipment, intangible assets, liabilities and provisions, which could in turn result in additional depreciation and amortization expense. As we integrate Inmarsat Group, we may learn additional information about Inmarsat Group that may adversely impact us, such as unknown or contingent liabilities, adequacy of financial reserves and issues relating to non-compliance with applicable laws.

 

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The combined company may not be able to retain customers, suppliers or distributors, or customers, suppliers or distributors may seek to modify contractual relationships with the combined company, which could have an adverse effect on the combined company’s business and operations. Third parties may terminate or alter existing contracts or relationships with the combined company.

As a result of the Transaction, the combined company may experience impacts on relationships with customers, suppliers and distributors that may harm the combined company’s business and results of operations. Certain customers, suppliers or distributors may seek to terminate or modify contractual obligations following the Transaction whether or not contractual rights are triggered as a result of the Transaction. There can be no guarantee that customers, suppliers and distributors will remain with or continue to have a relationship with the combined company or do so on the same or similar contractual terms following the Transaction. If any customers, suppliers or distributors seek to terminate or modify contractual obligations or discontinue the relationship with the combined company, then the combined company’s business and results of operations may be harmed. Furthermore, the combined company does not expect to have long-term arrangements with many of its significant suppliers. If the combined company’s suppliers were to seek to terminate or modify an arrangement with the combined company, then the combined company may be unable to procure necessary supplies from other suppliers in a timely and efficient manner and on acceptable terms, or at all.

We and Inmarsat Group also have contracts with third parties which may require consent from these parties in connection with the Transaction, or which may otherwise contain limitations applicable to such contracts following the Transaction. If these consents cannot be obtained, the combined company may suffer a loss of potential future revenue, incur costs and lose rights that may be material to the combined company’s business. In addition, third parties with whom we or Inmarsat Group currently have relationships may terminate or otherwise reduce the scope of their relationship in anticipation of the Transaction. Any such disruptions could limit the combined company’s ability to achieve the anticipated benefits of the Transaction. The adverse effect of any such disruptions could also be exacerbated by a delay in the completion of the Transaction or by a termination of the Purchase Agreement.

The unaudited pro forma combined financial information included in this proxy statement may not be indicative of what the combined company’s actual financial position or results of operations would have been.

The unaudited pro forma combined financial information included in this proxy statement is presented solely for illustrative purposes and is not necessarily indicative of what the combined company’s actual financial position or results of operations would have been had the Transaction been completed on the dates indicated. This unaudited pro forma combined financial information reflects adjustments that were developed using preliminary estimates based on available information and various assumptions, and may be revised as additional information becomes available. Accordingly, the final acquisition accounting adjustments may differ materially from the pro forma adjustments reflected in this proxy statement.

Inmarsat Holdings is currently not a U.S. publicly reporting company and the obligations associated with integrating into a public company may require significant resources and management attention.

Inmarsat Holdings is, and prior to the consummation of the Transaction will remain, a private company that is not subject to reporting requirements and does not have accounting personnel specifically employed to review internal controls over financial reporting. Upon completion of the Transaction, the Inmarsat Group business will become subject to the rules and regulations established from time to time by the SEC and Nasdaq. In addition, as a public company, we are required to document and test our internal controls over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act of 2002, so that our management can certify as to the effectiveness of our internal control over financial reporting in connection with the annual report. Inmarsat Group is required to be included in the scope of our internal control over financial reporting in the annual report to be filed with the SEC for the fiscal year following the fiscal year in which the Transaction is consummated and thereafter, which requires us to make and document significant changes to our internal controls over financial reporting. Bringing

 

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Inmarsat Group into compliance with these rules and regulations and integrating Inmarsat Group into our current compliance and accounting system may increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources. Furthermore, the need to establish the necessary corporate infrastructure to integrate Inmarsat Group may divert management’s attention from implementing our growth strategy, which could prevent us from improving our business, financial condition and results of operations. However, the measures we take may not be sufficient to satisfy our obligations as a public company. Inmarsat Holdings has identified three material weaknesses in its internal control over financial reporting during the preparation of its financial statements for inclusion in this proxy statement. All three issues were complex, required significant judgements and estimates and were related to the accounting for revenue agreements with one customer, purchase price accounting for the acquisition in 2019, and deferred taxes. Although Inmarsat Holdings believes that all such material weaknesses have been fully remediated, there can be no assurance that Inmarsat Holdings will not identify material weaknesses or significant deficiencies in the future. If we do not continue to develop and implement the right processes and tools to manage our changing enterprise upon the Transaction and maintain our culture, our ability to compete successfully and achieve our business objectives could be impaired, which could negatively impact our business, financial condition and results of operations. In addition, we cannot predict or estimate the amount of additional costs we may incur to bring Inmarsat Group into compliance with these requirements. We anticipate that these costs will materially increase our selling, general and administration expenses. In addition, bringing Inmarsat Group into compliance with these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. These additional obligations could have a material adverse effect on our business, financial condition, results of operations and cash flow.

Risks Relating to Our Business

You should read and consider risk factors specific to our businesses that will also affect the combined company after the completion of the Transaction. These risks are described in our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 and subsequent Quarterly Reports on Form 10-Q, which are incorporated by reference herein. For the location of information incorporated by reference in this proxy statement, see the section entitled “Where You Can Find Additional Information; Incorporation of Certain Documents by Reference.

Risks Relating to Inmarsat Group’s Business

The businesses of Inmarsat Group and Viasat are subject to similar risks and uncertainties. Accordingly, Inmarsat Group’s business is and will be subject to risks similar to those described above and in Viasat’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021 (taking into account the differences in their respective business activities). In addition, Inmarsat Group and its business are and will continue to be subject to the following risks specific to Inmarsat Group.

Inmarsat Group may not retain sufficient rights to the spectrum required to operate its existing satellite systems and may not be able to obtain sufficient new rights in order to take full advantage of future business opportunities.

Inmarsat Group relies on L-band, S-band, C-band and Ka-band radio spectrum to provide its services, and the risks incorporated by reference under Risks Relating to Our Business, including in connection with obtaining or maintaining required authorizations and changes to the regulatory environment, similarly apply to the spectrum used in Inmarsat Group’s business. Inmarsat Group’s use of the L-band is governed, in part, by sharing arrangements with other satellite operators that are re-evaluated and re-established through two annual, regional multilateral meetings of those satellite operators (one for operators whose satellites cover the Americas, and a second for those whose satellites cover Europe, Africa, Asia and the Pacific). Portions of C-band where Inmarsat Group has feeder links for its existing satellites have been allocated for international mobile telecommunications use which makes continued licensing of C-band gateways more difficult in many countries and introduces the risk of interference from terrestrial use.

 

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Inmarsat Group, together with Ligado Networks LLC, formerly known as LightSquared Inc. (Ligado), collectively have the rights to most of the mobile-satellite L-band spectrum allocation in the Americas. Under the Ligado Cooperation Agreement, as described in the section entitled Information about Inmarsat Group, Inmarsat Group and Ligado agreed on certain spectrum assignments for the Americas for the foreseeable future. Inmarsat Group believes those rights provide it sufficient spectrum to support its existing services at current levels, but there can be no assurance that such spectrum rights will continue to be sufficient. As described above, Inmarsat Group’s failure to maintain sufficient spectrum rights could have a material adverse effect on its business, financial condition and results of operations.

In May 2009, Inmarsat Group was selected through European Parliament and Council Decision 2009/449/EC to operate an S-band mobile satellite services (MSS)/complementary ground component (CGC) system across Europe. Inmarsat Group used this authorization to implement the European Aviation Network (EAN) (in partnership with Deutsche Telekom) to provide mobile broadband services to aircraft flying over Europe. Pursuant to European Parliament and Council Decision 626/2008/EC (the MSS Decision), a regulatory framework was established whereby member states of the European Union (EU) are required to authorize Inmarsat Group to operate the S-band MSS/CGC system in accordance with national and European Community law. The MSS Decision contains conditions on the modalities of the implementation of the S-band MSS/CGC system. A number of lawsuits have been brought questioning the legality of the EAN, including by Viasat, which to date have been either unsuccessful or have been withdrawn. The award of the S-band spectrum in Europe was made as a pan-European decision until 2027 and there can be no certainty that Inmarsat Group will be successful in renewing or extending beyond that date the authorizations issued by individual member states to date, on which the operation of the EAN relies.

The development of combined satellite and terrestrial networks, and the repurposing of satellite spectrum for terrestrial operations, could interfere with Inmarsat Group’s services.

On January 29, 2003, the Federal Communications Commission (the FCC) adopted an order (the ATC Order) allowing spectrum allocated to MSS, including in the L-band, to be used to support integrated ancillary terrestrial component (ATC) services if certain preconditions are met and operator-specific authorizations obtained. Since the time of the ATC Order, a number of MSS operators, including Ligado, have proposed or discussed such services.

The ATC Order and related decisions permitting integrated MSS/ATC in the L-band are based on certain assumptions, particularly relating to the level of interference that the provision of these services would likely cause to MSS or satellite operations, such as Inmarsat Group’s. If the FCC’s assumptions with respect to the use of L-band spectrum for integrated MSS/ATC services prove inaccurate, or a significant level of integrated MSS/ATC services is provided in the United States, the provision of integrated MSS/ATC services could interfere with Inmarsat Group’s satellites, gateway operations and user terminals, which may adversely impact its services, costs and revenues. Jurisdictions other than the United States are considering, and could implement, similar regulatory regimes in the future.

Inmarsat Group cannot provide assurance that the development of combined satellite and terrestrial networks in the United States, Canada or in other countries will not result in harmful interference to its operations. Additionally, if there is a sharing of C-band with terrestrial operators, this could negatively impact Inmarsat Group’s services. If Inmarsat Group is unable to prevent such interference it could have a material adverse effect on its business, financial condition and results of operations.

Inmarsat Group may be subject to operational, regulatory and financial risks in relation to the Ligado Cooperation Agreement.

Operational, regulatory and financial risks to Inmarsat Group may arise in connection with the Ligado Cooperation Agreement. Inmarsat Group transitioned to the 30 MHz Plan under the Ligado Cooperation

 

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Agreement at the end of 2021, which reduces the amount of L-band spectrum available for Inmarsat Group’s services in North America and may require Inmarsat Group’s U.S. L-band services to coexist with Ligado’s own services in adjacent frequencies. There can be no assurance that actions taken by Inmarsat Group, Ligado or third parties to avoid, mitigate or otherwise address interference between the respective services will be effective or considered sufficient. Moreover, as discussed above, if Ligado launches its ATC services, there is a risk that Inmarsat Group’s U.S. L-band services may receive interference from Ligado’s ATC operations. The congestion and interference risks could have an adverse effect on Inmarsat Group’s future North America L-band service performance, revenues and costs. There can be no assurance that Inmarsat Group will be able to mitigate this impact. As of the date of this proxy statement, Ligado has sent a letter alleging that Inmarsat Group is in breach of the Ligado Cooperation Agreement. Inmarsat Group intends to defend vigorously against any potential litigation, but the outcome would be uncertain and an unfavorable outcome could have a negative impact on Inmarsat Group’s business, financial condition and results of operations.

In respect of the Ligado Cooperation Agreement, Inmarsat Group has received payments that are intended to compensate it for the value of the spectrum provided to Ligado, including the lost revenues from Inmarsat Group utilizing less spectrum, as well as the potential costs of mitigation efforts to use the spectrum more efficiently and to protect its network from potential interference from any Ligado ATC operations. However, such payments may not be sufficient to fully compensate Inmarsat Group and Inmarsat Group’s interference mitigation strategy may not be successful, or may itself undermine Inmarsat Group’s business operations. As customers look to migrate from one Inmarsat Group terminal and/or service to another, there is a risk that some customers may choose competing services instead, which could have an adverse effect on Inmarsat Group’s business, financial condition and results of operations. In addition, Inmarsat Group could face claims from its customers, end-users, and/or Ligado regarding potential ATC interference to Inmarsat Group’s services.

In April 2020, the FCC approved Ligado’s application to modify its license to permit ATC services in the United States, subject to a number of operating conditions. Petitions for Reconsideration have been filed by the National Telecommunications Information Administration and others. If the FCC reconsiders its decision, or if there is a successful appeal, then there could be an adverse impact on Inmarsat Group’s receipt of future revenues from Ligado under the Ligado Cooperation Agreement. In addition, there can be no assurance that the remaining payments by Ligado under the Ligado Cooperation Agreement will be made on a timely basis or at all (whether due to Ligado’s breach, insolvency or otherwise).

Inmarsat Group relies on its third parties to provide ground infrastructure for certain of its narrowband L-band services and broadband services.

Inmarsat Group has third parties who provide the ground infrastructure for its narrowband L-band services, and also sells its narrowband L-band services to third-party distribution partners, some of whom operate the land-earth stations (LES) that transmit and receive those services to and from Inmarsat Group satellites. If any of these distribution partners fail to provide or maintain these LES facilities, Inmarsat Group has some ability to migrate affected traffic to its own LES facilities though there is likely to be some service disruption or limitation, including regulatory, which may affect the ability or timescale for a migration. This could adversely affect Inmarsat Group’s business, financial condition and results of operations. Inmarsat Group also has third parties who provide the ground infrastructure for the EAN and its Global Xpress (GX) services. The failure of third parties to provide or maintain these services could also adversely affect Inmarsat Group’s business, financial condition and results of operations.

Inmarsat Group also relies on manufacturers and partners to supply to time and quality the technology and infrastructure required to support new satellite ground infrastructure deployment for the Inmarsat-6 satellites and for any other satellites currently being constructed, services and capabilities, or maintain existing infrastructure, and capabilities, without which Inmarsat Group’s revenues would be negatively impacted. This requires Inmarsat Group to procure suppliers for delivery of projects and support and maintenance activities through thorough and robust approaches appropriate for critical projects and activities.

 

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In addition, Inmarsat Group relies on a network of LESs, Satellite Access Stations (SASs) and ground infrastructure, some of which are managed by third parties, and if there are significant interruptions in these networks due to component or telecom failure, physical attack, fire, explosion, extreme weather, natural disasters, failure of a third party to fulfil its contractual obligations or otherwise, such interruptions could affect Inmarsat Group’s business, financial condition and results of operations.

Sales by distribution partners and resellers represent a significant portion of Inmarsat Group’s revenues; Inmarsat Group may be held responsible for actions taken by its distribution partners and resellers in violation of applicable laws; the failure, loss or insolvency of key distribution partners could adversely affect Inmarsat Group’s revenues, profitability and liquidity.

Inmarsat Group continues to rely on third-party distribution partners, resellers and other service providers for a material portion of its revenues. There is a risk that Inmarsat Group’s third party distribution partners, resellers or service providers could fail to market, distribute or support its products and services effectively, or fail to offer its products and services at prices which are competitive, which could adversely affect Inmarsat Group’s revenues, profitability, liquidity and reputation. Changes in Inmarsat Group’s business model could affect the willingness of third-party distribution partners, resellers or other service providers to continue to offer Inmarsat Group’s services.

Like Viasat, Inmarsat Group’s sales and operations are subject to various applicable laws and regulations relating to trade, sanctions, export controls and anti-bribery laws, and violations of any such laws or regulations could materially adversely affect Inmarsat Group’s business, financial condition and results of operations. Inmarsat Group may also be held responsible under such laws and regulations for actions taken by its third party distribution partners, resellers or other service providers who sell Inmarsat Group’s products and services on its behalf. Inmarsat Group has clauses in its contracts with third party distribution partners, resellers and other service providers requiring them to comply with such laws and regulations and expressly prohibiting any actions in breach of sanctions laws. Inmarsat Group also has a compliance team and internal procedures in place designed to address such risks; however, there can be no assurance that third party distribution partners, resellers or other service providers have fully complied or will comply with such covenants at all times, or that Inmarsat Group’s internal procedures have been or will continue to be completely effective in monitoring or ensuring such compliance. Accordingly, from time to time activities have been and may be undertaken by third party distribution partners, resellers or other service providers, in violation of their contracts with Inmarsat Group and such laws and regulations, for which Inmarsat Group may be held responsible. For example, during 2021 Inmarsat Group identified that certain distributors were in breach of their contracts with Inmarsat Group and applicable sanctions laws and regulations. Upon identification, Inmarsat Group took immediate action to terminate the relevant services and is currently investigating these breaches with a view to ascertaining any risk to Inmarsat Group from past or future non-compliance by its distributors and to improving its internal procedures to identify and prevent future breaches by its distributors, resellers or other service providers. Non-compliance with any applicable trade control, sanctions, export control or anti-corruption laws or other legal requirements may result in criminal and/or civil penalties, disgorgement and/or other sanctions and remedial measures, and may result in unexpected legal or compliance costs. Moreover, any existing or future investigation of alleged violations of any such laws could have a material adverse impact on Inmarsat Group’s reputation, business, financial condition and results of operations.

In addition, the loss, insolvency or merger of any key third party distribution partners, resellers or other service providers could materially affect Inmarsat Group’s routes to market, increase its reliance on a few key partners, reduce customer choice or result in a significant bad debt cost, all of which could have a material adverse effect on its business, financial condition and results of operations.

 

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The impact of the United Kingdom’s withdrawal from the European Union may impact Inmarsat Group’s business operations and prospects.

Inmarsat Group is headquartered in the United Kingdom. After Brexit on January 31, 2020, there followed a transition period, when the United Kingdom and the EU entered into a trade and cooperation agreement to govern the future relationship between the parties, which was provisionally applied as of January 1, 2021 and entered into force on May 1, 2021 following ratification by the EU. Such agreement is untested and may lead to ongoing political and economic uncertainty and periods of exacerbated volatility in both the United Kingdom and in wider European and global markets for some time. The longer term economic, legal, political and social implications of Brexit remain unclear at this stage and may have been masked by the Covid-19 pandemic in 2020 and 2021. Brexit could lead to calls for similar referendums in other European jurisdictions, which could cause increased economic volatility in the European and global markets. This mid- to long-term uncertainty could have material adverse effects on the economy generally and on Inmarsat Group’s business, financial condition and results of operations.

 

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PROPOSAL 1:

Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction

Overview

A portion of the consideration to be paid to the Sellers in connection with the Transaction will consist of the Stock Consideration, consisting of approximately 46.36 million shares of Viasat common stock, which will be issued to the Sellers as set forth in and pursuant to the terms of the Purchase Agreement and which we expect will represent approximately 38% of the outstanding shares of Viasat common stock after giving effect to the Transaction (or approximately 37% on a fully diluted basis). We are proposing the Stock Issuance Proposal in order to comply with Rule 5635(a) of the Nasdaq Stock Market Rules, which requires stockholder approval prior to the issuance of securities in connection with the acquisition of the stock or assets of another company (other than a public offering for cash) where the issuance equals 20% or more of the common stock or 20% of the voting power outstanding before such issuance.

The terms of the Purchase Agreement and the Related Agreements are complex and only briefly summarized below. For further information, please see the full text of the Purchase Agreement, which is attached as Annex A hereto, and the Related Agreements, which are attached as Annexes C, D and E hereto. The discussion herein is qualified in its entirety by reference to such documents.

We are asking our stockholders to approve the issuance of the Stock Consideration to the Sellers in connection with the Transaction. Our stockholders should read carefully this proxy statement in its entirety for more detailed information concerning the Purchase Agreement, which is attached as Annex A to this proxy statement. Please see the subsection entitled “The Purchase Agreement” below, for additional information and a summary of certain terms of the Purchase Agreement. You are urged to read carefully the Purchase Agreement in its entirety before voting on this proposal.

We will not be able to consummate the Transaction unless this Stock Issuance Proposal is approved by the affirmative vote of a majority of the votes cast by holders of outstanding shares of Viasat common stock present in person or represented by proxy, assuming a quorum is present.

The Purchase Agreement

This subsection of the proxy statement describes the material provisions of the Purchase Agreement, but does not purport to describe all of the terms of the Purchase Agreement. The following summary is qualified in its entirety by reference to the complete text of the Purchase Agreement, which is attached as Annex A hereto. You are urged to read the Purchase Agreement in its entirety because it is the primary legal document that governs the Transaction.

The Purchase Agreement, together with the warranty deeds and other documents entered into in connection with the Purchase Agreement, contain warranties and covenants that the respective parties to such agreements made to each other as of the date of the Purchase Agreement or other specific dates. The assertions embodied in those warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Purchase Agreement. The warranties in the warranty deeds are also modified in important part by the underlying disclosure letters, none of which have been filed publicly and which were used for the purpose of allocating contractual risk among the parties rather than establishing matters as facts.

 

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General Description of the Purchase Agreement

On November 8, 2021, we entered into the Purchase Agreement with the Sellers which provides for, among other things, our acquisition of Inmarsat Holdings. Under the Purchase Agreement, on the terms and pursuant to the conditions contained therein, the Sellers will sell to us, and we will purchase, accept and pay for, in each case, at the consummation of the transactions contemplated by the Purchase Agreement, all of the issued and outstanding shares of Inmarsat Holdings, free and clear of all encumbrances. The purchase price that we will pay for the Inmarsat Holdings shares is approximately $3.95 billion consisting of: (i) an amount in cash equal to $850.0 million (the Base Cash Consideration), subject to adjustments, and (ii) 46,363,636 fully paid, validly issued and non-assessable shares of Viasat common stock (the Stock Consideration), valued at approximately $3.1 billion based on the closing price of $67.00 per share of Viasat common stock on Nasdaq on November 5, 2021 (the last trading day prior to the execution of the Purchase Agreement). The Base Cash Consideration is subject to certain adjustments, including for certain dividends, distributions, certain payments to or other transactions with the Sellers and their affiliates, Seller transaction costs and retention bonuses in excess of specified aggregate amounts, transaction bonuses (if any), certain taxes and similar items, as set forth in the Purchase Agreement.

Closing of the Transaction

The closing of the Transaction is expected to take place in person or virtually at 10:00 a.m., London time, on the first business day which is a Monday falling on or following the fifteenth business day after the satisfaction or (to the extent permitted by applicable law) waiver of the conditions described below under the subsection “Conditions to Closing of the Transaction” or at such other date and time as may be mutually agreed upon in writing by us and the Investor Sellers.

Conditions to Closing of the Transaction

The respective obligations of us and the Sellers to consummate and effect the Transaction and the other transactions contemplated by the Purchase Agreement are subject to the satisfaction, at or prior to the closing of the Transaction, of each of the following conditions:

 

   

the satisfaction or receipt of certain regulatory approvals and clearances;

 

   

the required vote of our stockholders to approve the Stock Issuance Proposal and the Charter Amendment Proposal;

 

   

the completion of the exchange of the Management Sellers’ shares and options of a subsidiary of Inmarsat Holdings for shares of Inmarsat Holdings; and

 

   

the completion of a review by Inmarsat Group in respect of certain limited matters.

Warranties

Under the Purchase Agreement, the Sellers made customary warranties regarding the Sellers relating to: incorporation; standing and power; ownership of the shares of Inmarsat Holdings; authority; investment; solvency; and litigation.

In addition, under the management warranty deed entered into in connection with the Purchase Agreement (the Management Warranty Deed), certain of the Management Sellers made customary warranties regarding Inmarsat Group relating to: incorporation; standing and power; capitalization; financial statements; operation of the business; indebtedness; solvency; material contracts; assets; real property; intellectual property; information technology; data protection; employment; pensions; legal and regulatory compliance; insurances; bribery, corruption, sanctions and export controls; litigation; and tax. The Management Sellers’ aggregate liability for breach of the Management Warranty Deed is capped at $1.00, except in the case of fraud, and we do not otherwise have any right to indemnification or any other recovery for any breaches of the warranties contained in the Management Warranty Deed.

 

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Under the Purchase Agreement, Viasat made customary warranties relating to: incorporation; standing and power; authority; solvency; litigation; capitalization; anti-takeover protections; and financing.

In addition, under the purchaser warranty deed entered into in connection with the Purchase Agreement (the Purchaser Warranty Deed), Viasat made customary warranties relating to: incorporation; standing and power; capitalization; financial statements; operation of the business; indebtedness; solvency; material contracts; assets; real property; intellectual property; information technology; data protection; employment; pensions; legal and regulatory compliance; insurances; bribery, corruption, sanctions and export controls; litigation; and tax. Viasat’s aggregate liability for breach of the Purchaser Warranty Deed is capped at $1.00, except in the case of fraud, and the Sellers do not otherwise have any right to indemnification or any other recovery for any breaches of the warranties contained in the Purchaser Warranty Deed.

Covenants of the Parties

Covenants of the Sellers

The Sellers made certain covenants under the Purchase Agreement, including, among others, the covenants set forth below.

 

   

Prior to the closing of the Transaction, the Sellers have agreed to cause Inmarsat Holdings and its subsidiaries to conduct their business in the ordinary course of business in all material respects.

 

   

In particular, subject to certain exceptions set forth in the Purchase Agreement or the prior approval of Viasat, prior to the closing of the Transaction, the Sellers have agreed to cause Inmarsat Holdings and its subsidiaries not to:

 

   

allot or issue or transfer or agree to allot or issue or transfer any share or loan capital other than from one Inmarsat Group company to another Inmarsat Group company;

 

   

grant any right to subscribe for any share or loan capital other than from one Inmarsat Group company to another Inmarsat Group company;

 

   

amend any organizational documents or accounting reference date;

 

   

change their residence for tax purposes;

 

   

create any encumbrance over the Inmarsat Holdings shares; or

 

   

adopt, materially amend or terminate any material benefit plan, other than reasonably necessary or advisable to implement certain transactions with respect to Inmarsat Group’s UK pension plan.

 

   

In addition, subject to certain exceptions set forth in the Purchase Agreement or the prior approval of Viasat, prior to the closing of the Transaction, the Sellers have also agreed to cause Inmarsat Holdings and its subsidiaries not to do any of the following, other than in the ordinary course of business:

 

   

enter into any new radio spectrum, satellite capacity, satellite coordination or similar agreement or materially alter the terms of any such existing agreement;

 

   

create any encumbrances over their shares, loan capital or assets;

 

   

acquire or dispose of any assets, business or undertakings or assume or incur liabilities, obligations or expenses (actual or contingent), other than an acquisition, disposal, assumption or incurrence (or, in each case, series of related actions), as the case may be, that has a net value or burden to Inmarsat Holdings and its subsidiaries of less than $25.0 million;

 

   

request the cancellation of any material permit or deliberately and knowingly take any action or omits to take any action which would cause any material permit not to be renewed, to the extent such action would, or would reasonably be likely to have, a material adverse effect on the financial condition, business or operation of Inmarsat Holdings and its subsidiaries;

 

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terminate or materially amend in a manner adverse to Inmarsat Holdings and its subsidiaries the terms of any material policy of insurance covering any orbital assets of Inmarsat Holdings and its subsidiaries and maintained by Inmarsat Holdings and its subsidiaries at the date of the Purchase Agreement;

 

   

amend the terms of their borrowing or financial indebtedness in any material respect or creates or incurs borrowing or financial indebtedness other than the creation or incurrence of indebtedness of less than $25.0 million;

 

   

enter into, vary, amend or terminate a material contract;

 

   

enter into, vary, amend or terminate any joint venture or partnership or agreement or arrangement for the sharing of profits;

 

   

grant any increase in salary, wage rate, bonus or benefits to any employee which increases their remuneration by greater than 15% in the aggregate, other than in connection with a bona fide promotion of such employee;

 

   

compromise or settle any outstanding tax inquiry, audit or challenge by, or any outstanding tax litigation or dispute with, any taxation authority which involves more than $25.0 million of tax;

 

   

enter into, terminate or amend in any material respect any consolidation, group, unity or loss-sharing arrangement for any tax purposes, or make or amend in any material respect any claim, election or option relating to taxation or amend in any material respect of any tax return, in each case, except as required by law or to the extent consistent with past practice of Inmarsat Holdings or the applicable subsidiary; or

 

   

enter into any agreement or arrangement (whether in writing or otherwise) to do any of the foregoing or allow or permit any of the foregoing to occur.

 

   

During the period prior to closing, the Sellers have agreed to cause Inmarsat Holdings and its subsidiaries to provide to us, at our sole expense, reasonable information and cooperation reasonably requested by us in connection with any financing sought by us in connection with the Transaction.

 

   

The Sellers have agreed to cause Inmarsat Holdings and its subsidiaries to seek an amendment to its existing credit agreement to permit the transactions contemplated by the Purchase Agreement.

 

   

Inmarsat Holdings and its subsidiaries shall undertake a review of their business practices in regards to compliance with sanctions laws and the current and the historical adequacy of their compliance procedures and controls as they relate to their compliance with sanctions laws.

 

   

The Sellers have agreed that, in certain circumstances, we shall be entitled to retain up to $30.0 million of the purchase price for a period of up to 18 months. Such retained amount shall be applied towards certain specified liabilities, to the extent there is any liability attaching to Inmarsat Group, with the balance (if any) being released to the Sellers.

 

   

The Sellers shall be permitted, in certain circumstances (including having received our prior consent), to cause Inmarsat Holdings to pay a dividend to the Sellers of up to $300.0 million. Any amount of such dividend shall be deducted from the purchase price.

Covenants of Viasat

We made certain covenants under the Purchase Agreement, including, among others, the covenants set forth below.

 

   

Prior to the closing of the Transaction, we have agreed to conduct our business in the ordinary course of business in all material respects.

 

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In particular, subject to certain exceptions, prior to the closing of the Transaction, we have agreed not to, and will cause our subsidiaries not to:

 

   

amend any organization documents (other than the amendment to our Certificate of Incorporation contemplated by the Charter Amendment Proposal);

 

   

issue, deliver or sell, pledge, create an encumbrance or authorize the issuance, delivery, sale, pledge or encumbrance of, any shares of capital stock or other equity securities of us or our wholly owned subsidiaries, subject to certain exceptions, including with respect to issuances pursuant to our benefit plans;

 

   

(i) split, combine or reclassify any shares of capital stock (other than pursuant to any transaction: (a) solely among us and one or more of our wholly owned subsidiaries; (b) solely among our wholly owned subsidiaries; or (c) in the case of a subsidiary that is not wholly owned, where we and our wholly owned subsidiaries are treated proportionately); (ii) declare, set aside or pay any dividend or make any other distribution (whether in cash, stock, property or any combination thereof) in respect of any shares of its capital stock or other equity securities of us or any of our subsidiaries, other than dividends or distributions by our subsidiary to us or our wholly owned subsidiary (or, where the relevant subsidiary is not wholly owned, where we or one of our wholly owned subsidiaries receives at least our pro rata share of such dividend of distribution); or (iii) redeem, repurchase, cancel or otherwise acquire or offer to redeem, repurchase, or otherwise acquire any of equity securities or any equity securities of any of our subsidiaries, other than (x) repurchases or withholding of Viasat common stock in connection with the exercise, vesting or settlement of Viasat equity awards (including in satisfaction of any amounts required to be deducted or withheld under law) in accordance with the present terms of such Viasat equity awards or, to the extent expressly permitted by the Purchase Agreement, granted after the date of the Purchase Agreement or (y) repurchases or withholding of shares of TrellisWare Technologies, Inc. in accordance with the terms thereof (including in satisfaction of any amounts required to be deducted or withheld under law);

 

   

propose or adopt any plan of merger, consolidation, reorganization, liquidation, scheme or arrangement, tender offer or dissolution of us or any of our material subsidiaries, file a petition in bankruptcy under any provisions of federal or state bankruptcy law on behalf of us or any of our material subsidiaries or consent to the filing of any bankruptcy petition against us or any of our material subsidiaries under any similar law;

 

   

delist our common stock from Nasdaq;

 

   

other than in the ordinary course of business or with respect to the implementation of a TrellisWare Buy-Out (as defined in the Purchase Agreement), acquire or dispose of any assets, business or subsidiaries having a value in excess of $100.0 million;

 

   

other than (i) in the ordinary course of business; (ii) with respect to the Transaction financing or any other financing transaction(s) undertaken by us or any of our subsidiaries after the date of the Purchase Agreement in an aggregate principal amount not to exceed $700.0 million; or (iii) borrowings under our existing revolving credit facility, assume or incur liabilities, obligations or expenses (actual or contingent) in excess of $25.0 million;

 

   

subject to certain exceptions, amend the terms of our borrowing or financial indebtedness in any material respect or create or incur borrowing or financial indebtedness outside the ordinary course of business in excess of $25.0 million;

 

   

enter into, amend or terminate a material contract other than in the ordinary course of business;

 

   

implement or adopt any stockholder rights plan or similar arrangement;

 

   

enter into any agreement or arrangement (whether in writing or otherwise) or announce our intention or do any of the foregoing or allow or permit any of the foregoing to occur.

 

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We have agreed to promptly prepare and file with the SEC this proxy statement and cause this proxy statement to be mailed to our stockholders. Prior to filing this proxy statement with the SEC, we will make drafts of the proxy statement and other documents to be filed with the SEC available to the Investor Sellers, and provide the Investor Sellers with a reasonable opportunity to review and comment on such documents and consider such comments in good faith.

 

   

We have agreed to, as promptly as practicable following the proxy effectiveness, establish a record date and hold a meeting of stockholders for the purpose of obtaining the required vote of the stockholders to the Stock Issuance Proposal and the Charter Amendment Proposal. Our Board has recommended to the stockholders that they vote in favor of the Stock Issuance Proposal and the Charter Amendment Proposal (the Board Recommendation) and we have agreed that our Board will not change, withdraw, withhold, qualify or modify the Board Recommendation, other than in certain limited circumstances.

 

   

We will cause the shares of Viasat common stock to be issued in connection with the Transaction to be approved for listing on Nasdaq, subject to official notice of issuance, prior to the closing of the Transaction.

 

   

We will take all lawful actions required and available to us under the relevant financing documents to draw down funds enabling us to pay the consideration under the Purchase Agreement and meet our other obligations under the Purchase Agreement.

 

   

From and after the closing, we are required to cause Inmarsat Group to fulfill and honor Inmarsat Group’s existing indemnification obligations to its officers and directors. We have also agreed that we will maintain “tail” director and officer liability insurance coverage at our expense with a claims period of at least six years from the closing date.

Non-Solicit Restrictions

 

   

During the period from the date of the Purchase Agreement and continuing until the earlier of the termination of the Purchase Agreement pursuant to its terms or the closing, we will, and we will cause our subsidiaries and use our reasonable best efforts to cause our and our subsidiaries’ representatives to, cease immediately and cause to be terminated any and all existing activities, discussions or negotiations, if any, with any third party with respect to any alternative acquisition proposal or with respect to any indication, proposal or inquiry that would reasonably be expected to lead to an alternative acquisition proposal.

 

   

During the period from the date of the Purchase Agreement and continuing until the earlier of the termination of the Purchase Agreement pursuant to its terms or the closing, we will not, and we will cause our subsidiaries and use our reasonable best efforts to cause our and our subsidiaries’ representatives not to, directly or indirectly:

 

   

solicit, initiate or take any action or knowingly facilitate or knowingly encourage (including by way of furnishing non-public information to any person in connection with) the submission of any alternative acquisition proposal or any indication, proposal or inquiry that would reasonably be expected to lead to an alternative acquisition proposal;

 

   

enter into or participate in any discussions or negotiations with, furnish any non-public information relating to us or any of our subsidiaries to or afford access to the business, properties, assets, books or records of us or any of our subsidiaries to, any third party that we know is seeking to make (or may reasonably be likely to seek to make), or has made, an alternative acquisition proposal;

 

   

fail to enforce or grant any waiver or release under any standstill or similar agreement with respect to any class of equity securities of us or any of our subsidiaries, unless our Board determines after consulting with our outside legal counsel that the failure to waive such provision would reasonably be expected to be inconsistent with its fiduciary duties under law; or

 

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enter into any agreement in principle, letter of intent, term sheet, merger agreement, acquisition agreement, option agreement or other agreement (other than a confidentiality agreement) providing for or relating to an alternative acquisition proposal.

 

   

From and after date of the Purchase Agreement, we shall promptly (and in any event within 24 hours) notify the Investor Sellers of the receipt of any alternative acquisition proposal or any indication, proposal or inquiry that would reasonably be expected to lead to an alternative acquisition proposal. Each such notice shall be provided in writing and shall identify the third party making, and, to the extent applicable, the material terms and conditions (including price) of, any such alternative acquisition proposal, indication, inquiry, proposal or request (including any changes thereto and, if applicable, copies of any written requests, proposals or offers, including proposed agreements). Following such initial notice, we shall keep the Investor Sellers reasonably and promptly informed of the status and details of any such alternative acquisition proposal, indication, inquiry, proposal or request (including any changes thereto), including the status of any such discussions or negotiations, and shall promptly (but in no event later than 24 hours after receipt) provide to the Investor Sellers copies of all material correspondence and written materials sent or provided to us or our subsidiaries that describes any terms or conditions of any alternative acquisition proposal (as well as written summaries of any material oral communications addressing such matters).

Exceptions to Our Non-Solicit Restrictions

Prior to the stockholder approval of the Stock Issuance Proposal and the Charter Amendment Proposal, we are not prohibited from:

 

   

contacting a third party that has made a bona fide alternative acquisition proposal (which has not resulted from a violation of our non-solicit obligations) solely to clarify (and not to engage in negotiations or discussions regarding) the material terms of such alternative acquisition proposal and inform such third party of our non-solicit obligations; and

 

   

engaging in negotiations or discussions with a third party that has made an unsolicited bona fide written alternative acquisition proposal (which has not resulted from a violation of our non-solicit obligations), and furnishing to such third party and its representatives non-public information relating to us or our subsidiaries pursuant to a confidentiality agreement with terms no less favorable to us in any material respect than those contained in our confidentiality agreement with Inmarsat Group, provided that all such non-public information (to the extent that such information has not been previously provided or made available to the Investor Sellers) is provided or made available to the Investor Sellers, as the case may be, substantially concurrently with the time it is provided or made available to such third party and provided further that prior to and as a condition of taking any actions described in this sub-paragraph, our Board determines in good faith, after consultation with our financial advisor and outside legal counsel, that the failure to take such action would reasonably be expected to be inconsistent with its fiduciary duties under law and such alternative acquisition proposal either constitutes or is reasonably likely to result in a Superior Proposal.

Change of Recommendation Restrictions

Subject to certain exceptions, neither we nor our Board shall:

 

   

fail to make or withdraw or qualify, amend or modify in any manner adverse to the Investor Sellers, the Board Recommendation;

 

   

fail to include the Board Recommendation in this proxy statement;

 

   

recommend, adopt or approve or publicly propose to recommend, adopt or approve any alternative acquisition proposal;

 

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fail to publicly reaffirm (without qualification) the Board Recommendation in a statement complying with Rule 14e-2(a) under the Exchange Act with regard to an alternative acquisition proposal by the close of business on the tenth business day after the commencement of such alternative acquisition proposal under Rule 14e-2(a); or

 

   

publicly propose to do any of the foregoing.

We refer to the taking of any of the actions described in the bullets above as a Change of Recommendation.

Exceptions to Our Change of Recommendation Restrictions

Prior to the stockholder approval of the Stock Issuance Proposal and the Charter Amendment Proposal, our Board is entitled to make a Change of Recommendation if:

 

   

in the case of a Change of Recommendation taken in connection with an alternative acquisition proposal:

 

   

we have complied with our non-solicit obligations;

 

   

the alternative acquisition proposal has not been withdrawn;

 

   

our Board determines in good faith, after consultation with our financial advisor and outside legal counsel that such alternative acquisition proposal, and taking into account all the terms and conditions of the alternative acquisition proposal that our Board reasonably considers to be appropriate (including the identity of the person making the alternative acquisition proposal and the expected timing and likelihood of completion, any governmental or other approval requirements (including divestitures and entry into other commitments and limitations), break-up fees, expense reimbursement provisions, conditions to completion and availability of necessary financing), would result in a transaction (i) that, if completed, is more favorable to our stockholders from a financial point of view than the Transaction (taking into account any written proposal by the Investor Sellers to amend the terms of the Purchase Agreement); (ii) that is reasonably capable of being completed on the terms proposed; and (iii) for which financing, if a cash transaction (whether in whole or in part), is then fully committed or determined to be reasonably available by our Board (a Superior Proposal);

 

   

our Board determines in good faith, after consultation with our financial advisor and outside legal counsel that the failure to make a Change of Recommendation would reasonably be expected to be inconsistent with our directors’ fiduciary duties under law;

 

   

in the case of a Change of Recommendation that is not in response to and does not otherwise involve or relate to an alternative acquisition proposal:

 

   

we have complied with our non-solicit obligations;

 

   

there has been any material event, change, effect, development or occurrence arising or occurring after the date of the Purchase Agreement that: (i) was not known or reasonably foreseeable, or the material consequences of which were not known or reasonably foreseeable, in each case to our Board as of or prior to the date of the Purchase Agreement; (ii) does not relate to or involve any alternative acquisition proposal; (iii) does not relate to the fact that, in and of itself, we exceed any internal or published projections, forecasts, estimates or predictions in respect of revenues, earnings or other financial or operating metrics, or changes or prospective changes in the market price or trading volume of Viasat common stock; and (iv) does not relate to any event or circumstance arising in connection with satisfying the regulatory conditions (an Intervening Event);

 

   

our Board determines in good faith, after consultation with our financial advisor and outside legal counsel that the failure to make a Change of Recommendation would reasonably be expected to be inconsistent with our directors’ fiduciary duties under law; and

 

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(i) at least four business days before making the Change of Recommendation, we have notified the Investor Sellers in writing that we intend to make the Change of Recommendation which notice attaches, in the case of a Change of Recommendation in response to an alternative acquisition proposal, the most current version of each proposed contract providing for or related to such alternative acquisition proposal (including any contract relating to financing or expense reimbursement) and the identity of the third parties making the alternative acquisition proposal or, in the case of an Intervening Event, a reasonably detailed description of the facts relating to such Change of Recommendation; (ii) if requested by the Investor Sellers, during such four business day period, we and our representatives shall have discussed and negotiated in good faith with the Investor Sellers (to the extent that the Investor Sellers desire to so discuss or negotiate) regarding any proposal by the Investor Sellers to amend the terms of the Purchase Agreement in response to such alternative acquisition proposal or other potential Change of Recommendation; and (iii) after such four business day period, our Board determines in good faith, after consultation with our financial advisor and outside legal counsel and taking into account any written proposal by the Investor Sellers to amend the terms of the Purchase Agreement, that: (A) in the case of any such action in connection with an alternative acquisition proposal, such alternative acquisition proposal continues to constitute a Superior Proposal; and (B) the failure to make the Change of Recommendation would continue to reasonably be expected to be inconsistent with its fiduciary duties under law. In the event of any amendment to the financial terms or other material terms of any such alternative acquisition proposal, we are required to deliver a new written notification consistent with the foregoing and a new notice period shall commence, during which we shall be required to comply with the foregoing requirements, except that the notice period shall be for two business days (as opposed to four business days). After delivery of such written notice, we shall promptly keep the Investor Sellers reasonably informed of all material developments affecting the material terms of any such alternative acquisition proposal and shall provide the Investor Sellers with copies of any additional, material written materials received that relate to such alternative acquisition proposal.

Mutual Covenants

 

   

We and the Sellers will take all reasonably necessary action such that the issuance of the Stock Consideration to the Sellers under the Purchase Agreement constitutes a valid “private placement” under the Securities Act.

 

   

We and the Sellers will not to make any announcement in connection with the Purchase Agreement without the prior written approval of the Sellers, subject to certain exceptions.

 

   

We and the Sellers have agreed to use reasonable best efforts to file and submit all necessary or advisable notifications, filings, draft filings or other documentation required in connection with the Transaction pursuant to certain applicable antitrust, competition, foreign investment or national security laws or regulations, including under the HSR Act and the United Kingdom’s Enterprise Act 2002.

 

   

We and the Sellers will remain subject to certain continuing obligations of confidentiality with regard to information relating to Viasat and Inmarsat Group.

 

   

We and the Sellers will pay their own costs and expenses incurred in connection with the Purchase Agreement, whether or not the transactions contemplated thereby are consummated, except as otherwise expressly provided in the Purchase Agreement.

Breach of Warranty

Seller Liability

In the event of a breach of a warranty or covenant of the Sellers under the Purchase Agreement, we are entitled to make a claim against the Sellers (for damages or otherwise) unless the breach is remedied at no cost or expense

 

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to us within 30 days after notice of our claim. The warranties and covenants of Sellers set forth in the Purchase Agreement survive for a period of 18 months following the closing (or a period of four years for breaches of ownership warranties). The warranties of the Sellers in the Purchase Agreement cover fundamental matters such as due authority, no conflicts, title to Inmarsat Holdings shares, investment warranties and solvency, and do not cover any warranties regarding Inmarsat Group and its business and affairs.

The maximum aggregate liability of each Seller is equal to the aggregate value of the consideration to be received by such Seller. The Sellers are not liable for any indirect or consequential losses and the Sellers are not liable for any breach of warranties to the extent that we had prior knowledge of facts or circumstances related to such breach.

The Management Sellers have also made certain warranties regarding Inmarsat Group and its business pursuant to a Management Warranty Deed, separate from the warranties regarding the Sellers in the Purchase Agreement. The Management Sellers’ aggregate liability for breach of the Management Warranty Deed is capped at $1.00 and we do not otherwise have any right to indemnification or other recovery for any breaches of the warranties contained in the Management Warranty Deed.

Viasat Liability

In the event of a breach of a warranty or covenant of Viasat under the Purchase Agreement, the Sellers may seek recourse through any rights or remedies available to them at law or in equity.

In addition, we have made warranties regarding Viasat and our business pursuant to a separate purchaser warranty deed (the Purchaser Warranty Deed), separate from the warranties regarding Viasat in the Purchase Agreement. Our liability for breach of the Purchaser Warranty Deed is capped at $1.00 and the Sellers do not otherwise have any right to indemnification for any breaches of the warranties contained in the Purchaser Warranty Deed.

Termination

The Purchase Agreement may be terminated and the Transaction may be abandoned any time prior to closing as follows:

 

   

by either us or the Investor Sellers, if closing has not occurred by 11:59 p.m. on the date that is 18 months following the date of the Purchase Agreement (the Long Stop Date); provided, however, that the right to terminate the Purchase Agreement by this date will not be available to any party whose material breach of any provision of the Purchase Agreement has been the primary cause of, or primarily resulted in, closing not having occurred; and provided, further, that we have the right to extend the Long Stop Date to the date that is 24 months following the date of the Purchase Agreement in certain circumstances if additional time is needed to satisfy regulatory conditions;

 

   

by the Investor Sellers, if we or the Board make a Change in Recommendation

 

   

by the Investor Sellers, if we have not convened the stockholder meeting by 11:59 p.m. on the earlier of the Long Stop Date or the date on which all regulatory conditions have been satisfied;

 

   

by the Investor Sellers, if we have materially breached any of our non-solicit obligations under the Purchase Agreement unless such breach is caused by an employee of ours or any of our subsidiaries who is not a director, officer or senior employee of ours or any of our subsidiaries; or

 

   

by us or the Investor Sellers, if stockholder approval of the Stock Issuance Proposal and the Charter Amendment Proposal is not obtained at the stockholder meeting (including any adjournment or proposal thereof).

 

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In the event of termination of the Purchase Agreement, the Purchase Agreement will become void except for provisions relating to: (i) fraud; (ii) termination fees; (iii) limitation of liability; (iv) publicity and confidentiality; (v) limited recourse; and (vi) certain miscellaneous provisions of the Purchase Agreement.

Termination Fees

The Purchase Agreement provides that if the Investor Sellers terminate the Purchase Agreement due to a Change in Recommendation, or us not having held a stockholder meeting to approve the Stock Issuance Proposal and the Charter Amendment Proposal by the Long Stop Date (or the date on which all regulatory conditions have been satisfied) or a material breach by us of our non-solicit obligations with respect to alternative transactions, or either party terminates the Purchase Agreement due to a failure to obtain stockholder approval of the Stock Issuance Proposal and the Charter Amendment Proposal at such time as the Investor Sellers could terminate due to a Change in Recommendation, then, in each case, a termination fee of $150.0 million will be payable by us to the Sellers or Inmarsat Holdings in cash (the Termination Fee). In addition, if either we or the Investor Sellers terminate the Purchase Agreement due to the Transaction having not been consummated by the Long Stop Date where our stockholder meeting to obtain approval of the Stock Issuance Proposal and the Charter Amendment Proposal has not yet been held, or the stockholder approval is not obtained at our stockholder meeting and, in either case, a proposal for an alternative transaction is publicly disclosed or announced and not publicly withdrawn prior to our stockholder meeting and, prior to the first anniversary of such termination, we consummate an alternative transaction or enter into an alternative definitive agreement with respect to a proposal for an alternative transaction, we will be required to pay the Sellers the Termination Fee (less any amount previously paid for expenses to the Sellers or Inmarsat Group). Additionally, a termination fee of $200.0 million will be payable by us if either we or the Investor Sellers terminate the Purchase Agreement due to the Transaction not being completed by the Long Stop Date and at the time of termination regulatory conditions are not satisfied. If either we or the Investor Sellers terminate the Purchase Agreement due to failure to obtain the stockholder approval of the Stock Issuance Proposal and the Charter Amendment Proposal and the Sellers are not otherwise entitled to receive the Termination Fee, we will be required to reimburse all out-of-pocket expenses reasonably incurred by the Sellers and/or Inmarsat Group up to $25 million if such termination occurs within nine months after the date of the Purchase Agreement, or up to $40.0 million if such termination occurs thereafter.

Amendments

The Purchase Agreement may be amended at any time by execution of an instrument in writing signed on behalf of each of the Investor Sellers and Viasat and, if such amendment is or may be adverse to any Management Seller, at least two Management Sellers’ Representatives (as defined in the Purchase Agreement).

Governing Law

The Purchase Agreement is governed by and shall be construed in accordance with the laws of England and Wales.

Related Agreements

This section describes the material provisions of certain additional agreements entered into, or to be entered into, in connection with the Purchase Agreement, which we refer to as the Related Agreements, but does not purport to describe all of the terms thereof. The following summary is qualified in its entirety by reference to the complete text of each of the Related Agreements. The Related Agreements include the Stockholders Agreement, the Registration Rights Agreement and the Voting Agreements, included as Annexes C, D and E, respectively. Stockholders and other interested parties are urged to read the Related Agreements in their entirety prior to voting on the proposals presented at the special meeting.

 

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Stockholders Agreement

Concurrently with the Purchase Agreement, we and the Investor Sellers entered into a Stockholders Agreement, which will become effective at the closing.

Under the Stockholders Agreement, the Investor Sellers will have the right to designate (i) two individuals for nomination to our Board so long as the Investor Sellers collectively beneficially own at least 25% of the total outstanding shares of Viasat common stock and (ii) one individual for nomination to our Board so long as the Investor Sellers collectively beneficially own at least 15% of the total outstanding shares of Viasat common stock. In addition, for so long as the Investor Sellers have the right to designate at least one director, they also have the right (subject to applicable law and Nasdaq rules) to designate one of their director nominees to serve on our Compensation and Human Resource Committee, and one to serve on at least one other committee of our Board.

Under the Stockholders Agreement, so long as the Investor Sellers collectively beneficially own at least 15% of the total outstanding shares of Viasat common stock, the Investor Sellers agree to vote their shares of Viasat common stock, subject to certain exceptions including matters relating to significant corporate transactions and amendments of Viasat organizational documents which would materially, disproportionately and adversely affect the rights of the Investor Sellers, in accordance with the recommendations of our Board.

In addition, the Stockholders Agreement will impose certain transfer restrictions with respect to the shares of Viasat common stock issued to the Investor Sellers, including a prohibition on transfer during an initial 180-day lock-up period commencing from the closing of the Transaction, and a prohibition on transfers to our competitors and certain other parties for so long as the Investor Sellers collectively beneficially own at least 10% of the total outstanding shares of Viasat common stock, in each case subject to customary exceptions.

Under the Stockholders Agreement, the Investor Sellers have also agreed to customary standstill restrictions in accordance with which, among other things, the Investor Sellers will agree to not acquire, or agree to acquire, any additional shares of Viasat common stock or securities that are convertible or exchangeable into (or exercisable for) shares of Viasat common stock (or enter into certain agreements and arrangements as set forth in the Stockholders Agreement), subject to customary exceptions. Such standstill will be in effect during the period commencing on the closing date of the Transaction and continuing until the earlier of the second anniversary of the closing date or the date that is three months after the date that the Investor Sellers collectively beneficially own less than 10% of the outstanding shares of Viasat common stock.

Registration Rights Agreement

At the closing, we and the Investor Sellers will enter into a Registration Rights Agreement in substantially the form attached as Annex D to this proxy statement, pursuant to which, among other things and subject to certain restrictions, we will be required to file with the SEC a registration statement on Form S-3 registering for resale the shares of Viasat common stock issuable to the Investor Sellers upon the completion of the transactions contemplated by the Purchase Agreement and to conduct certain underwritten offerings or facilitate certain block trade transactions upon the request of holders of Registrable Securities (as defined therein). The Registration Rights Agreement also provides holders of Registrable Securities (as defined therein) with certain customary piggyback registration rights.

Voting Agreements

Concurrently with the Purchase Agreement, Baupost and each of our executive officers and directors, in their respective capacities as stockholders of Viasat, entered into a Voting and Support Agreements with the Investor Sellers and Viasat, pursuant to which Baupost and such individuals have agreed, among other things, to vote their respective shares of Viasat common stock (i) in favor of the Stock Issuance Proposal and the Charter Amendment

 

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Proposal, (ii) in favor of any proposal to adjourn or postpone the special meeting in the event that there are insufficient proxies to approve such matters, (iii) against any alternative acquisition proposal, (iv) against any action, proposal, transaction or agreement that would reasonably be expected to result in a breach in any material respect of any covenant or warranty of Viasat under the Purchase Agreement or of such stockholder under the Voting Agreement, and (v) against any other action, agreement or transaction that would reasonably be expected to impede, interfere with, delay, postpone, adversely affect or prevent the Transaction or the other transactions contemplated by the Purchase Agreement.

Baupost and the individuals that signed the Voting Agreements beneficially owned an aggregate of approximately 27% of the outstanding shares of Viasat common stock as of the record date. The forms of Voting Agreements entered into by Baupost and each of our executive officers and directors are included as Annex E.

The Transaction

Background of the Transaction

Our Board and senior management team regularly review our performance, future growth prospects and overall strategic direction and consider potential opportunities to strengthen our business and enhance stockholder value. These reviews from time to time include consideration of, and discussions with other companies regarding, potential strategic transactions and other opportunities that may have the potential to accelerate or enhance the execution of our business strategy and increase stockholder value. In particular, our Board regularly reviews with senior management potential merger and acquisition opportunities, including the potential for mergers or business combination transactions with various satellite operators and other companies.

From time to time over a number of years, we have had informal discussions regarding potential strategic partnerships, collaborations and business combination transactions between Viasat and Inmarsat Group, but previously those discussions did not progress beyond preliminary discussions.

In the spring of 2020, Inmarsat Holdings’ board of directors and management commenced discussions with Barclays as a financial advisor to begin to assess a wide range of potential strategic opportunities and alternatives for the company.

Over the course of calendar year 2020 and 2021, Inmarsat Group and its representatives held discussions with four alternative parties. Discussions with two of these parties involved substantive negotiations and due diligence, with negotiations with one party continuing until just prior to the finalization of terms with Viasat.

On July 9, 2020, Andrew Sukawaty, the Chairman of the Board of Inmarsat Holdings, contacted Mark Dankberg, then Chairman of the Board and Chief Executive Officer of Viasat, to inquire about Viasat’s potential interest in pursuing a business combination transaction between Inmarsat Group and Viasat. Mr. Dankberg asked whether discussions for a possible transaction would be conducted on an exclusive basis. Mr. Sukawaty advised Mr. Dankberg that Inmarsat Group was also considering other strategic alternatives and was in discussions with other parties regarding such alternatives, and that any negotiations would therefore need to be on a non-exclusive basis.

In mid-July 2020, Viasat began working with PJT Partners as its financial advisor in connection with a potential business combination transaction with Inmarsat Group.

On July 21, 2020, representatives of Viasat and Inmarsat Holdings attended a meeting via telephone conference in which Inmarsat Holdings presented its views regarding the strategic rationale, potential synergies, growth opportunities and other benefits of a business combination transaction with Viasat.

On July 28, 2020, Barclays provided Viasat with certain financial projections for Viasat (based on publicly available information), Inmarsat Group and the combined company, including potential synergies. On July 29, 2020, representatives of Viasat attended a call with Barclays to discuss the projections.

 

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On July 31, 2020, our Board held a meeting, with members of Viasat’s senior management and representatives of Baupost present, in which Richard Baldridge, then President and Chief Operating Officer of Viasat, and Keven Lippert, the Executive Vice President, Strategic Initiatives and Chief Commercial Officer of Viasat, provided the Board with an update with respect to potential merger and acquisition opportunities, including the potential for mergers or business combinations with other satellite operators, including a summary of the recent discussions with Inmarsat Holdings. Baupost is Viasat’s largest stockholder, attends meetings of our Board in a non-voting observer capacity, and is subject to confidentiality obligations with respect to confidential information discussed at Board meetings.

On August 4, 2020, representatives of Viasat attended a call with Barclays to discuss Barclays’ initial estimates of the synergies of a business combination transaction between Viasat and Inmarsat Group, including approximately $225 million of combined annual run-rate operating cost synergies and capital expenditure synergies, and on September 1, 2020, Barclays provided a preliminary high-level model to Viasat illustrating a pro forma combination between Viasat and Inmarsat Group.

On September 3, 2020, our Board held a meeting, with members of Viasat’s senior management and representatives of Baupost present, in which Mr. Dankberg led a discussion of various strategic alternatives for Viasat, including an update on potential mergers or business combination transactions with various satellite operators, including a presentation of a pro forma business combination transaction with Inmarsat Group as compared to a combination with two other satellite operators. The Board indicated its support for management continuing to engage in discussions with Inmarsat Holdings regarding a potential transaction.

On September 8, 2020, representatives of Viasat, Inmarsat Holdings and Barclays held a telephonic meeting to discuss the Inmarsat Holdings strategic alternatives process and contemplated next steps, including execution of a non-disclosure agreement and commencement of preliminary due diligence. On September 21, 2020, Viasat and Inmarsat executed a mutual non-disclosure agreement and PJT Partners shared an initial diligence request list with Barclays, including key questions about Inmarsat Group’s business.

Commencing in October 2020, the parties held numerous due diligence meetings via telephone and video conference and exchanged information in connection with their due diligence investigations.

On October 19, 2020, Mr. Sukawaty spoke with Mr. Dankberg to discuss the proposed terms of a possible all-stock business combination transaction in which Viasat stockholders would retain a 50.1% stake in the combined company, with the shareholders of Inmarsat Holdings (the Inmarsat Shareholders) receiving a 49.9% stake (in each case, on a fully diluted basis), subject to various high-level terms including Inmarsat Shareholders retaining the rights to receive all remaining payments due to Inmarsat Group under the Ligado Cooperation Agreement (the Ligado Payments), in addition to the $570 million of after-tax proceeds expected to be received from Ligado later in October 2020. The ownership percentages discussed did not reflect the impact of Viasat’s then-contemplated acquisition of RigNet.

On October 21, 2020, Barclays notified PJT Partners that Inmarsat Holdings’ position on board representation of the combined company was that the Inmarsat Shareholders would receive the right to designate four directors to the board of directors of the combined company, with Viasat retaining the right to nominate a majority of the directors on the Board.

On October 27 and 28, 2020, members of our management held in-person discussions with PJT Partners, which included a detailed analysis of the Inmarsat Holdings proposals, as well as the strategic rationale for the proposed transaction, valuation matters and leverage implications, and potential counter-proposals. On October 28, 2020, representatives from Viasat, PJT Partners and Barclays then discussed various financing and structuring matters via telephone conference.

 

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On October 29, 2020, our Board held a meeting, with members of our senior management and a representative of Baupost present, at which, among other matters, Mr. Dankberg detailed for the Board the proposals received from Inmarsat Holdings for an all-stock business combination transaction and related terms, including the expressed desire of Inmarsat Shareholders that Messrs. Dankberg and Baldridge continue to lead the combined company. Members of management summarized for the Board Inmarsat Group’s business, spectrum position and standalone financial performance, as well as the estimated pro forma financial data and potential value of the combined company. Management then previewed with the Board a potential counter-proposal for an all-stock business combination under which Viasat stockholders would retain a 59% stake in the combined company, with Inmarsat Shareholders receiving a 41% stake (in each case, on a fully diluted basis). Viasat’s counter-proposal did not reflect the impact of the acquisition of RigNet, which was under negotiation by Viasat at the time. Viasat management solicited feedback from Board members on the proposal, and the Board indicated its support for management continuing negotiations with Inmarsat Holdings on that basis.

On November 6, 2020, Mr. Dankberg and Mr. Sukawaty held a telephone conference to discuss the proposed business combination transaction. During the call, Mr. Dankberg made the counter-proposal described above. Mr. Sukawaty indicated that Inmarsat Holdings was not prepared to move forward with due diligence given the magnitude of the gap between the parties’ positions regarding ownership of the combined company.

On November 9, 2020, Barclays reiterated to PJT Partners that Inmarsat Holdings was unwilling to move forward with due diligence based on the magnitude of the gap between the parties’ positions regarding ownership of the combined company.

On November 10, 2020, Mr. Dankberg and Mr. Sukawaty discussed the impasse via telephone conference, and Mr. Sukawaty agreed to provide high-level due diligence information and access to Inmarsat Group management on a limited basis while the parties continued to attempt to bridge the gap between their respective positions.

On November 11, 2020, representatives of Barclays and PJT Partners discussed potential next steps by telephone conference, and Barclays provided certain Inmarsat Group financial information and debt documentation. Barclays reiterated that Viasat and its representatives would only be provided with financial information and access to Inmarsat Group management on a limited basis in an effort to narrow the magnitude of the gap between the parties’ positions regarding ownership of the combined company, and emphasized that Inmarsat Shareholders would not consider proceeding with a transaction under the terms proposed by Viasat. Barclays therefore asked that Viasat reassess its view of the prospects of Inmarsat Group’s business and submit a revised proposal based on its further due diligence.

During the period from November 13 to November 24, 2020, representatives of Viasat and Inmarsat Holdings attended a number of telephone conferences, in which the parties discussed financing and transaction structure (including preliminary analysis of different structuring alternatives from a tax and financing perspective), the companies’ respective financial results for the quarter ended September 30, 2020 and high-level outlook for the remainder of calendar year 2020 and future periods. During these November meetings, Inmarsat Group management demonstrated that its projections for Inmarsat Group’s financial performance in calendar year 2020 exceeded Viasat’s initial estimates on the basis of both revenue and EBITDA, with favorable momentum and long-term trends across Inmarsat Group’s maritime, government and business aviation businesses. Inmarsat Holdings also stated that the Inmarsat Group business had proven more resilient to the impact of COVID-19 than Viasat had originally expected. Following these discussions, Viasat revised its projections to reflect a more favorable view of performance for the Inmarsat Group business.

On December 1, 2020, at our request, PJT Partners communicated an updated proposal to Barclays on behalf of Viasat, reflecting the additional analyses undertaken with respect to relative valuations, due diligence, analysis of synergies, Inmarsat Group’s updated actual financial performance to-date, and its financial outlook. Under this counter-proposal, Viasat stockholders would retain 55% of the combined company and Inmarsat Shareholders would receive 45%, in each case on a fully diluted basis. This counter-proposal did not reflect the impact of the

 

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acquisition of RigNet (which transaction was then under negotiation by Viasat). In addition, under the counter-proposal, Inmarsat Shareholders would retain the right to receive 90% of future Ligado Payments (with Inmarsat Shareholders also retaining the $570 million of after-tax proceeds received from Ligado in October 2020).

On December 4, 2020, our Board held a meeting, with members of our senior management and a representative of Baupost present, in which senior management discussed with the Board the potential Inmarsat Holdings transaction and other strategic opportunities (including the proposed acquisition of RigNet). During the meeting, management provided the Board with a detailed update on the status of negotiations and the terms of the counter-proposal made on December 1, 2020. Management then reviewed the potential structure, terms and strategic rationale for the proposed transaction with Inmarsat Holdings, including potential synergies. Management also outlined for the Board standalone financial data for each of Viasat and Inmarsat Holdings, projected pro forma financial data for the combined company and the potential impact of the proposed transaction on Viasat’s stock price. Management discussed the strategic rationale and merits for the potential transaction with Inmarsat Holdings, including how it compared to other potential strategic alternatives.

Also on December 4, 2020, Messrs. Dankberg and Sukawaty discussed the economic terms of the proposed transaction via telephone conference, including treatment of the future Ligado Payments as well as the potential timing of a transaction, projected financing needs of the combined company and other matters.

On December 6, 2020, representatives of PJT Partners and Barclays discussed the various work streams required to sign and announce a business combination transaction, and the preparation of a joint work plan and timeline.

On December 15, 2020, Mr. Baldridge, then Chief Executive Officer of Viasat, Tony Bates, Chief Financial Officer of Inmarsat, and representatives from PJT Partners and Barclays engaged in further discussions regarding a potential transaction timeline, work plan and next steps via telephone.

On December 17 and 18, 2020, representatives of Viasat, Inmarsat Holdings and their advisors participated in multiple due diligence sessions via video conference regarding Viasat’s business, Inmarsat Group’s business, accounting standards and other matters.

On December 21, 2020, Viasat announced its entry into an agreement to acquire RigNet for consideration in the form of approximately 4.0 million shares of Viasat common stock. Shortly thereafter, Barclays provided an updated diligence request list with incremental requests, including questions regarding the RigNet transaction. Pro forma for the acquisition of RigNet, the ownership splits proposed by Inmarsat Holdings in its October 19, 2020 proposal would have been 51.5% for existing Viasat stockholders (including 48.7% for legacy Viasat stockholders and 2.8% for legacy RigNet stockholders) and 48.5% for Inmarsat Shareholders, and the ownership splits conveyed in Viasat’s December 1, 2020 proposal would have been 56.4% for existing Viasat stockholders (including 53.3% for legacy Viasat stockholders and 3.1% for legacy RigNet stockholders) and 43.6% for Inmarsat Shareholders.

On January 4, 2021, Messrs. Dankberg and Sukawaty discussed the timelines for completion of their respective due diligence reviews, with a view to completing due diligence sessions by the end of January.

During January 2021, members of our management and PJT Partners participated in multiple due diligence sessions via video conference with Inmarsat Holdings and its advisors, and Messrs. Dankberg and Baldridge met with Inmarsat Shareholders to discuss industry trends and the potential business model of the combined company.

On February 2, 2021, Mr. Sukawaty called Mr. Dankberg to relay feedback on the proposed terms of the transaction from a meeting of the board of directors of Inmarsat Holdings held on January 29, 2021. Mr. Sukawaty expressed concerns regarding proceeding with an all-stock business combination with Viasat at this time given the parties’ differing views as to the relative valuations of the two companies and stated that Inmarsat Holdings was not prepared to move forward at that time on the proposed terms. Mr. Dankberg responded by suggesting that a portion of the consideration be paid in cash to address such concerns.

 

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On February 2, 2021, our Board held a meeting, with members of our senior management and representatives of Baupost present, in which, among other matters, management reviewed and discussed a potential business combination transaction with Inmarsat Group, including the strategic rationale and merits, and how the potential transaction with Inmarsat Group compared to the other potential strategic alternatives. During the meeting, management engaged in a detailed discussion with the Board regarding the risks, opportunities and strategic implications of the various alternatives. Management sought guidance from the Board on the potential terms of counter-offers to Inmarsat Holdings, and the Board confirmed its continued support for management continuing negotiations with Inmarsat Holdings on the basis discussed.

On February 24, 2021, Inmarsat Group announced the appointment of Rajeev Suri as the new Chief Executive Officer of Inmarsat, effective March 1, 2021.

On February 25, 2021, Mr. Dankberg attended a telephone call with Mr. Sukawaty, in which Mr. Dankberg relayed a revised proposal in which Viasat would provide approximately $2.66 billion of total consideration to Inmarsat Shareholders, comprising $1.0 billion in cash (to be potentially funded through a PIPE transaction) and approximately $1.66 billion in shares of Viasat common stock. Based on the closing price per share of Viasat common stock on February 24, 2021 of $54.93, this would have represented approximately 30.3 million shares of Viasat common stock (which would have implied an approximately 61.4% ownership stake for Viasat stockholders (including 58.0% for legacy Viasat stockholders and 3.4% for legacy RigNet stockholders) and an approximately 24.1% ownership stake for Inmarsat Shareholders on a fully diluted basis, after taking into account the effect of the PIPE transaction priced illustratively at a $54.93 share price). This proposal assumed that the combined company would be entitled to receive 15% of future Ligado Payments with the rights to the remaining 85% retained by Inmarsat Shareholders (with the Inmarsat Shareholders retaining 100% of the $570 million of after-tax proceeds received from Ligado in October 2020). In making this proposal, Mr. Dankberg highlighted the merits of a transaction that delivered partial upfront liquidity to the Inmarsat Shareholders with an ability for those shareholders to begin monetizing their investment in Inmarsat Holdings sooner than the prior all-stock transaction scenarios under consideration. This revised proposal also contemplated reducing the director designation rights of the Inmarsat Shareholders to reflect their lower percentage ownership stake in the combined company, as well as having the Inmarsat Shareholders be subject to a relatively short lock-up period.

On February 26, 2021, Inmarsat Holdings distributed to its shareholders the $570 million of after-tax proceeds from the $700 million payment received by Inmarsat Group from Ligado in October 2020.

On March 2, 2021, Messrs. Dankberg and Sukawaty discussed the key terms of Viasat’s revised proposal via telephone.

Also on March 2, 2021, members of Viasat senior management met in-person with Baupost to discuss in detail Viasat’s analysis of a potential business combination transaction with Inmarsat Holdings, including but not limited to rationale, valuation and resulting leverage profile, and to solicit Baupost’s views on the merits and terms of the proposed transaction.

On March 3, 2021, Inmarsat Holdings made a counter-proposal in which Viasat would pay $1.0 billion of cash consideration to the Inmarsat Shareholders (to be funded through a PIPE transaction), and issue shares of Viasat common stock that would provide a 51.5% ownership stake for Viasat stockholders (including 48.7% for legacy Viasat stockholders and 2.8% for legacy RigNet stockholders) and a 35.8% ownership stake for Inmarsat Shareholders on a fully diluted basis, after taking into account the effect of the PIPE transaction. In its counter-proposal, Inmarsat Holdings valued the consideration at approximately $3.81 billion, based on a share price of $52.50 per share of Viasat common stock and Viasat’s fully diluted shares outstanding at that time. Inmarsat Holdings’ representatives indicated that they viewed this proposal to be economically similar to Inmarsat Holdings’ initial proposal made to Viasat on October 19, 2020, but with $1.0 billion of cash consideration in lieu of a portion of the originally contemplated stock consideration. This proposal assumed that the combined

 

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company would be entitled to receive 10% of future Ligado Payments with the right to the remaining 90% retained by Inmarsat Shareholders. Under Inmarsat Holdings’ proposal, the Inmarsat Shareholders would also have the right to designate three directors to the board of directors of the combined company for so long as their collective ownership percentage of the combined company was at least 30%, and Inmarsat Shareholders would be subject to a six-month post-closing lock-up.

On March 16, 2021, Viasat submitted a revised proposal to Inmarsat Holdings in which Viasat would provide $3.0 billion of total consideration to Inmarsat Shareholders (excluding Ligado payments), comprising $1.0 billion of cash consideration funded by a PIPE and $2.0 billion in shares of Viasat common stock. Based on the closing price per share of Viasat common stock on March 15, 2021 of $56.65, this would have represented approximately 35.3 million shares of Viasat common stock (which would have implied an approximately 59.3% ownership stake for Viasat stockholders in the combined company (including 56.1% for legacy Viasat stockholders and 3.2% for legacy RigNet stockholders) and an approximately 27.1% ownership stake for Inmarsat Shareholders on a fully diluted basis, after taking into account the effect of the PIPE transaction). In Viasat’s revised proposal, Inmarsat Shareholders would also have the right to designate two directors to the board of directors of the combined company for so long as their collective ownership percentage of the combined company was at least 25%. This proposal assumed that the combined company would be entitled to receive 10% of future Ligado Payments with the rights to receive the remaining 90% retained by Inmarsat Shareholders.

In late March 2021, pursuant to several conversations between Barclays and PJT Partners, Viasat was informed that Inmarsat Holdings was not interested in pursuing negotiations with Viasat in light of the magnitude of the gap between the parties’ respective economic proposals and that Inmarsat Holdings was pursuing other strategic options, including negotiations with other interested parties for a business combination transaction.

On April 30, 2021, Viasat closed the RigNet acquisition (which involved the issuance of approximately 4.0 million shares of Viasat common stock) and also completed the purchase of the remaining 51% interest in Euro Broadband Infrastructure Sàrl (EBI) for approximately €142.6 million.

On May 14, 2021, our Board held a meeting, with members of our senior management and representatives of Baupost present, in which, among other matters, management provided an update on the potential transaction with Inmarsat Group, including its strategic rationale and merits, and how the potential transaction with Inmarsat Group compared to other potential strategic alternatives. The Board engaged in a lengthy and detailed discussion with management regarding risks, opportunities and strategic implications of the potential transaction. The Board indicated its continued support for a potential business combination transaction with Inmarsat Group.

On May 20, 2021, in order to support a potentially revised proposal from Viasat and at the request of PJT Partners, Barclays provided PJT Partners with Inmarsat Group’s full calendar year 2020 financial results and a draft of Inmarsat Group’s first quarter calendar year 2021 results. These financial results indicated that Inmarsat Group had exceeded prior calendar year 2020 budgeted results on the basis of both revenue and EBITDA. In addition, Inmarsat Group demonstrated further momentum in the first quarter of calendar year 2021 with maritime, government, and enterprise revenues all increasing year-over-year. Only aviation revenues declined due to the continued impact of COVID-19 on first quarter commercial aviation revenue. With this information, our management re-evaluated the combined business’ pro forma credit profile taking into account Inmarsat Group’s better than expected performance, Viasat’s continued strong performance, incremental EBITDA from both Viasat’s RigNet and EBI acquisitions, more favorable than previously expected standalone leverage profiles for both companies, and an improved view of synergies reflecting further analysis, among other factors. The credit analysis and availability of financing on attractive terms supported sourcing the $1.0 billion of cash consideration from borrowings as opposed to a PIPE offering. Accordingly, in light of these favorable dynamics, our management began assessing a transaction scenario that funded the $1.0 billion of cash consideration with incremental borrowings rather than the proceeds of a PIPE transaction.

In late May 2021, PJT Partners was informed that Inmarsat Holdings had also retained JP Morgan as a financial advisor.

 

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On June 10, 2021, Barclays informed PJT Partners that Inmarsat Holdings was in detailed discussions with other parties for a business combination transaction, and that if Viasat remained interested in pursuing a transaction with Inmarsat Holdings, Viasat would need to present a meaningfully improved proposal relative to the proposal that Viasat submitted on March 16, 2021 as soon as possible.

On June 30, 2021, at our request, PJT Partners submitted a revised proposal to Barclays on behalf of Viasat in which Viasat would provide approximately $3.27 billion of total consideration to Inmarsat Shareholders, comprising $1.0 billion in cash and approximately $2.27 billion in shares of Viasat common stock. Based on the closing price per share of Viasat common stock on June 29, 2021 of $50.00, this would have represented approximately 45.3 million shares of Viasat common stock (which would have implied an approximately 63.0% ownership stake for Viasat stockholders (including legacy RigNet stockholders) and an approximately 37.0% ownership stake for Inmarsat Shareholders on a fully diluted basis). In this revised offer, Viasat proposed funding the cash portion of the consideration through incremental borrowings. This proposal assumed that the combined company would be entitled to receive 10% of future Ligado Payments (with the rights to receive the remaining 90% retained by Inmarsat Shareholders).

On July 9, 2021, Messrs. Dankberg and Sukawaty briefly discussed the key terms of Viasat’s revised proposal via telephone and agreed to resume due diligence activities and discussions.

On July 22, 2021, representatives of Viasat, Inmarsat Holdings, PJT Partners, Barclays, and JP Morgan attended a diligence session during which Viasat and Inmarsat Holdings each presented their respective preliminary results for the quarter ended on June 30, 2021 as well as outlook for the remainder of their respective fiscal years. Inmarsat Holdings also indicated that it intended to pay a $150 million dividend to its shareholders by the end of July 2021. Subsequent to the call, at our request, PJT Partners informed Barclays that both the total consideration and cash consideration in Viasat’s most recent proposal would need to be reduced by $150 million to reflect the proposed dividend to Inmarsat Shareholders.

On July 27, 2021, Inmarsat Holdings submitted a counter-proposal to Viasat in which Viasat would provide $3.4 billion of total consideration to Inmarsat Shareholders, including $1.0 billion of cash consideration funded by incremental borrowings and $2.4 billion in shares of Viasat common stock. Inmarsat Holdings’ counter-proposal assumed that the previously disclosed $150 million dividend payment would be made without any impact to these proposed terms. Based on the closing price per share of Viasat common stock on July 26, 2021 of $49.81, this would have represented approximately 48.2 million shares of Viasat common stock (which would have implied an approximately 61.5% ownership stake for Viasat stockholders (including legacy RigNet stockholders) in the combined company and an approximately 38.5% ownership stake for Inmarsat Shareholders, on a fully diluted basis). This proposal assumed that the combined company would be entitled to receive 10% of future Ligado Payments (with the rights to receive the remaining 90% retained by Inmarsat Shareholders).

On July 28, 2021, our Board held a meeting, with members of our senior management and a representative of Baupost present, in which, among other matters, management led the Board in a review and discussion of various strategic items, including the potential business combination transaction with Inmarsat Group, including an update on the status of negotiations, due diligence and Inmarsat Holdings’ most recent offer, and previewed with the Board potential terms for a counter-offer. Management discussed the strategic rationale and merits for the potential transaction with Inmarsat Holdings, including how it compared to other potential strategic alternatives. After discussions, the Board indicated its support for management’s continued negotiations with Inmarsat Holdings.

On August 3, 2021, at our request, PJT Partners submitted a revised proposal to Barclays on behalf of Viasat, in which Viasat would provide approximately $3.17 billion of total consideration to Inmarsat Shareholders (taking into account Inmarsat Holdings’ payment in July 2021 of the $150 million dividend to its shareholders), which comprised $850 million of cash consideration funded by incremental borrowings and approximately $2.32 billion in shares of Viasat common stock. Based on the closing price per share of Viasat common stock on August 2, 2021 of $48.09, this would have represented approximately 48.2 million shares of Viasat common stock (which

 

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would have implied an approximately 61.5% ownership stake for Viasat stockholders (including legacy RigNet stockholders) and an approximately 38.5% ownership stake for Inmarsat Shareholders, on a fully diluted basis). This proposal assumed that the combined company would be entitled to receive 10% of future Ligado Payments (with the rights to receive the remaining 90% retained by Inmarsat Shareholders).

On August 5, 2021, Barclays communicated a counter-proposal to PJT Partners in which Viasat would provide $3.3 billion of total consideration to Inmarsat Shareholders, including $900 million of cash consideration funded by incremental borrowings and $2.4 billion in shares of Viasat common stock. Based on the closing price per share of Viasat common stock on August 4, 2021 of $48.06, this would have represented approximately 49.9 million shares of Viasat common stock (which would have implied an approximately 60.7% ownership stake for Viasat stockholders (including legacy RigNet stockholders) and an approximately 39.3% ownership stake for Inmarsat Shareholders, on a fully diluted basis). This proposal expressly assumed that the combined company would be entitled to receive 10% of future Ligado Payments (with the rights to the remaining 90% retained by Inmarsat Shareholders).

On August 8, 2021, Viasat and Inmarsat Holdings agreed that the gap between the bid/ask on the economic terms was sufficiently reduced to start drafting transaction documentation and prepare a work plan and timeline to complete due diligence and the other work streams required to sign and announce a potential transaction.

On August 11, 2021, PJT Partners provided Barclays with an updated diligence request list on behalf of Viasat, and on August 19, 2021, Barclays provided an updated diligence request list to PJT Partners on behalf of Inmarsat Holdings.

On August 14, 2021, Viasat and certain of its representatives, including PJT Partners, were granted access to Inmarsat Holdings’ virtual data room for purposes of conducting due diligence in connection with the proposed transaction. Commencing August 16, 2021, representatives of Viasat and Inmarsat Holdings and their respective financial, legal and tax advisors attended numerous due diligence and working sessions via video conference regarding various financial, business, tax, structuring, legal and regulatory matters.

On August 23, 2021, representatives of Viasat, Inmarsat Holdings, PJT Partners, Barclays, JP Morgan, Trinity Advisers, Inmarsat Holdings’ additional financial advisor, and Inmarsat Shareholders attended a financial due diligence session in which Viasat presented to Inmarsat Holdings and its shareholders Viasat’s first quarter fiscal year 2022 results and outlook for fiscal years 2022 through 2026.

On August 28, 2021, representatives of Kirkland & Ellis International LLP, legal counsel to Inmarsat Holdings (Kirkland), sent an initial draft of a proposed share purchase agreement to representatives of Latham & Watkins LLP, legal counsel to Viasat (Latham) providing for the sale by the existing Inmarsat Shareholders and certain management and employees holding options and shares of a subsidiary of Inmarsat Holdings of all of the shares of Inmarsat Holdings in exchange for a to-be-determined cash purchase price, subject to adjustments, as well as a to-be-determined number of shares of Viasat common stock.

On September 2, 2021, our Board held a meeting with members of our senior management and representatives of Baupost present, in which, among other matters, Mr. Baldridge provided the Board with a detailed review of the status of discussions and negotiations regarding the potential Inmarsat Holdings transaction. As part of this review, the Board discussed with management the status of due diligence, potential transaction timing, the status of ongoing negotiation of economic terms, an analysis performed by PJT Partners with respect to the proposed equity consideration to be issued to Inmarsat Shareholders, an analysis of standalone and pro forma credit profile, and an analysis of proposals and counter-proposals made. After discussions, the Board confirmed its continued support for management’s ongoing negotiations with Inmarsat Holdings.

On September 5, 2021, the Daily Telegraph published an article featuring an interview with Mr. Suri in which Mr. Suri discussed potential consolidation among satellite operators and indicated that Inmarsat Holdings had attracted interest from multiple parties.

 

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Between September 13 and September 22, 2021, representatives of Viasat, Inmarsat Holdings and their respective advisors continued to attend due diligence sessions via video conference regarding various tax, legal and financial due diligence matters, as well as due diligence sessions regarding Inmarsat Group’s business segments and working sessions regarding high-level analyses of potential synergies.

Between September 27 and September 29, 2021, representatives of Viasat, Inmarsat Holdings, including the Chief Executive Officers of both companies, PJT Partners, Barclays, JP Morgan, Trinity Advisers, Latham and Kirkland attended various in-person meetings in London to discuss the proposed business combination transaction and Viasat’s further due diligence requirements. During the course of these meetings, the parties discussed and negotiated certain of the key terms of the potential transaction, including valuation-related matters and the extent to which expected post-closing payments or receipts or other events should trigger purchase price adjustments, the scope of warranties and indemnities (with Viasat seeking a longer claim period and additional carve-outs to limits on liability), the possibility of representation and warranty insurance, closing conditions

(with Viasat seeking a more extensive set of conditions beyond those proposed by Inmarsat Holdings, including with respect to regulatory matters and material adverse changes), regulatory covenants (with Viasat proposing a reciprocal efforts standard in lieu of the more stringent regulatory covenants proposed by Inmarsat Holdings), non-solicitation covenants, termination rights (with Viasat seeking customary fiduciary outs) and reverse break fees (with Viasat proposing a narrower set of triggers and a substantially lower quantum than those proposed by Inmarsat Holdings). The parties discussed valuing the equity of Inmarsat Holdings in the range of $3.3 billion to $3.4 billion (of which $850 million would be paid in cash and $2.45 billion to $2.55 billion would be paid in shares of Viasat common stock) with a range of potential outcomes depending on the extent to which the Inmarsat Shareholders would retain the right to future Ligado Payments. Based on the $54.26 closing share price of Viasat common stock on September 28, 2021, the $2.45 billion to $2.55 billion of stock consideration to be delivered by Viasat would have equated to approximately 45.2 million to 47.0 million shares of Viasat common stock. The parties concluded that sufficient progress had been made on constructively negotiating the terms of the potential transaction to warrant commencement or acceleration of the various work streams required to sign and announce the potential transaction, including the resolution of remaining open economic and legal issues, confirmatory due diligence, financing commitments and regulatory analyses.

During the period from September 30, 2021 through October 29, 2021, representatives of Inmarsat Holdings, together with their respective financial advisors and outside legal counsel, continued to address Viasat’s questions and exchanged information regarding due diligence of Inmarsat Holdings and related matters.

On October 4, 2021, representatives of Latham sent a revised draft of the share purchase agreement to representatives of Kirkland.

On October 7, 2021, representatives of Viasat, Inmarsat Holdings, Barclays, Trinity Advisers, PJT Partners, Latham and Kirkland attended a meeting at Latham’s offices in London to negotiate and seek to resolve open points under the draft share purchase agreement, including with respect to potential additional adjustments to the purchase price (including the extent to which expected post-closing payments or receipts or other events should trigger purchase price adjustments, and with Inmarsat Holdings also proposing a ticking fee on the base purchase price), treatment of Ligado Payments, scope of warranties and indemnities (including with respect to the proposed cap and length of claim period for fundamental warranties), closing conditions (with Inmarsat Holdings continuing to seek greater deal certainty by having fewer, more limited conditions to closing), regulatory covenants (with the parties continuing to negotiate the applicable efforts standard to obtain regulatory approvals and clearances and related matters, with Inmarsat Holdings maintaining that Viasat should have primary responsibility for obtaining regulatory approvals and clearances), non-solicitation and other pre-closing covenants (including scope of pre-closing actions requiring consent and proposed exceptions and carve-outs, with Viasat seeking to retain greater flexibility over financing and operational matters prior to closing), termination rights (with Inmarsat Holdings objecting to Viasat’s proposed broadening of termination rights) and reverse break fees (with continued extensive discussions around both the trigger events and the quantum, with Viasat rejecting any reverse break fee related to regulatory approvals and Inmarsat Holdings continuing to seek substantially higher reverse break fees and expense reimbursements than those proposed by Viasat).

 

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On October 8, 2021, representatives of Viasat, Inmarsat Holdings and their respective advisors attended a due diligence session regarding future Ligado Payments. In addition, on October 8, 2021, representatives of Viasat, Inmarsat Holdings, Latham, Apax, Warburg, PJT Partners, Barclays, JP Morgan, Trinity Advisers, Latham and Kirkland attended a video conference call to discuss financing matters.

Also on October 8, 2021, our Board held a meeting, with members of our senior management and representatives of Baupost present, in which senior management provided the Board with a detailed update on the potential Inmarsat Holdings transaction. As part of this review, the Board discussed with senior management the status of negotiations, timing, proposed economic terms, proposed rights of Inmarsat Shareholders to designate two directors to the board of directors of the combined company, and other key terms under negotiation, including regulatory covenants and reverse break fees. The Board also discussed with management potential synergies, integration planning and the status of review of various regulatory matters. Kevin Harkenrider, then Executive Vice President – Global Operations and Chief Operations Officer of Viasat, reviewed for the Board Viasat’s due diligence findings to date, including due diligence related to Inmarsat Group’s satellite fleet and cybersecurity risks. Mr. Baldridge and Robert Blair, Vice President, General Counsel and Secretary of Viasat, also engaged the Board in a discussion with respect to availability, cost and terms of representation and warranty insurance coverage, and the potential value and limitations of such coverage with respect to the potential transaction.

On October 10, 2021, representatives of Viasat, Inmarsat Holdings, Apax, Warburg, PJT Partners, Barclays, JP Morgan, Trinity Advisers, Latham and Kirkland participated in a follow-up telephone conference regarding financing matters.

On October 11, 2021, representatives of Viasat, Inmarsat Holdings, Barclays, Trinity Advisers, PJT Partners and JP Morgan attended a due diligence session via video conference regarding Inmarsat Group’s satellite fleet in connection with obtaining financing commitments for the transaction.

On October 13, 2021, representatives of Kirkland sent a revised draft of the share purchase agreement to representatives of Latham. The revised draft reflected Inmarsat Holdings’ position on various open items, including matters relating to consideration adjustments, regulatory conditions and efforts, termination rights and reverse break fees. During the period from October 13, 2021 to November 8, 2021, representatives of Viasat, Inmarsat Holdings, Latham and Kirkland continued to discuss and negotiate certain key terms of the share purchase agreement and other definitive documents, and also discussed U.K. Government communications and other legal and regulatory matters. During that period, revised drafts of each of the key transaction documents were repeatedly exchanged between the respective parties’ legal advisors.

Between October 14, 2021 and October 28, 2021, representatives of Viasat, Inmarsat Holdings, PJT Partners, Trinity Advisers, Deloitte (Viasat’s transaction tax advisor), PricewaterhouseCoopers LLP (Inmarsat Holdings’ transaction tax advisor and a United Kingdom entity) and Latham attended numerous working sessions to discuss various tax and legal structuring matters. Structuring matters discussed included proposed tax and legal structuring steps, certain cross-border tax considerations and certain tax elections.

On October 15, 2021, representatives of Kirkland attended a meeting at Latham’s offices to further discuss and negotiate the draft share purchase agreement. In particular, discussions focused on transaction terms relating to sell-side deal protections, closing conditions (with Inmarsat Holdings continuing to seek greater deal certainty through a narrower set of closing conditions), regulatory covenants (with Inmarsat Holdings continuing to seek a higher standard of effort to fulfill and satisfy regulatory conditions than the standard proposed by Viasat), termination rights, reverse break fees (with Viasat continuing to reject a reverse break fee related to regulatory approvals and the parties continuing to negotiate the quantum of the reverse break fee for a change in recommendation and expense reimbursements) and conditionality. As part of these discussions, Viasat engaged Linklaters to provide additional input and advice to Viasat on regulatory matters. Also, on October 15, 2021, members of PJT Partners, Barclays, JP Morgan, Trinity Advisers, Latham and Kirkland participated in a telephone conference to discuss the appropriate quantum of any change of recommendation reverse break fee payable by Viasat.

 

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On October 22, 2021, representatives of Inmarsat Holdings and Viasat, including the Chief Executive Officers of both companies, attended a telephone call to discuss the treatment of future Ligado Payments in light of a transaction structure that would result in the combined company retaining the right to receive 100% of all future Ligado Payments.

On October 27, 2021, representatives of Viasat, Inmarsat Holdings, including the Chief Executive Officers of both companies, Latham, Kirkland, PJT Partners and Trinity Advisers attended a meeting via telephone conference to discuss open issues in the share purchase agreement and other transaction documentation.

In particular, discussions focused on deal conditionality, triggers for and quantum of reverse break fees and expense reimbursements, and requirements for financing commitments, among other matters.

On October 28, 2021, our Board held a meeting, with members of our senior management and representatives of Baupost present, in which management led the Board in a detailed review and discussion of the proposed Inmarsat Holdings transaction and its potential value to Viasat and its stockholders, including potential synergies. Senior management and the Board discussed the timing and status of negotiations, proposed economic terms, voting rights and obligations of the Inmarsat Shareholders, and other key terms subject to negotiation, including the proposed ownership percentages of the combined company, the reverse break fee related to regulatory approvals and the reverse break fee for a change in Board recommendation. Mr. Blair led the Board in a review and discussion of the current telecom and antitrust regulatory environment, regulatory processes in certain jurisdictions and the range of potential outcomes with respect to obtaining regulatory approvals of the transaction. Mr. Harkenrider led the Board in a discussion of our due diligence findings. Shawn Duffy, Senior Vice President and Chief Financial Officer of Viasat, led a review and discussion of the proposed financing for the proposed transaction including the bank commitments received, timing of bridge and backstop commitments, indicative terms, the pro forma capitalization of the combined company, and the proposed sources and uses of capital contemplated with respect to the potential transaction. Paul Froelich, Vice President, Corporate Development of Viasat, then led the Board in a review and discussion of various financial matters, including profit and loss and unlevered pre-tax free cash flow projections for Viasat and Inmarsat Holdings and Viasat’s standalone and pro forma combined credit profile.

On October 29, 2021, representatives of Viasat and Inmarsat Holdings participated in a telephone call to discuss various legal due diligence items, including, among other matters, Ligado and regulatory matters.

During October and November 2021, representatives of Inmarsat Holdings discussed the proposed transaction with U.K. Government officials, including with Department for Business, Energy and Industrial Strategy (BEIS) staff. Commencing on November 4, 2021, representatives of Viasat also participated in these discussions, including with respect to potential undertakings to be given by the combined company to the UK Government.

On November 1, 2021, the parties, led by the Chief Executive Officers of both companies, agreed that the consideration to be delivered to the Inmarsat Shareholders in the potential transaction would comprise approximately 46.36 million shares of Viasat common stock and $850 million of cash, with the understanding that the combined company would retain 100% of any future Ligado Payments. The agreed upon number of Viasat shares to be issued reflected the parties’ negotiations as to the appropriate level of ownership splits between the parties, as well as market-based methodologies to measure Viasat’s volume weighted average share price over various time periods. The agreed upon number of Viasat shares would represent a fully-diluted ownership split of approximately 62.5% for Viasat stockholders and approximately 37.5% for Inmarsat Shareholders.

On November 1 and November 2, 2021, representatives from Kirkland, Latham, Inmarsat Holdings and Viasat continued negotiation of the share purchase agreement and associated transaction documents. The parties held a series of in-person meetings at the offices of Latham, as well as a number of teleconferences. In particular, discussions focused on the quantum and nature of the reverse break fees, as well as the scope and nature of the closing conditions. Among other matters, the parties tentatively agreed to a reverse break fee of $150.0 million in

 

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the event that the share purchase agreement is terminated due to a change in recommendation, but that the obligations under the Voting Agreements would terminate upon such change in recommendation (as requested by Viasat). Tentative agreement was also reached with respect to the regulatory break fee, which was significantly lowered from Inmarsat Holdings’ initial proposals.

Also on November 2, 2021, our Board held a meeting, with members of our senior management and representatives of Baupost, Latham and Linklaters present, during which management led the Board in a detailed discussion of the timing and status of negotiations, key terms, including, among others, total consideration to be paid (including the number of shares of Viasat common stock to be issued and resulting pro forma ownership percentages of the combined company), regulatory covenants, the reverse break fee related to regulatory approvals, the reverse break fee for a change in Board recommendation, the proposed rights of Inmarsat Shareholders to designate two directors to the board of directors of the combined company following the potential transaction, and the potential for competing bidders to acquire Inmarsat Holdings. Our Board and management further discussed the status of the draft definitive agreements for the potential transaction, due diligence, financing commitments, and investor, public and employee relations communications plans. Representatives of Latham and Linklaters also provided a detailed review and discussion with respect to certain regulatory approvals required for the transaction, including a summary of the work performed to assess regulatory considerations for the proposed transaction, the current regulatory environment, the regulatory approval processes, the typical timing and outcomes for regulatory review, and other regulatory considerations. Representatives of Latham also provided an overview of fiduciary duties and judicial standard of review with respect to the proposed transaction and reviewed with the Board the relevant key terms of the share purchase agreement and other definitive agreements, drafts of which had previously been provided to the Board.

On November 3, 2021, our Board held a meeting, with members of our senior management and representatives of Baupost and Latham present, to receive an update on the proposed transaction. During the meeting, the Board discussed, among other matters, the timing and status of communications among Viasat, Inmarsat Holdings and the U.K. Government with respect to the transaction.

Between November 4 and November 6, 2021, discussions continued between representatives of Kirkland, Latham, Viasat and Inmarsat Holdings to finalize terms of the draft share purchase agreement and ancillary agreements. Based on these discussions and discussions over the prior weeks, tentative agreements were reached with respect to the following matters, among others, (i) finalizing the terms on which the base cash purchase price would be adjusted, which included certain potential positive cash adjustments as requested by Inmarsat Holdings (but not including the ticking fee proposed by Inmarsat Holdings) and certain potential negative cash adjustments as requested by Viasat, (ii) defining the parameters of each party’s regulatory obligations, including that each party use its respective best endeavors to ensure the satisfaction of the regulatory conditions, as well as the inclusion of a termination right (and corresponding reverse break fee) in the event that the regulatory conditions are not satisfied by the specified outside date, (iii) establishing the scope of closing conditions by balancing the level of deal certainty desired by Inmarsat Holdings with Viasat’s countervailing considerations regarding its obligation to close, and (iv) defining the parameters of each party’s pre-closing covenants to provide Viasat with certain flexibility to operate the Viasat business and incur additional debt in the interim period and to provide Inmarsat Holdings certain flexibility to operate the Inmarsat Group business in the interim period, in each case subject to negotiated consent requirements, exceptions and carve-outs.

On November 7, 2021, our Board held a meeting, with members of our senior management and representatives of Baupost, PJT Partners and Latham present, during which management updated the Board on the status of negotiations and documentation for the potential Inmarsat Holdings transaction and discussed the key terms of the share purchase agreement, including the regulatory covenants and potential regulatory outcomes. Ms. Duffy provided our Board with an update on financing commitments for the proposed transaction. Representatives of Latham again briefed the Board on the directors’ fiduciary duties with respect to the transaction, and led the Board in a detailed discussion of the key terms of the share purchase agreement and other definitive agreements. Representatives of PJT Partners then presented to the Board a financial analysis of the proposed transaction, and

 

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led the Board in a discussion of the key economic terms of the transaction. Representatives of PJT Partners then delivered its oral opinion, which was confirmed by delivery of a written opinion dated November 7, 2021, to the effect that, as of such date and based upon and subject to the various assumptions, qualifications and limitations upon the review undertaken by PJT Partners in preparing its opinion (which were stated in its written opinion), the consideration to be paid by Viasat in the transaction was fair to Viasat from a financial point of view. Following a thorough review and consideration of the relevant factors, the Board unanimously determined that the share purchase agreement and the transactions contemplated thereby were fair to, advisable and in the best interests of Viasat and its stockholders, approved the acquisition of Inmarsat Holdings, share purchase agreement and related documentation, and recommended that Viasat’s stockholders vote to approve both the issuance of shares of Viasat common stock in the transaction and an amendment to Viasat’s Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance.

On November 8, 2021, following the approval of the share purchase agreement and the transaction by our Board and the board of directors of Inmarsat Holdings, Viasat and the Inmarsat Shareholders executed the share purchase agreement. In addition, Viasat obtained financing commitments for $2.3 billion of new debt facilities in connection with the transaction (which may be secured and/or unsecured), which commitments included commitments with respect to the $700.0 million Term Loan Facility that was entered into by Viasat in March 2022. Viasat also obtained $3.2 billion of commitments to backstop certain amendments required under Viasat’s $700.0 million revolving credit facility, Viasat’s Ex-Im credit facility and Inmarsat Group’s $2.4 billion senior secured credit facilities. Later on November 8, 2021, prior to the opening of trading, Viasat and Inmarsat Group issued press releases announcing the execution of the share purchase agreement.

Our Board of Directors’ Reasons for the Approval of the Transaction and the Stock Issuance

Our Board, in evaluating the Transaction, held a number of meetings, consulted with our management, legal counsel, financial advisors and other advisors, and considered the business, assets and liabilities, results of operations, financial performance, strategic direction and prospects of both Viasat and Inmarsat Group. In reaching its unanimous resolution (i) that the terms and conditions of the Purchase Agreement and the transactions contemplated thereby, including the Transaction, are fair to, advisable and in the best interests of Viasat and our stockholders and (ii) to recommend that our stockholders approve the proposals required as conditions to closing the Transaction, our Board considered and evaluated a number of factors, including, but not limited to, the factors discussed below. This explanation of our Board’s reasons for the Transaction and all other information presented in this section is forward-looking in nature and, therefore, should be read in light of the factors discussed under “Cautionary Note Regarding Forward-Looking Statements” beginning on page 21 of this proxy statement.

Our Board identified a number of potential benefits of the Transaction, which it believes will contribute to the success of the combined company and thus inure to the benefit of the combined company’s stockholders, including but not limited to the following (which are not necessarily presented in order of their relative importance to Viasat):

 

   

Materially Accelerates Our Global Strategy. Inmarsat Group’s existing satellite fleet would provide global coverage and greater redundancy and resiliency for the combined company versus Viasat on a standalone basis. We believe that the Transaction would accelerate the expansion of our global revenue in both mobility and government, where our customers increasingly demand greater geographic coverage and redundancy, more bandwidth in high-demand locations, and, in some cases, the resilience of complementary narrowband services. In addition, the Transaction would also accelerate availability and customer choice for broadband and narrowband services, including IoT services.

 

   

Increases Exposure to a $1.6 Trillion Mobility-Focused TAM2 and Unlocks the IoT Market. Inmarsat Group has an established global distribution and partnership network across core mobility verticals, which would greatly expand the number of users served by our combined platform of vertically integrated, end-to-end solutions. Mobility and government verticals are “natural” users of

 

2 

Represents estimated total addressable market in 2030, based on Viasat estimates incorporating data from NSR, Euroconsult, Frost & Sullivan and the FCC.

 

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satellite services because these users, including ships, planes, and military vehicles, spend significant time beyond the reach of terrestrial connectivity. The Transaction would materially increase our serviceable addressable market in both maritime and narrowband communications, including the IoT, where we have a limited presence today and lack the requisite narrowband satellite spectrum resources.

 

   

Increases Proportion of Revenue from Services and Growing Mobility Verticals. The combined company would have a more geographically diverse, services-focused revenue base grounded in core mobility verticals, as well as government. For the nine months ended December 31, 2021, the percentage of our total revenues derived from services was 56%, compared to 69% calculated on a pro forma basis after giving effect to the Transaction, with over two-thirds of the combined company’s revenue derived from mobility and government. This services and mobility rich revenue mix would provide a strong financial and operational foundation to support robust revenue growth.

 

   

Complements Our Existing Network to Better Serve Mobility with Improved Efficiency. In order to serve ships and planes in transit, Inmarsat Group brings strong oceanic coverage, which Viasat would not otherwise have on a standalone basis today. In contrast, Viasat’s existing satellites have strong coverage and ample bandwidth over certain land masses, including hubs where demand density is highest. The integration of our respective fleets – including existing and to-be-launched satellites – would also provide our respective customers with greater service assurance including polar reach, oceanic coverage and network density. In addition, the combined company’s global coverage would allow us to operate our existing and planned satellites more efficiently, thereby increasing the total capacity of our combined satellite fleet and enhancing customer experience.

 

   

Expands Global Spectrum Portfolio, Opening New Growth and Innovation Opportunities. By accelerating the expansion of our Ka-band spectrum resources from regional to global, while simultaneously acquiring Inmarsat Group’s global L-band and regional S-band portfolio, the Transaction is expected to materially improve our long-term growth prospects as the combined company continues to build out its global next-generation, multi-layered hybrid network, with the ability to draw upon the best characteristics of each frequency band and orbit. Adding L-band and S-band capabilities would create new network development opportunities, including the potential for low-latency terrestrial, air-to-ground and hybrid solutions, as well as multi-orbit Ka- and L-/S-band constellations. Overall, we expect that the combined company’s complementary assets, when integrated, will better position the combined company for growth and will increase the pace and scale of innovation in the mobile communications sector, thereby delivering enhanced quality of service (including improved speed, flexibility, reliability, coverage and security) and offering greater value to existing and new customers.

 

   

Creates Substantial Synergy Opportunities. We project that the Transaction would result in approximately $190 million in combined cost and capital expenditure synergies on an annual run-rate basis, including annual run-rate cost synergies of $80 million from achieving greater operating efficiencies, capturing inherent economies of scale, and leveraging corporate resources, as well as annual run-rate capital expenditure synergies of $110 million from combining our existing satellite fleets. Anticipated cost and capital expenditure synergies alone represent a combined after-tax net present value of approximately $1.5 billion, net of expected costs to achieve such synergies. In addition, we expect that the combined company would achieve material revenue benefits not included in the current outlook from new tiered services enabled by a global multi-layer network and the revitalization of L-band services. These would include cross selling up-tier Ka-band broadband services to Inmarsat Group’s existing customer base, as well as cross selling L-band safety and IoT services and global Ka-band services to Viasat’s existing customer base.

 

   

Materially Increases Levered and Unlevered Free Cash Flow. We expect that the Transaction will more than double cumulative free cash flow on both a levered and unlevered basis over the calendar year 2023 to 2026 period relative to our prior stand-alone targets. Our Board also considered the accretive effect of the Transaction on free cash flow on a per share basis, recognizing that the magnitude of the increase in free cash flow on a percentage basis is projected to exceed the percentage increase in the number of shares of Viasat common stock outstanding as a result of the Transaction.

 

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Reduces Execution Risk with Straightforward Integration. Inmarsat Group adds established retail and wholesale distribution capabilities, a broader technology supply chain and customer relationships in key target geographies and verticals that we would otherwise need to build from the ground up. We have proven experience integrating complementary businesses, including WildBlue, RigNet and Euro Broadband Infrastructure Sàrl. In addition to Inmarsat Group’s extensive engineering skillsets, we have a deep bench of engineering talent that is highly familiar with the satellite, terminal, ground equipment and software technologies utilized by Inmarsat Group today.

 

   

Strengthens Global Heritage and Platform for Space Safety and Sustainability. Inmarsat Group has a long heritage of international aviation and maritime safety, and like Viasat, is also committed to promoting space sustainability and international space cooperation. The cultures of both Inmarsat Group and Viasat are aligned in their commitment to continued investment in technical talent and space-related development in the UK, as well as building strong relationships with leading regional broadband satellite partners in Australia, Brazil, Europe and other key geographies. We believe our collective heritage and international relationships will enable the combined company to better advocate for space safety, sustainable space policy and international cooperation.

In addition to its consideration of the above benefits, our Board considered a number of other factors pertaining to the Transaction as generally supporting its decision to enter into the Purchase Agreement and the transactions contemplated thereby, including but not limited to, the following material factors:

 

   

Fairness Opinion. The written opinion of PJT Partners, dated November 7, 2021, to our Board, and the related financial analysis presented by PJT Partners to our Board on November 7, 2021, to the effect that, as of the date of the written opinion and based upon and subject to among other things, the assumptions made, procedures followed, matters considered and conditions, qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the consideration to be paid by Viasat in the Transaction is fair to Viasat from a financial point of view, as more fully described in “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Transaction—Opinion of Our Financial Advisor” below and attached as Annex B.

 

   

Terms of the Purchase Agreement. The terms and conditions of the Purchase Agreement, including the ability of Viasat to consider, receive and respond to, under certain circumstances specified in the Purchase Agreement, an unsolicited written proposal for a business combination from a third party prior to completion of the Transaction and the right of our Board after complying with the terms of the Purchase Agreement to change its recommendation to our stockholders, and belief that the terms thereof were reasonable, and were not a significant deterrent to potential competing transactions and would not prevent such competing transactions from third parties.

 

   

Board Composition. Our Board’s belief that the addition of two additional directors nominated by the Investor Sellers will add further valuable expertise and experience and in-depth familiarity with Inmarsat Group to our Board, which will enhance the likelihood of realizing the strategic benefits that we expect to derive from the Transaction.

 

   

Financing Availability. The belief of our Board, following consultation with our management and financial advisors, and based in part upon the debt financing commitments that we obtained in connection with the execution of the Purchase Agreement, that it was likely that we would be able to obtain the necessary financing to fund the Transaction, and that after the completion of the Transaction, the combined company would be able to service and repay its indebtedness.

 

   

Stockholder Approval. The fact that our stockholders will have the opportunity to vote on the Stock Issuance Proposal and Charter Amendment Proposal, which are conditions precedent to the Transaction.

 

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Ancillary Agreements. Our Board’s belief that the terms of the ancillary agreements to be entered into in connection with the Transaction, including the Registration Rights Agreement and the Stockholders Agreement, are reasonable, and the fact that the Investor Sellers have agreed to certain lock-up, standstill and voting restrictions in the Stockholders Agreement.

 

   

Other Factors. The Board also considered historical information concerning Viasat’s and Inmarsat Group’s respective businesses, financial condition, results of operations, earnings, management, competitive positions and prospects on a standalone basis and a forecasted combined basis, as well as the current and prospective business environment in which Viasat and Inmarsat Group operate, including international, national and local economic conditions and the competitive and regulatory environment, and the likely effect of these factors on Viasat and the combined company.

Our Board was also aware of and considered a variety of uncertainties and risks and other potentially negative factors in its deliberations concerning the Purchase Agreement and the Transaction, including, but not limited to, the following:

 

   

Fixed Consideration. The fact that the consideration payable by us, including the number of shares of Viasat common stock to be issued by us, under the Purchase Agreement is fixed (other than in respect of certain specified adjustments), and will not be adjusted for changes in the market price of Viasat common stock or the economic performance of Viasat or Inmarsat Group. The number of shares of Viasat common stock will not be adjusted if the market price of Viasat’s shares increases or if the economic performance of Inmarsat Group relative to Viasat declines (or the economic performance of Viasat relative to Inmarsat Group improves), which means that the value of the shares of Viasat common stock to be issued to the Sellers under the Purchase Agreement based on the then-current trading price could be significantly higher than their value based on the trading price prevailing at the time the Purchase Agreement was entered into.

 

   

Transaction Costs. The substantial costs to be incurred in connection with the Transaction, including those incurred regardless of whether the Transaction is consummated, and which may exceed our management’s estimates. Based on information available as of the date of this proxy statement, we currently estimate that Viasat may incur approximately $250 million in Transaction costs (including financing costs) through the closing of the Transaction, including (but not limited to) fees paid to investment banking, legal and accounting advisors, regulatory and public relations advisors, rating agency fees, filing fees, printing costs and other costs and expenses, although actual amounts could vary materially from these estimates if future developments differ from the underlying assumptions used by management in determining the current estimate of these costs. A significant portion of these Transaction costs is contingent upon the closing of the Transaction occurring, although some have been and will be incurred regardless of whether the Transaction is consummated.

 

   

Integration Risks. The potential challenges and difficulties in integrating and combining two businesses of the size and complexity of Viasat and Inmarsat Group, including the possible diversion of management and employee attention for an extended period of time, and the risk that the anticipated cost savings and operational and other synergies between the two companies, or other anticipated benefits of the Transaction, might not be realized, may only be achieved over time or might take longer to realize than expected. We anticipate that significant financial investments and costs would be incurred in connection with integrating the two businesses and execution of our business plan, including costs relating to formulating and implementing integration plans and eliminating duplicative costs, as well as potential employment-related costs. Based on information available as of the date of this proxy statement, we currently estimate that we will incur approximately $50 million in integration costs and investments to realize synergies and efficiencies during each of the first two years following the closing of the Transaction. While we have assumed a certain level of expenses would be incurred to integrate the two businesses and achieve synergies and efficiencies and we continue to assess the magnitude of these costs, many of these expenses are, by their nature, difficult to estimate accurately and there are many factors beyond our control that could affect the total amount or timing of these

 

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costs. Although we expect that the elimination of duplicative costs, as well as the realization of strategic benefits, additional income, synergies and other efficiencies, should allow the combined company to offset integration-related costs over time, this net benefit may not be achieved in the near term, or at all.

 

   

Unknown Liabilities. The risk that Inmarsat Group may have or incur material liabilities which were not identified during our due diligence.

 

   

Business Uncertainties and Disruption Resulting from the Transaction. The possibility that the announcement and pendency of the Transaction could result in uncertainties and disruption of our businesses, including the potential employee attrition and potential adverse effects on customers, suppliers and other business relationships.

 

   

Interim Restrictions. The fact that restrictions on the conduct of our business during the period between the execution of the Purchase Agreement and the completion of the Transaction may delay or prevent us from taking certain actions with respect to our operations during the pendency of the Transaction.

 

   

Significant Stock Issuance. The potential impact on the market price of Viasat common stock as a result of the dilution associated with the issuance of shares of Viasat common stock under the Purchase Agreement and any resale of a substantial amount of such shares (or the perception that such sales could occur), and the fact that the Sellers will, collectively, own approximately 38% of outstanding Viasat common stock upon the closing of the Transaction (or approximately 37% on a fully diluted basis).

 

   

Regulatory Risks. The fact that the completion of the Transaction requires certain regulatory approvals and clearances and the satisfaction of other closing conditions that are not within our control, the potential length of regulatory approval processes, and the possibility that regulatory or other governmental authorities might seek to require certain actions or undertakings of Viasat or Inmarsat Group or impose certain terms, conditions or limitations on Viasat’s or Inmarsat Group’s businesses in connection with granting approval of the Transaction or might otherwise seek to prevent or delay the Transaction.

 

   

Increased Indebtedness and Leverage of the Combined Company. The fact that we will incur and assume significant additional indebtedness in connection with the Transaction. In connection with the Transaction, we have obtained financing commitments for an additional $1.6 billion of new debt facilities and expect to assume $2.1 billion in principal amount of Inmarsat Group’s senior secured bonds as well as the outstanding indebtedness under Inmarsat Group’s $2.4 billion senior secured credit facilities.

 

   

No-Shop Restrictions. The restrictions that the Purchase Agreement imposes on soliciting competing acquisition proposals.

 

   

Termination Fee and Expense Reimbursement. The possibility that a termination fee of up to $200 million, or expense reimbursement of up to $40 million, may be payable by us to the Sellers under certain circumstances, which may deter third parties from exploring an alternative transaction with us and, if the Purchase Agreement is terminated in circumstances where the applicable termination fee is not immediately payable, may impact our ability to engage in another transaction for up to one year following such termination, and the fact that we may be required to pay a termination fee under circumstances in which Viasat does not engage in another transaction. Our Board recognized that the provisions in the Purchase Agreement relating to the termination fees and expense reimbursement and the non-solicitation of acquisition proposals were insisted upon by the Sellers as a condition to entering into the Purchase Agreement. However, our Board was of the view, after discussions with its legal advisors, that the amount of the termination fees and expense reimbursement and the non-solicitation of acquisition proposals were reasonable and would not prevent our Board from exercising its fiduciary duties in light of, among other things, the benefits of the Transaction to us, and would not unreasonably deter competing transactions.

 

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No Financing Condition. The fact that the Purchase Agreement does not contain a financing condition, and the risk that the financing and any refinancing that may be undertaken in connection with the Transaction may not ultimately be available on the terms anticipated by us, or at all.

 

   

Risks Associated with Failure to Complete the Transaction. The risks and costs to us, including the transaction costs to be incurred by us in connection with the Transaction, that our stockholders may not approve the Stock Issuance Proposal or Charter Amendment Proposal and that the Transaction may not be completed in a timely manner or at all and the potential consequences of non-completion or delays in completion.

 

   

Litigation Risk. The inherent risk of litigation in transactions of this nature, including the potential lawsuits that could be brought against us or our Board in connection with the Transaction.

In addition, our Board was aware of and considered the interests that certain of our directors and executive officers have with respect to the Transaction that differ from, or are in addition to, their interests as stockholders of Viasat, as described in “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Transaction—Interests of Certain Persons in the Transaction” beginning on page 81 of this proxy statement.

Our Board conducted discussions of, among other things, the factors described above, including asking questions of our management and our legal, regulatory and financial advisors. After due consideration, our Board concluded that, on balance, the overall potential benefits that it expected Viasat and our stockholders to achieve as a result of the Transaction outweighed the potentially negative factors or risks associated with the Transaction. Accordingly, our Board unanimously determined that the Purchase Agreement and the transactions contemplated thereby, including the Transaction, and the issuance of the Stock Consideration to the Sellers, are fair to, advisable and in the best interests of Viasat and our stockholders.

The foregoing discussion of the information and factors that Viasat considered is not intended to be exhaustive, but rather is meant to include the material factors that Viasat considered. Our Board collectively reached the conclusion to approve the Purchase Agreement and the other transactions contemplated by the Purchase Agreement in light of the various factors described above and other factors that the members of our Board believed were appropriate. In view of the complexity and wide variety of factors, both positive and negative, that we considered in connection with our evaluation of the Transaction, our Board did not find it practical, and did not attempt, to quantify, rank or otherwise assign relative or specific weights or values to any of the factors it considered in reaching its decision and did not undertake to make any specific determination as to whether any particular factor, or any aspect of any particular factor, was favorable or unfavorable to the ultimate determination of our Board. Rather, our Board viewed its decision as being based on the totality of the information available and the factors presented to and considered by it. In addition, in considering the factors discussed above, individual directors may have given different weights to different factors.

Opinion of Our Financial Advisor

We retained PJT Partners to act as our financial advisor in connection with the Transaction and, upon our request, to render its fairness opinion to our Board in connection therewith. We selected PJT Partners to act as our financial advisor in connection with the Transaction based on PJT Partners’ qualifications, expertise and reputation, its knowledge of our industry and its knowledge and understanding of our business and affairs.

At a meeting of our Board on November 7, 2021, PJT Partners rendered its oral opinion, subsequently confirmed in its written opinion dated November 7, 2021, to our Board to the effect that, as of such date and based upon and subject to, among other things, the assumptions made, procedures followed, matters considered and conditions, qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion), the consideration to be paid by us in the Transaction was fair to us from a financial point of view.

 

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The full text of PJT Partners’ written opinion delivered to our Board, dated November 7, 2021, is attached as Annex B to this proxy statement and incorporated herein by reference in its entirety. PJT Partners’ written opinion has been provided by PJT Partners at our request to our Board and is subject to, among other things, the assumptions made, procedures followed, matters considered, and qualifications and limitations on the review undertaken by PJT Partners in connection with the opinion (which are stated in its written opinion). You are encouraged to read PJT Partners’ written opinion carefully and in its entirety. PJT Partners provided its opinion to our Board, in its capacity as such, in connection with and for purposes of its evaluation of the Transaction only, and PJT Partners’ opinion does not constitute a recommendation as to any action our Board should take with respect to the Transaction or how the stockholders should vote or act with respect to the Transaction or any other matter. The following is a summary of PJT Partners’ opinion and the methodology that PJT Partners used to render its opinion. This summary of the PJT Partners opinion contained in this proxy statement is qualified in its entirety by reference to the full text of PJT Partners’ written opinion.

In arriving at its opinion, PJT Partners, among other things:

 

   

reviewed certain publicly available information concerning the business, financial condition and operations of Inmarsat Group and Viasat;

 

   

reviewed certain internal information concerning the business, financial condition and operations of Inmarsat Group and Viasat prepared and furnished to PJT Partners by our and Inmarsat Group’s management;

 

   

reviewed certain internal financial analyses, estimates and forecasts relating to Inmarsat Group, including projections for calendar years 2021 through 2026 that were prepared by the management of Inmarsat Group, and adjusted and approved for PJT Partners’ use by our management (the Inmarsat Projections);

 

   

reviewed certain internal financial analyses, estimates and forecasts relating to Viasat, including projections for calendar years 2021 through 2026 that were prepared, and approved for PJT Partners’ use, by our management (collectively, the Viasat Projections and, together with the Inmarsat Projections, the Projections);

 

   

reviewed certain transaction synergies estimated by our and Inmarsat Group’s management to result from the Transaction, that were prepared, and approved for PJT Partners’ use, by our management (the Synergy Estimates);

 

   

held discussions with members of our and Inmarsat Group’s senior management concerning, among other things, our respective evaluation of the Transaction and Viasat’s and Inmarsat Group’s businesses, operating and regulatory environments, financial conditions, prospects and strategic objectives;

 

   

reviewed the potential pro forma financial impact of the Transaction on our financial performance;

 

   

compared certain financial information for Viasat and Inmarsat Group with similar publicly available financial and stock market data for certain other companies that PJT Partners deemed to be relevant;

 

   

compared the proposed financial terms of the Transaction with publicly available financial terms of certain other business combinations that PJT Partners deemed to be relevant;

 

   

reviewed the Purchase Agreement; and

 

   

performed such other financial studies, analyses and investigations, and considered such other matters, as PJT Partners deemed necessary or appropriate for purposes of rendering its opinion.

In preparing its opinion, with our consent, PJT Partners relied upon and assumed the accuracy and completeness of the foregoing information and all other information discussed with or reviewed by PJT Partners, without independent verification thereof. PJT Partners assumed, with our consent, that the Projections and Synergy

 

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Estimates, and the assumptions underlying the Projections and the Synergy Estimates, and all other financial analyses, estimates and forecasts provided to PJT Partners by our management, were reasonably prepared in accordance with industry practice and represented our management’s (or, in the case of the Inmarsat Projections, Inmarsat Group’s management’s) best currently available estimates and judgments as to the business and operations and future financial performance of Viasat and Inmarsat Group and the other matters covered thereby. PJT Partners relied, at our direction, on the assessments of our management as to Inmarsat Group’s ability to achieve the Inmarsat Projections and was advised by us, and assumed that the Inmarsat Projections will be realized in the amounts and at the times projected. With our consent and at our direction, PJT Partners did not take into account any revenues, operating expenditures or capital expenditures for Viasat relating to or resulting from our ViaSat-4 program during the forecast period. PJT Partners assumed no responsibility for and expressed no opinion as to the Projections or the Synergy Estimates, the assumptions upon which they were based or any other financial analyses, estimates and forecasts provided to PJT Partners by our management. PJT Partners also assumed that there had been no material changes in the assets, financial conditions, results of operations, businesses or prospects of Viasat or Inmarsat Group since the respective dates of the latest financial statements made available to PJT Partners. PJT Partners relied, with our consent, on our management’s representations and/or projections regarding taxable income and tax attributes of Viasat and Inmarsat Group after giving effect to the Transaction, including standalone net operating loss and R&D tax credit utilization. PJT Partners also relied, with our consent, on our management’s guidance regarding normalized long-term capital expenditure levels of Viasat and Inmarsat Group. PJT Partners further relied, with our consent, upon the assurances of our management that they were not aware of any facts that would make the information, representations and projections provided by them or by Inmarsat Group’s management inaccurate, incomplete or misleading.

PJT Partners was not asked to undertake, and did not undertake, an independent verification of any information provided to or reviewed by it, nor was PJT Partners furnished with any such verification and PJT Partners does not assume any responsibility or liability for the accuracy or completeness thereof. PJT Partners did not conduct a physical inspection of any of the properties or assets of Viasat or Inmarsat Group. PJT Partners did not make an independent evaluation or appraisal of the assets or the liabilities (contingent or otherwise) of Viasat or Inmarsat Group, nor was PJT Partners furnished with any such evaluations or appraisals, nor did PJT Partners evaluate the solvency of Viasat or Inmarsat Holdings or any of their respective subsidiaries (or the impact of the Transaction thereon) under any applicable laws.

PJT Partners also assumed, with our consent, that the final executed form of the Purchase Agreement would not differ in any material respects from the draft reviewed by PJT Partners and that the consummation of the Transaction would be effected in accordance with the terms and conditions of the Purchase Agreement, without waiver, modification or amendment of any material term, condition or agreement, and that, in the course of obtaining the necessary regulatory or third party consents and approvals (contractual or otherwise) for the Transaction, no delay, limitation, restriction or condition will be imposed that would have an adverse effect on Inmarsat Holdings, Viasat or any of their respective subsidiaries, or the contemplated benefits of the Transaction. PJT Partners expressed no opinion as to any tax or other consequences that might result from the Transaction, nor did PJT Partners’ opinion address any legal, tax, regulatory or accounting matters, as to which PJT Partners understood that we obtained such advice as we deemed necessary from qualified professionals. PJT Partners is not a legal, tax or regulatory advisor and relied upon without independent verification the assessment of us and our legal, tax and regulatory advisors with respect to such matters.

PJT Partners did not consider the relative merits of the Transaction as compared to any other business plan or opportunity that might be available to us or the effect of any other arrangement in which we might engage, and PJT Partners’ opinion did not address our underlying decision to engage in the Transaction. PJT Partners’ opinion was limited to the fairness as of the date of the opinion, from a financial point of view, to us of the consideration to be paid by us in the Transaction, and PJT Partners’ opinion did not address any other aspect or implication of the Transaction, the Purchase Agreement, or any other agreement or understanding entered into or to be entered into in connection with the Transaction or otherwise. PJT Partners further expressed no opinion or view as to the fairness of the Transaction to the holders of any class of securities, creditors or other constituencies

 

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of any party. PJT Partners also expressed no opinion as to the fairness (financial or otherwise) of the amount or nature of the compensation to any officers, directors or employees, or any class of such persons of any party to the Transaction, whether relative to the consideration to be paid by us or otherwise.

PJT Partners’ opinion was necessarily based upon economic, market, monetary, regulatory and other conditions as they existed and could be evaluated, and the information made available to PJT Partners, as of the date of its opinion. PJT Partners assumed no responsibility for updating or revising its opinion based on circumstances or events occurring after the date of its opinion. PJT Partners expressed no opinion as to the prices or trading ranges at which Viasat common stock will trade at any time.

PJT Partners’ opinion was approved by a fairness committee of PJT Partners in accordance with established procedures. PJT Partners’ opinion was provided to our Board, in its capacity as such, in connection with and for the purposes of its evaluation of the Transaction only and the opinion does not constitute a recommendation as to any action our Board should take with respect to the Transaction or any aspect thereof or how the stockholders should vote or act with respect to the Transaction or any other matter.

Summary of Financial Analyses of Our Financial Adviser

In connection with rendering its opinion, PJT Partners performed certain financial, comparative and other analyses as summarized below. In arriving at its opinion, PJT Partners did not ascribe a specific range of values to the consideration to be paid by us in the Transaction, but rather made its determination as to fairness to us, from a financial point of view, of the consideration to be paid by us in the Transaction on the basis of various financial and comparative analyses. The preparation of a fairness opinion is a complex process and involves various determinations as to the most appropriate and relevant methods of financial and comparative analyses and the application of those methods to the particular circumstances. Therefore, a fairness opinion is not readily susceptible to summary description.

In arriving at its opinion, PJT Partners did not attribute any particular weight to any single analysis or factor considered by it but rather made qualitative judgments as to the significance and relevance of each analysis and factor relative to all other analyses and factors performed and considered by it and in the context of the circumstances of the Transaction. Accordingly, PJT Partners believes that its analyses must be considered as a whole, as considering any portion of such analyses and factors, without considering all analyses and factors as a whole, could create a misleading or incomplete view of the process underlying its opinion.

The following is a summary of the material financial analyses used by PJT Partners in preparing its opinion to our Board. Certain financial analyses summarized below include information presented in tabular format. In order to fully understand the financial analyses used by PJT Partners, the tables must be read together with the text of each summary, as the tables alone do not constitute a complete description of the financial analyses. In performing its analyses, PJT Partners made numerous assumptions, as of the date of its opinion, with respect to industry performance, general business and economic conditions and other matters, many of which are beyond the control of us or any other parties to the Transaction. None of Viasat, our Board, PJT Partners, or any other person assumes responsibility if future results are materially different from those discussed. Any estimates contained in these analyses are not necessarily indicative of actual values or predictive of future results or values, which may be significantly more or less favorable than as set forth below. In addition, analyses relating to the value of the businesses do not purport to be appraisals or reflect the prices at which the businesses may actually be sold. The financial analyses summarized below were based on the Projections and other financial information prepared and furnished to PJT Partners by or on behalf of our and Inmarsat Group’s management, as applicable, and approved for PJT Partners’ use by our management. The following summary does not purport to be a complete description of the financial analyses performed by PJT Partners. The following quantitative information, to the extent that it is based on market data, is based on market data as it existed as of November 5, 2021 (which was the last trading day for Viasat common stock prior to the date of PJT Partners’ opinion), and is not necessarily indicative of current or future market conditions. Calculations of implied equity value were

 

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rounded to the nearest $5 million and calculations of implied equity value per share were rounded to the nearest $0.05. The detail underlying the fully diluted shares outstanding for Viasat used below was provided by our management.

Inmarsat Holdings Financial Analyses

Selected Public Market Multiples Analysis

In order to assess how the public market values shares of similar publicly traded companies and to provide a range of relative implied equity values of Inmarsat Holdings by reference to these companies, which could then be used to calculate implied equity value ranges, PJT Partners reviewed and compared specific financial, operating and public trading data relating to Inmarsat Holdings with selected companies that PJT Partners deemed comparable to Inmarsat Holdings and relevant for purposes of this analysis. The selected companies consisted of EchoStar, Eutelsat, Iridium, Viasat, SES and Telesat as implied by Loral.

Using publicly available information, PJT Partners calculated, for each selected company, the adjusted total enterprise value (calculated as the equity value based on fully diluted shares outstanding calculated using the treasury stock method, plus debt and less cash, after giving effect to certain adjustments for minority interests and unconsolidated assets, adjusted for post-tax, risk-adjusted C-Band proceeds, net operating losses, research and development tax credits and non-operating assets) (Adjusted TEV), as a multiple of estimated calendar year 2022 adjusted EBITDA (post-stock based compensation) (Adjusted EBITDA).

The results of this analysis are summarized below:

 

     EchoStar      Eutelsat      Iridium      Viasat(1)      SES      Telesat  

Adjusted TEV / CY2022E Adjusted EBITDA

     3.2x        5.8x        18.5x        11.3x        5.1x        NM  

 

(1)

Multiple reflects Adjusted EBITDA excluding operating expenditure for ViaSat-4 program.

Based on its experience and professional judgment, for purposes of its analysis PJT Partners selected an Adjusted TEV to 2022 calendar year estimated Adjusted EBITDA multiple reference range of 8.0x to 10.0x. In selecting this reference range, PJT Partners made qualitative judgments based on its experience and professional judgment concerning differences between the public trading histories, business, financial and operating characteristics and prospects of Inmarsat Group and the selected companies that could affect the public trading values in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between Inmarsat Group, as applicable, and the companies included in the selected public market multiples analysis.

Using this reference range and the Inmarsat Projections, after adjusting by (in each case as of September 30, 2021): (i) subtracting $3,385 million of net debt, (ii) subtracting $1 million of minority interest, (iii) adding $22 million of net present value of UK net operating losses and (iv) subtracting $105 million of other non-operating liabilities, PJT Partners calculated an illustrative range of implied equity value of Inmarsat Holdings of approximately $3,190 million to $4,850 million.

 

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Selected Precedent M&A Transactions Analysis

PJT Partners analyzed certain information relating to transactions announced since 2010 involving companies in the satellite service layer (the Service Layer Selected Transactions) and transactions announced since 2001 involving companies in the fixed satellite service industry (the FSS Selected Transactions), for each of which publicly disclosed information is available, that PJT Partners in its professional judgment considered generally relevant for comparative purposes:

The Service Layer Selected Transactions consisted of:

 

Announcement Date

  

Acquiror

  

Target

September 2021

   Providence    Marlink

April 2021

   GI Partners    ORBCOMM

December 2020

   Viasat    RigNet

August 2018

   Speedcast    Globecomm

November 2016

   Speedcast    Harris Caprock

May 2016

   Global Eagle    Emerging Markets Communications

December 2015

   Apax Partners    Marlink

April 2015

   Emerging Markets Communications    MTN Satellite Communications

August 2013

   Wasserstein    Globecomm

August 2013

   KKR    RigNet

December 2012

   ABRY    Emerging Markets Communications

August 2011

   Airbus    Vizada

March 2011

   Inmarsat Solutions Limited    Ship Equip

November 2010

   Harris    Schlumberger Information Solutions

May 2010

   Harris    Caprock

The FSS Selected Transactions consisted of:

 

Announcement Date

  

Acquiror

  

Target

June 2021

   4iG    Spacecom

June 2019

   Carlyle / CITIC    AsiaSat

March 2019

   Apax, Warburg Pincus, CPPIB, OTPBB    Inmarsat

February 2019

   Red Eléctrica    Hispasat

February 2018

   Abertis    Hispasat (57%)

May 2017

   Abertis    Hispasat (37.7%)

May 2016

   Sirius XM Radio    Sirius XM Canada

December 2014

   Carlyle    AsiaSat

October 2013

   BlackRock    Eutelsat

July 2013

   Eutelsat    Satmex

February 2013

   Arabsat    Hellas-Sat

June 2012

   CIC    Eutelsat (7%)

June 2012

   Eutelsat    GE Satellite (GE-23)

February 2011

   EchoStar    Hughes

September 2010

   Permira    ABS

July 2010

   MAI Holdings    Measat

October 2009

   Viasat    WildBlue

June 2007

   BC Partners, Silver Lake    Intelsat

February 2007

   Sirius    XM Satellite Radio

February 2007

   GE, CITIC    AsiaSat

December 2006

   Loral, PSP    Telesat

 

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Announcement Date

  

Acquiror

  

Target

December 2006

   Caisse des Dépôts    Eutelsat

December 2006

   Abertis    Eutelsat

October 2006

   Apax, Apollo, MDP, Permira    Telenor

October 2006

   SKY PerfecTV!    JSAT

December 2005

   SES    New Skies

August 2005

   Intelsat    PanAmSat

August 2004

   Apax, Apollo, Madison Dearborn, Permira    Intelsat

June 2004

   Blackstone    New Skies

April 2004

   KKR, Carlyle, Providence    PanAmSat

October 2003

   Apax, Permira    Inmarsat

July 2003

   Intelsat    Loral satellites

March 2001

   SES    GE Americom

March 2001

   Singapore Telecom    Optus

The reasons for and the circumstances surrounding each of the selected precedent transactions analyzed were diverse, and there are inherent differences in the business, operations, financial conditions and prospects of Inmarsat Group, Viasat and the companies included in the selected transactions.

For each of the Service Layer Selected Transactions and FSS Selected Transactions, based on publicly available information, PJT Partners calculated and compared the total enterprise value implied for each target company based on the consideration payable in the applicable selected transaction as a multiple of its EBITDA (post-stock based compensation) for the last twelve months (LTM) prior to the announcement of the applicable transaction and for the next twelve months (NTM) after the announcement of the applicable transaction.

The results of this analysis are summarized below:

 

Service Layer Selected Transactions

   Median      Mean  

TEV / LTM EBITDA (post-SBC)

     8.5x        9.5x  

TEV / NTM EBITDA (post-SBC)

     8.8x        9.9x  

FSS Selected Transactions

   Median      Mean  

TEV / LTM EBITDA (post-SBC)

     8.6x        8.1x  

TEV / NTM EBITDA (post-SBC)

     8.8x        8.3x  

Based on its analysis of the relevant metrics for each of the selected transactions, PJT Partners selected a total enterprise value to NTM EBITDA (post-stock based compensation) multiple reference range of 9.0x to 10.0x. In selecting this reference range, PJT Partners made qualitative judgments based on its experience and professional judgment concerning differences between the business, financial and operating characteristics and prospects of Inmarsat Group and the companies included in the selected transactions and other factors that could affect the public trading, acquisition or other values of such companies or Inmarsat Group. PJT Partners applied this reference range to Inmarsat Group’s estimated NTM Adjusted EBITDA (post-stock based compensation) and, after adjusting by (in each case as of September 30, 2021): (i) subtracting $3,385 million of net debt, (ii) subtracting $1 million of minority interest, (iii) adding $22 million of net present value of UK net operating losses and (iv) subtracting $105 million of other non-operating liabilities, calculated an illustrative range of implied equity value of Inmarsat Holdings of approximately $3,710 million to $4,510 million.

Discounted Cash Flow Analysis

PJT Partners performed a discounted cash flow (DCF) analysis of Inmarsat Group, which is a traditional valuation methodology used to derive a valuation of an asset by calculating the “present value” of estimated future cash flows of the asset. “Present value” refers to the current value of future cash flows and is obtained by discounting those future cash flows by a discount rate that takes into account macroeconomic assumptions and estimates of risk, the opportunity cost of capital, expected returns and other appropriate factors.

 

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To calculate the implied adjusted total enterprise value of Inmarsat Group using the DCF method, PJT Partners added (i) Inmarsat Group’s estimated unlevered free cash flows for the period from September 30, 2021 through December 31, 2026 based on the Inmarsat Projections to (ii) ranges of terminal values of Inmarsat Group as of December 31, 2026, and discounted such amounts to their present value as of September 30, 2021 using a range of selected discount rates.

The residual value of Inmarsat Group at the end of the projection period, or terminal value, was estimated by applying a perpetuity growth rate range of 0.5% to 1.5% to Inmarsat Group’s 2026 estimated unlevered free cash flow reflecting a normalized level of capital expenditures, selected by PJT Partners in its professional judgment, which implied a terminal value multiple range of 6.5x to 8.7x of Inmarsat Group’s fiscal year 2026 estimated Adjusted EBITDA (post-stock based compensation). The unlevered free cash flows and terminal values were then discounted to present value as of September 30, 2021 using discount rates ranging from 7.5% to 8.5%, which were selected based on PJT Partners’ analysis of the weighted average cost of capital of Inmarsat Group.

Based on its analysis, after adjusting by (in each case as of September 30, 2021): (i) subtracting $3,385 million of net debt, (ii) subtracting $1 million of minority interest, (iii) adding $22-$23 million of net present value of UK net operating losses and (iv) subtracting $105 million of other non-operating liabilities, PJT Partners then calculated an illustrative range of implied equity value of Inmarsat Holdings of approximately $3,645 million to $5,865 million.

Viasat Financial Analyses

Selected Public Market Multiples Analysis

In order to assess how the public market values shares of similar publicly traded companies and to provide a range of relative implied equity values per share of Viasat common stock by reference to these companies, which could then be used to calculate implied equity value per share ranges, PJT Partners reviewed and compared certain financial information, ratios and multiples for us to corresponding financial information, ratios and multiples for companies in each of the satellite communications and aerospace and defense industries and that PJT Partners deemed comparable, based on its experience and professional judgment, to us. The selected companies consisted of (i) for the satellite communications industry: Comtech, EchoStar, Eutelsat, Gogo, Iridium, KVH, OHB and SES; and (ii) for the aerospace and defense industry: BAE Systems, General Dynamics, L3Harris, Lockheed Martin, Maxar, Northrop Grumman and Thales.

Using publicly available information, PJT Partners calculated, for each selected company, the Adjusted TEV as a multiple of estimated calendar year 2022 Adjusted EBITDA.

The results of this analysis are summarized below:

Satellite Communications

 

     Comtech(1)      EchoStar      Eutelsat      Gogo      Iridium      KVH      OHB      SES  

Adjusted TEV / CY2022E Adjusted EBITDA

     10.2x        3.2x        5.8x        17.0x        18.5x        21.0x        8.8x        5.1x  

 

(1)

Reflected October 29, 2021 share price unaffected for Acacia Research takeover offer announcement.

Aerospace & Defense

 

     BAE
Systems
     General
Dynamics
     L3Harris      Lockheed
Martin
     Maxar      Northrop
Grumman
     Thales  

Adjusted TEV / CY2022E Adjusted EBITDA

     6.9x        12.7x        12.9x        10.2x        9.4x        14.5x        7.0x  

 

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Based on its experience and professional judgment, for purposes of its analysis PJT Partners selected an Adjusted TEV to 2022 calendar year estimated Adjusted EBITDA multiple reference range of 10.0x to 12.0x. In selecting this reference range, PJT Partners made qualitative judgments based on its experience and professional judgment concerning differences between the public trading histories, business, financial and operating characteristics and prospects of Viasat and the selected companies that could affect the public trading values in order to provide a context in which to consider the results of the quantitative analysis. These qualitative judgments related primarily to the differing sizes, growth prospects, profitability levels and degree of operational risk between us, as applicable, and the companies included in the selected public market multiples analysis.

Using this reference range and the Viasat Projections, after adjusting by (in each case as of September 30, 2021): (i) subtracting $1,941 million of net debt, (ii) subtracting $39 million of minority interest, (iii) adding $541 million net present value of net operating losses and research and development tax credits, and (iv) adding $64 million net present value of certain non-operating assets, PJT Partners then calculated an illustrative range of implied equity value of us of approximately $4,416 million to $5,575 million. PJT Partners then divided these implied equity values by 77.3 to 77.5 million shares of Viasat common stock outstanding (on a fully diluted basis using the treasury stock method as of November 2, 2021), and calculated an illustrative range of implied equity value per share of Viasat common stock of approximately $57.15 to $71.95.

Discounted Cash Flow Analysis

PJT Partners performed a DCF analysis of Viasat. In performing this analysis, to calculate the implied adjusted total enterprise value of Viasat using the DCF method, PJT Partners added (i) our estimated unlevered free cash flows for the period from September 30, 2021 through December 31, 2026 based on the Viasat Projections, which excludes revenues, operating expenditures or capital expenditures for us relating to or resulting from ViaSat-4 program except for estimated ViaSat-4 operating expenditure not exceeding $1 million and estimated ViaSat-4 capital expenditure not exceeding $59 million during the calendar year 2021, to (ii) ranges of terminal values of Viasat as of December 31, 2026, and discounted such amounts to their present value as of September 30, 2021 using a range of selected discount rates.

The residual value of Viasat at the end of the projection period, or terminal value, was estimated by applying a perpetuity growth rate range of 2.0% to 3.0% to our 2026 estimated unlevered free cash flow, selected by PJT Partners in its professional judgment, which implied a terminal value multiple range of 6.8x to 9.6x of our fiscal year 2026 estimated Adjusted EBITDA (post-stock based compensation). The unlevered free cash flows and terminal values were then discounted to present value as of September 30, 2021 using discount rates ranging from 8.0% to 9.0%, which were selected based on PJT Partners’ analysis of the weighted average cost of capital of Viasat.

Based on its analysis, after adjusting by (in each case as of September 30, 2021): (i) subtracting $1,941 million of net debt, (ii) subtracting $39 million of minority interest, (iii) adding $532-551 million net present value of net operating losses and research and development tax credits, and (iv) adding $64 million net present value of certain non-operating assets, PJT Partners then calculated an illustrative range of implied equity value of Viasat of approximately $3,807 million to $6,579 million. PJT Partners then divided these implied equity values by 77.2 to 77.9 million shares of Viasat common stock outstanding (on a fully diluted basis using the treasury stock method as of November 2, 2021), and calculated an illustrative range of implied equity value per share of Viasat common stock of approximately $49.35 to $84.50.

Relative Valuation and DCF “Has-Gets” Analysis

Implied Ownership Splits

Based on the range of implied equity values for Inmarsat Holdings and Viasat that were calculated by PJT Partners in its selected public market multiples analyses (excluding synergies) and adjusting for the cash

 

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consideration to be paid by us of $850 million, PJT Partners calculated a range of the implied ownership split between Viasat stockholders and Inmarsat Shareholders in the combined company after the Transaction. PJT Partners calculated the high end of the implied ownership range for existing Viasat stockholders by dividing the high value of the Viasat implied equity value reference range by the combined company’s implied equity value (which was calculated using the high value of the Viasat implied equity value reference range and the low value of the Inmarsat Holdings implied equity value reference range). PJT Partners calculated the low end of the implied ownership range for existing Viasat stockholders by dividing the low value of the Viasat implied equity value reference range by the combined company’s implied equity value (which was calculated using the high value of the Inmarsat Holdings implied equity value reference range and the low value of the Viasat implied equity value reference range). The result of this analysis, as compared to the 62.5% (for existing Viasat stockholders) to 37.5% (for existing Inmarsat Shareholders) implied ownership split reflected in the Transaction, was an implied ownership split range of 52.5% (for existing Viasat stockholders) and 47.5% (for existing Inmarsat Shareholders) to 70.4% (for existing Viasat stockholders) and 29.6% (for existing Inmarsat Shareholders).

Based on the range of implied equity values for Inmarsat Holdings and Viasat that were calculated by PJT Partners in its DCF analyses (excluding synergies) and adjusting for the cash consideration to be paid by Viasat of $850 million, PJT Partners calculated a range of the implied ownership split between Viasat stockholders and Inmarsat Shareholders in the combined company after the Transaction. PJT Partners calculated the high end of the implied ownership range for existing Viasat stockholders by dividing the high value of the Viasat implied equity value from the Viasat DCF analysis by the combined company’s implied equity value (which was calculated using the high value of the Viasat implied equity value from the Viasat DCF analysis and the low value of the Inmarsat Holdings implied equity value from the Inmarsat Group DCF analysis). PJT Partners calculated the low end of the implied ownership range for existing Viasat stockholders by dividing the low value of the Viasat implied equity value from the Viasat DCF analysis by the combined company’s implied equity value (which was calculated using the low value of the Viasat implied equity value from the Viasat DCF analysis and the high value of the Inmarsat Holdings implied equity value from the Inmarsat Group DCF analysis). The result of this analysis, as compared to the 62.5% (for existing Viasat stockholders) to 37.5% (for existing Inmarsat Shareholders) implied ownership split reflected in the Transaction, was an implied ownership split range of 43.1% (for existing Viasat stockholders) and 56.9% (for existing Inmarsat Shareholders) to 70.2% (for existing Viasat stockholders) and 29.8% (for existing Inmarsat Shareholders).

“Has / Gets” Analysis

PJT Partners performed a “Has / Gets” analysis in order to compare (1) the standalone DCF-based per share value of Viasat to (2) the DCF-based per share value of the combined company (which was calculated as described below), both excluding the Synergy Estimates and including the Synergy Estimates, giving effect to the completion of the Transaction, in each case from the perspective of the holders of Viasat common stock.

For purposes of the “Has / Gets” analysis, PJT Partners calculated (1) the DCF-based standalone value of Viasat based on PJT Partners’ DCF analysis for Viasat (as described above) at the mid-point of the discount rates and perpetuity growth rates used in such analysis, and (2) the equity valuation of the combined company giving effect to the completion of the Transaction by adding (i) the DCF-based standalone value of Viasat, (ii) the DCF-based standalone valuation of Inmarsat Group based on PJT Partners’ DCF analysis for Inmarsat Group (as described above) at the mid-point of the discount rates and perpetuity growth rates used in such analysis, and (iii) for purposes of the DCF-based value of the combined company including the Synergy Estimates, the DCF-based value of the Synergy Estimates (by performing an 11.25 year DCF of the Synergy Estimates as of September 30, 2021, using the mid-point of a range of weighted average cost of capital of 7.75% to 8.75%), and subtracting (iv) the combined company’s incremental debt of $1,104 million as compared to the sum of Viasat’s and Inmarsat Group’s standalone debt. PJT Partners then calculated the implied equity value per share of Viasat common stock, both on a standalone basis and after giving effect to the completion of the Transaction, by dividing such amounts resulting from the DCF analyses described in the previous sentence by (1) the number of

 

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outstanding shares of Viasat common stock as of September 30, 2021, and (2) the pro forma number of outstanding shares of Viasat common stock, giving effect to the completion of the Transaction, as provided in the Purchase Agreement, respectively.

The result of PJT Partners’ analysis for the DCF-based standalone value of Viasat was an implied price of $64.16 per share of Viasat common stock. The result of PJT Partners’ analysis for the DCF-based value of the combined company, giving effect to the completion of the Transaction (A) excluding the Synergy Estimates, was an implied price of $68.38 per share of Viasat common stock, and (B) including the Synergy Estimates described above (but excluding cross-sell synergies), was an implied price of $80.76 per share of Viasat common stock, representing an increase in DCF-based value of approximately 26% in respect of a share of Viasat common stock.

Other Information

PJT Partners also observed the additional factors described below, which were not considered part of its financial analyses in connection with rendering its opinion, but were referenced solely for informational purposes:

 

   

historical trading activity of Viasat common stock during the 52-week period ending November 5, 2021 indicated low and high intraday trading prices of Viasat common stock during such period of $29.82 to $68.76; and

 

   

publicly available Wall Street research analysts’ share price targets (certain of which were twelve-month price targets) for Viasat common stock indicated a target (discounted) share price range of $55.70 to $86.80 (excluding the highest and lowest price targets as outliers).

General

The preparation of a fairness opinion is a complex process and is not necessarily susceptible to partial analysis or summary description. Selecting portions of the analyses or of the summary set forth above, without considering the analyses as a whole, could create an incomplete view of the processes underlying PJT Partners’ opinion. In arriving at its fairness determination, PJT Partners considered the results of all of its analyses and did not attribute any particular weight to any factor or analysis considered by it. Rather, PJT Partners made its determination as to fairness on the basis of its experience and professional judgment after considering the results of all of its analyses. No company or transaction used in the above analyses as a comparison is directly comparable to us, Inmarsat Group or the Transaction. The terms of the Purchase Agreement, including the consideration, were determined through arm’s-length negotiations between us and Inmarsat Holdings, rather than PJT Partners, and the decision to enter into the Purchase Agreement was solely that of us, Inmarsat Holdings and the Sellers.

PJT Partners prepared these analyses for purposes of providing its opinion to our Board as to the fairness to us, from a financial point of view, as of the date of the written opinion of PJT Partners, of the consideration to be paid by us in the Transaction. These analyses do not purport to be appraisals nor do they necessarily reflect the prices at which businesses or securities actually may be sold. Analyses based upon forecasts of future results are not necessarily indicative of actual future results, which may be significantly more or less favorable than suggested by these analyses. Because these analyses are inherently subject to uncertainty, being based upon numerous factors or events beyond the control of the parties or their respective advisors, none of Viasat, our Board, PJT Partners or any other person assumes responsibility if future results are materially different from those forecast.

PJT Partners is an internationally recognized investment banking firm and, as part of its investment banking activities, is regularly engaged in the valuation of businesses and their securities in connection with mergers and acquisitions, investments for passive and control purposes, negotiated underwritings, competitive bids, secondary distributions of listed and unlisted securities, private placements and valuations for estate, corporate and other purposes. We selected PJT Partners to act as our financial advisor because of its qualifications, reputation and experience in the valuation of businesses and securities in connection with mergers and acquisitions.

 

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In acting as our financial advisor in connection with the Transaction, as compensation for its services in connection with the Transaction, PJT Partners is entitled to receive from us a $4 million opinion fee, which became payable upon the delivery of PJT Partners’ opinion to our Board and is creditable against any transaction fee that becomes payable upon the consummation of the Transaction. Upon the consummation of the Transaction, PJT Partners is entitled to receive a transaction fee of $24 million. In addition, the transaction fee payable to PJT Partners may be increased in our sole discretion. We also agreed to reimburse PJT Partners for certain out-of-pocket expenses and to indemnify PJT Partners for certain liabilities arising out of the performance of such services (including the rendering of PJT Partners’ opinion).

In the ordinary course of PJT Partners’ and its affiliates’ businesses, PJT Partners and its affiliates may provide investment banking and other financial services to us, Inmarsat Group, the Sellers or any of our or their respective affiliates and may receive compensation for the rendering of these services. During the two years preceding the date of its opinion, PJT Partners and certain of its affiliates advised us, certain affiliates of Inmarsat Group and certain affiliates of the Sellers, for which PJT Partners and its affiliates received or may in the future receive customary compensation. Such services during such period included: (i) previously advising us, through PJT Camberview, in connection with corporate governance and stockholder engagement matters unrelated to the Transaction; (ii) previously advising Inmarsat in connection with its December 2019 sale to Inmarsat Holdings; and (iii) advising certain affiliates (including certain portfolio companies) of the Sellers in connection with various financial advisory and restructuring services unrelated to the Transaction.

Certain Financial Forecasts

Prospective Financial Information

The Viasat Projections and Synergy Estimates, while presented with numerical specificity, reflect numerous assumptions that if different than expected could materially impact the revenue and Adjusted EBITDA growth that we ultimately achieve, including assumptions with respect to company, industry, vendor and customer performance, future market conditions including prevailing pricing for various products and services and the quality of competing offerings, the rate of recovery of aviation and other industries from COVID-19, government spending on communications services including the operational tempo of the U.S. armed forces, the health and launch cadence of our existing and future satellites, as well as general business, economic, regulatory, market and financial conditions and other matters, many of which are difficult to predict, subject to significant economic and competitive uncertainties and beyond our control. Multiple factors, including those described in the section of this proxy statement titled “Cautionary Note Regarding Forward Looking Statements” and “Risk Factors” could cause the Viasat Projections, the Synergy Estimates or the underlying assumptions to be inaccurate. As a result, there can be no assurance that the Viasat Projections or Synergy Estimates will be realized or that actual results will not be significantly higher or lower than projected. Because the Viasat Projections and Synergy Estimates cover multiple years, such information by its nature becomes less reliable with each successive year. In addition, given the uncertainty around the COVID-19 pandemic, the initial years included in the Viasat Projections are also subject to significant uncertainty. The Viasat Projections and Synergy Estimates do not take into account any circumstances or events occurring after the date on which they were prepared, including the Transaction or the conflict in Ukraine. Economic and business environments can and do change quickly, which adds an additional significant level of uncertainty as to whether the results portrayed in the Viasat Projections and Synergy Estimates will be achieved. As a result, the inclusion of the Viasat Projections and Synergy Estimates in this proxy statement does not constitute an admission or representation by us, PJT Partners or any other person that the information is material. The summaries of the Viasat Projections and Synergy Estimates set forth below are not provided to influence our stockholders’ decisions regarding whether to vote for the Stock Issuance Proposal, Charter Amendment Proposal or any other proposal. The Viasat Projections and Synergy Estimates should be evaluated, if at all, in conjunction with the historical financial statements and other information contained in our public filings with the SEC.

 

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The Viasat Projections and Synergy Estimates were not prepared with a view toward public disclosure or toward complying with US GAAP, nor were they prepared with a view toward compliance with the published guidelines of the SEC, or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The non-GAAP financial measures used in the Viasat Projections and Synergy Estimates were prepared solely for internal use by us or our financial advisors. The prospective financial information included in this proxy statement has been prepared by, and is the responsibility of, our management. PricewaterhouseCoopers LLP (a Delaware limited liability partnership) has not audited, reviewed, examined, compiled nor applied agreed-upon procedures with respect to the accompanying prospective financial information and, accordingly, PricewaterhouseCoopers LLP does not express an opinion or any other form of assurance with respect thereto. The PricewaterhouseCoopers LLP report incorporated by reference in this proxy statement relates to our previously issued financial statements. It does not extend to the prospective financial information and should not be read to do so. In addition, neither the Viasat Projections nor the Synergy Estimates have been updated or revised to reflect information or results after the date the Viasat Projections and Synergy Estimates were prepared or as of the date of this proxy statement, and except as required by applicable securities laws, we do not intend to update or otherwise revise the Viasat Projections, the Synergy Estimates or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

For the foregoing reasons, and considering that the special meeting will be held several months after the Viasat Projections and Synergy Estimates were prepared, as well as the uncertainties inherent in any forecasting information, readers of this proxy statement are cautioned not to place unwarranted reliance on the Viasat Projections and Synergy Estimates set forth below. No one has made or makes any representation to any investor or stockholder regarding the information included in the Viasat Projections or the Synergy Estimates. We urge all stockholders to review our most recent SEC filings for a description of our reported financial results. Please see the section entitled “Where You Can Find Additional Information; Incorporation of Certain Documents by Reference” beginning on page 131 of this proxy statement.

Certain Viasat Unaudited Financial Projections

We do not, as a matter of course, publicly disclose projections as to future performance, other than generally providing, on a quarterly basis, guidance as to expected trends, certain expected financial results and operational metrics for certain future periods. We otherwise avoid making public projections for future periods due to, among other things, the unpredictability of the underlying assumptions and estimates. However, we are including in this proxy statement a summary of the Viasat Projections solely because such financial information was given to our Board and PJT Partners for purposes of considering and evaluating the Transaction, including in connection with PJT Partners’ financial analyses and opinion described in the section “—Opinion of Our Financial Advisor.” The Viasat Projections include the revenue, operating expenses and capital expenditures associated with Viasat’s existing satellites and three ViaSat-3 satellites currently under construction, but, except as otherwise noted below, exclude revenue, operating expenses and capital expenditures associated with the ViaSat-4 program. We advised the recipients of the Viasat Projections that our internal financial forecasts are subjective in many respects. The inclusion of the Viasat Projections should not be regarded as an indication that our Board, PJT Partners, us, our management or any other recipient of this information considered, or now considers, them to be an assurance of the achievement of future results or an accurate prediction of future results, and they should not be relied on as such.

The expected growth in revenue and Adjusted EBITDA over the forecast period reflected in the Viasat Projections is a result of multiple drivers, including but not limited to: (i) an overall estimated total addressable market for satellite services growing from approximately $1 trillion in 2020 to approximately $1.6 trillion in 2030 (based on data from NSR, Euroconsult, Frost & Sullivan, ValourConsultancy, CISCO, the FCC and others, as well as Viasat estimates), (ii) three ViaSat-3 satellites coming into service over the projection period with at least eight times the capacity of Viasat’s existing fleet, (iii) continued growth in demand by military and government users for secure, higher-capacity, higher-quality satellite connectivity solutions consistent with

 

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Viasat’s historical growth rate in government and reflecting a 5% estimated annual CAGR for the broader total addressable market from 2020 to 2030 for satellite government premium services (based on data from NSR, Frost & Sullivan and Jane’s Defense, as well as Viasat estimates), (iv) continued growth in demand for mobility services by airlines, ship operators, train and bus operators, passengers and crews, reflecting a 12% estimated annual CAGR for the broader total addressable market from 2020 to 2030 for satellite mobile premium services (based on data from Euroconsult, ValourConsultancy and CISCO), (v) continued growth from Viasat’s in-flight connectivity (IFC) customers currently under contract and additional international growth from the global coverage associated with the Viasat-3 constellation, consistent with our historical win rate for expected future airline connectivity request for proposals, (vi) continued growth in demand for enterprise satellite connectivity services across energy, enterprises, ground services, IoT and cybersecurity, reflecting a 7% estimated annual CAGR for the broader total addressable market from 2020 to 2030 for satellite fixed and enterprise premium services (based on data from Euroconsult and NSR), (vii) continued growth in demand for satellite consumer services including residential internet, community internet, smart home connectivity, and small-medium business connectivity reflecting a 3% estimated annual CAGR for the broader total addressable market for satellite consumer services (based on data from the FCC, ITU and Euroconsult, as well as Viasat estimates), and (viii) a 4% improvement in Adjusted EBITDA margins over the projection period as a result of the operating leverage associated with satellite services.

Our management provided our Board with the Viasat Projections in connection with our Board’s evaluation of a potential transaction with Inmarsat Group, which comprised non-public, unaudited financial forecasts with respect to our business, as a standalone company, for calendar years 2021 through 2026. In addition, the Viasat Projections were provided to PJT Partners and were used in the financial analyses presented by PJT Partners to our Board as discussed in “—Opinion of Our Financial Advisor.” The Viasat Projections included in this proxy statement are presented to give the stockholders access to the financial projections that were made available to our Board and PJT Partners.

The following is a summary of the Viasat Projections, with dollars in millions:

 

     Estimated(1)      Projected(1)  
     CY2021E      CY2022E     CY2023E     CY2024E      CY2025E      CY2026E  

Revenue

   $ 2,727      $ 3,255     $ 3,907     $ 4,807      $ 5,315      $ 5,575  

Adjusted EBITDA (Pre-SBC)(2)

     596        672       789       1,040        1,344        1,459  

Adjusted EBITDA (Post-SBC)(3)

     510        579       689       933        1,223        1,325  

Unlevered Free Cash Flow(4)

        (639     (394     86        479        366  

 

(1)

All of the amounts set forth in this table exclude all revenue, operating expenditures and capital expenditures associated with the ViaSat-4 program, except for ViaSat-4 operating expenditures not exceeding $1 million and ViaSat-4 capital expenditures of $59 million in CY2021E.

(2)

Adjusted EBITDA (Pre-SBC) is a non-GAAP financial measure, which is calculated as net income (loss) attributable to Viasat, Inc. plus (i) depreciation and amortization, (ii) interest expense, net, (iii) income tax expense (benefit) and (iv) stock-based compensation expense (SBC).

(3)

Adjusted EBITDA (Post-SBC) is a non-GAAP financial measure, which is calculated as Adjusted EBITDA (Pre-SBC) less SBC.

(4)

Unlevered free cash flow is a non-GAAP financial measure, which is calculated as Adjusted EBITDA (Post-SBC) less cash taxes (excluding the impact of interest expense, net operating losses (NOLs) and other tax attributes), capital expenditures, changes in net working capital and minor adjustments for other cash items. The Viasat Projections did not include an equivalent unlevered free cash flow calculation for CY2021E.

The Viasat Projections do not take into account the possible financial and other effects of the Transaction and do not attempt to predict or suggest future results following the Transaction. The Viasat Projections do not give effect to the Transaction, including the impact of negotiating or executing the Purchase Agreement, the expenses that may be incurred in connection with completing the Transaction, the effect of any business or strategic decision or action that has been or will be taken as a result of the Purchase Agreement having been executed, or

 

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the effect of any business or strategic decisions or actions that would likely have been taken if the Purchase Agreement had not been executed, but that were instead altered, accelerated, postponed or not taken in anticipation of the Transaction.

The Viasat Projections do not and should not be read to update, modify or affirm any prior financial guidance issued by us. Stockholders are cautioned not to place undue reliance on this information in making a decision as to whether to vote in favor of the Stock Issuance Proposal and Charter Amendment Proposal.

Certain Inmarsat Group Financial Projections

In July and August 2021, in connection with our evaluation of a possible transaction with Inmarsat Group, Inmarsat Group management provided us with their internally prepared projections for calendar years 2021 through 2025. Our management adjusted those projections based on the results of their due diligence on Inmarsat Group, including a review of the assumptions underlying Inmarsat Group’s internally prepared projections as well as Inmarsat Group’s historical performance and business trends, and discussions with Inmarsat Group management. These adjustments included, but were not limited to, more conservative revenue growth assumptions in Inmarsat Group’s government and aviation businesses and, to a lesser extent, in their maritime and enterprise businesses. In addition, we extrapolated projections for Inmarsat Group for calendar year 2026 based on such adjusted projections and discussions with Inmarsat Group management. These resulting projections for calendar years 2021 through 2026 are collectively referred to as the Inmarsat Projections. We subsequently provided the Inmarsat Projections to our Board and PJT Partners for purposes of considering and evaluating the Transaction. We are including in this proxy statement the Inmarsat Projections solely because such financial information was given to our Board and PJT Partners for purposes of considering and evaluating the Transaction, including in connection with PJT Partners’ financial analyses and opinion described in the section titled “—Opinion of Our Financial Advisor.” The Inmarsat Projections are subjective in many respects. The inclusion of the Inmarsat Projections should not be regarded as an indication that our Board, PJT Partners, us, our management, Inmarsat Group, its management or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results or an accurate prediction of future results, and they should not be relied on as such.

The expected growth in revenue and Adjusted EBITDA over the forecast period reflected in the Inmarsat Projections is a result of multiple drivers, including but not limited to: (i) size and growth for the total addressable market for the broader overall satellite connectivity market, satellite government premium services, satellite mobile premium services and satellite fixed and enterprise premium services, consistent with those described above under the section captioned “Certain Viasat Financial Projections,” (ii) seven planned Inmarsat Group satellites coming into service over the projection period, (iii) continued recovery in the long-haul IFC market, (iv) strong growth in Inmarsat Group’s aviation business, both from current IFC customers under contract and an expanding business aviation business, (v) stabilization and modest growth in both Inmarsat Group’s maritime and enterprise businesses, and (vi) a 5% improvement in Adjusted EBITDA margins over the projection period due the operating leverage associated with satellite services and growth in IFC overcoming business expansion costs.

The Inmarsat Projections, while presented with numerical specificity, reflect numerous assumptions that if different than expected could materially impact the revenue and Adjusted EBITDA growth that Inmarsat Group ultimately achieves, including assumptions with respect to company, industry, vendor and customer performance, future market conditions including prevailing pricing for various products and services and the quality of competing offerings, the rate of recovery of aviation and other industries from COVID-19, government spending on communications services, particularly with respect to military spending in the nations comprising the Five Eyes alliance, the health and launch cadence of Inmarsat Group’s existing and future satellites, as well as general business, economic, regulatory, market and financial conditions and other matters, many of which are difficult to predict, subject to significant economic and competitive uncertainties and beyond our and Inmarsat’s control. Such assumptions relate to expected satellite launch dates and expected levels of revenue growth in each of the maritime, government, aviation and enterprise sectors, among others.

 

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Multiple factors, including those described in the section of this proxy statement entitled “Risk Factors—Risks Relating to Inmarsat Group’s Business” could cause the Inmarsat Projections or the underlying assumptions to be inaccurate. As a result, there can be no assurance that the Inmarsat Projections will be realized or that actual results will not be significantly higher or lower than projected. Because the Inmarsat Projections cover multiple years, such information by its nature becomes less reliable with each successive year. In addition, given the uncertainty around the COVID-19 pandemic, the initial years included in the Inmarsat Projections are also subject to significant uncertainty. The Inmarsat Projections do not take into account any circumstances or events occurring after the date on which they were prepared, including, among others, the Transaction or the conflict in Ukraine. Economic and business environments can and do change quickly, which adds an additional significant level of uncertainty as to whether the results portrayed in the Inmarsat Projections will be achieved. As a result, the inclusion of the Inmarsat Projections in this proxy statement does not constitute an admission or representation by us, Inmarsat Group, PJT Partners or any other person that the information is material. The summary of the Inmarsat Projections is not provided to influence the stockholders’ decisions regarding whether to vote for the Stock Issuance Proposal, Charter Amendment Proposal or any other proposal. The Inmarsat Projections should be evaluated, if at all, in conjunction with the historical financial statements and other information contained this proxy statement.

Inmarsat Group has historically prepared its financial statements in accordance with IFRS, and accordingly the Inmarsat Projections were prepared using financial information provided by Inmarsat Group prepared using IFRS accounting standards. IFRS differs from US GAAP in a number of significant respects. The Inmarsat Projections have not been reconciled to US GAAP and were not prepared with a view toward public disclosure or compliance with US GAAP, published guidelines of the SEC or the guidelines established by the American Institute of Certified Public Accountants for preparation and presentation of prospective financial information. The Inmarsat Projections have not been audited, reviewed, examined, compiled nor have agreed-upon procedures been applied by any accounting firm or any other person. Neither Inmarsat Holdings’ independent auditors, nor any other independent accountants, have compiled, examined, or performed any procedures with respect to the Inmarsat Projections, nor have they expressed any opinion or any other form of assurance on such information or its achievability, and assume no responsibility for, and disclaim any association with, the Inmarsat Projections. The Deloitte LLP report included in this proxy statement relates to Inmarsat Holdings’ previously issued financial statements. It does not extend to the prospective financial information, including the Inmarsat Projections, and should not be read to do so. The Inmarsat Projections included in this proxy statement are presented to give the stockholders access to the financial projections that were made available to our Board and PJT Partners.

The following is a summary of the Inmarsat Projections, with dollars in millions:

 

     Estimated      Projected  
     CY2021E      CY2022E      CY2023E      CY2024E      CY2025E      CY2026E  

Revenue

   $ 1,340      $ 1,483      $ 1,690      $ 1,903      $ 2,026      $ 2,097  

Adjusted EBITDA(1)

     733        832        961        1,106        1,212        1,260  

Unlevered Free Cash Flow(2)

        4        384        574        705        755  

 

(1)

Adjusted EBITDA is a non-GAAP and non-IFRS financial measure, which Inmarsat Group calculates as total revenue (excluding revenue relating to Ligado) less net operating expenses (excluding expenses related to the Transaction), and which Viasat further adjusted for purposes of conforming with US GAAP to eliminate a $10 million annual building lease expense that has been reclassified as operating expenditure. Except for the foregoing adjustment with respect to building lease expense, no adjustments were made to give effect to the differences between IFRS and US GAAP. Inmarsat Group does not have stock-based compensation expense.

(2)

Unlevered free cash flow is a non-GAAP and non-IFRS financial measure, which is calculated as the Adjusted EBITDA less cash taxes (excluding the impact of interest expense, NOLs and other tax attributes), capital expenditures and changes in net working capital. The Inmarsat Projections did not include an equivalent unlevered free cash flow calculation for CY2021E.

 

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The Inmarsat Projections do not take into account the possible financial and other effects on Inmarsat Group of the Transaction and do not attempt to predict or suggest future results following the Transaction. The Inmarsat Projections do not give effect to the Transaction, including the impact of negotiating or executing the Purchase Agreement, the expenses that may be incurred in connection with completing the Transaction, the effect on Inmarsat Group of any business or strategic decision or action that has been or will be taken as a result of the Purchase Agreement having been executed, or the effect of any business or strategic decisions or actions that would likely have been taken if the Purchase Agreement had not been executed, but that were instead altered, accelerated, postponed or not taken in anticipation of the Transaction. Further, the Inmarsat Projections do not take into account the effect on Inmarsat Group of any possible failure of the Transaction to occur.

For the foregoing reasons, and considering that the special meeting will be held several months after the Inmarsat Projections were prepared, as well as the uncertainties inherent in any forecasting information, readers of this proxy statement are cautioned not to place unwarranted reliance on the Inmarsat Projections set forth above. No one has made or makes any representation to any investor or stockholder regarding the information included in the Inmarsat Projections. Neither Inmarsat Holdings nor any of its affiliates assumes any responsibility for the validity, reasonableness, accuracy or completeness of the Inmarsat Projections. We and Inmarsat Holdings urge all stockholders to review Inmarsat Holdings’ consolidated financial statements included elsewhere in this proxy statement.

In addition, the Inmarsat Projections have not been updated or revised to reflect information or results after the date the Inmarsat Projections were prepared, and except as required by applicable securities laws, neither we nor Inmarsat Holdings intends to update or otherwise revise the Inmarsat Projections or the specific portions presented to reflect circumstances existing after the date when made or to reflect the occurrence of future events, even in the event that any or all of the assumptions are shown to be in error.

The Inmarsat Projections do not and should not be read to update, modify or affirm any prior financial guidance previously issued by Inmarsat Group. Stockholders are cautioned not to place undue reliance on this information in making a decision as to whether to vote in favor of the Stock Issuance Proposal and Charter Amendment Proposal.

Certain Projected Synergies

Our management, based in part on inputs from and discussions with Inmarsat Group management, also prepared non-public, unaudited synergies projected for the combined company on a run rate basis. We are including in this proxy statement a summary of the Synergy Projections solely because such financial information was given to our Board and PJT Partners for purposes of considering and evaluating the Transaction, including in connection with PJT Partners’ financial analyses and opinion described in the section “—Opinion of Our Financial Advisor.” The Synergy Estimates are subjective in many respects. The inclusion of the Synergy Estimates should not be regarded as an indication that our Board, PJT Partners, us, our management, Inmarsat Group, its management or any other recipient of this information considered, or now considers, it to be an assurance of the achievement of future results or an accurate prediction of future results, and they should not be relied on as such.

The following is a summary of the Synergy Estimates, with dollars in millions:

 

Category

   Run Rate(1)  

Operating Cost Synergies(2)

   $ 80  

Capital Expenditure Synergies(3)

   $ 110  

 

(1)

Synergy Estimates are calculated on a pre-tax basis and exclude $100 million of estimated costs to achieve the synergies. In addition, Synergy Estimates exclude cross-selling benefits, which may be significant.

(2)

Run rate operating cost synergies are expected to be achieved in calendar year 2025.

(3)

Run rate capital expenditure synergies are expected to be achieved in calendar year 2026.

 

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The Synergy Estimates assume that the Transaction will be completed and that the expected benefits of the Transaction will be realized, including that no restrictions, terms or other conditions will be imposed in connection with the receipt of any required regulatory approvals or clearances in connection with the completion of the Transaction, including any divestitures or other structural or behavioral remedies or commitments.

Considering that the special meeting will be held several months after the Synergy Estimates were prepared, as well as the uncertainties inherent in any forecasting information, readers of this proxy statement are cautioned not to place unwarranted reliance on the Synergy Estimates. No one has made or makes any representation to any investor or stockholder regarding the information included in the Synergy Estimates.

Interests of Certain Persons in the Transaction

In considering the recommendation of our Board to vote for the proposals presented at the special meeting, including the Stock Issuance Proposal and the Charter Amendment Proposal, you should be aware that aside from their interests as stockholders, certain of our executive officers and directors have interests in the Transaction that are different from, or in addition to (and which may conflict with), the interests of our stockholders generally. Our Board was aware of and considered these interests, among other matters, in evaluating the Transaction and transaction agreements and in recommending to our stockholders that they vote in favor of the proposals presented at the special meeting, including the Stock Issuance Proposal and the Charter Amendment Proposal.

These interests include, among other things, the expected continued leadership of the combined company by Messrs. Dankberg and Baldridge, the expected continued employment of other executive officers of Viasat by the combined company, and the expected continued service of directors of Viasat as directors of the combined company.

Our Board Following the Transaction

If the Transaction is consummated, we will take all necessary action (but solely to the extent such actions are permitted by law) to cause two individuals designated by the Investor Sellers to be appointed to serve as directors of the combined company, in addition to our existing Board members. Thereafter, the Investor Sellers will have the right to designate for nomination up to two directors to be elected at the each annual or special meeting of the stockholders at which directors are to be elected following completion of the Transaction.

The Investor Sellers have designated Andrew Sukawaty as one of the initial Investor Directors and will designate an additional initial Investor Director prior to the closing of the Transaction.

Total Company Shares to be Issued in the Transaction

At the closing under the Purchase Agreement, we will issue 46,363,636 shares of Viasat common stock to the Sellers. It is anticipated that, at the closing of the Transaction, the shares of Viasat common stock issued to the Sellers would represent approximately 38% of the total outstanding shares of Viasat common stock immediately after the Transaction (or approximately 37% on a fully diluted basis), and legacy Viasat stockholders would retain an aggregate ownership interest of approximately 62% of the total outstanding shares of Viasat common stock immediately after the Transaction.

Financing and Indebtedness

In connection with the execution of the Purchase Agreement, we entered into a Commitment Letter on November 8, 2021 with Bank of America, N.A., BofA Securities, Inc., JPMorgan Chase Bank, N.A, Barclays Bank PLC, Credit Suisse AG, Cayman Islands Branch, and Credit Suisse Loan Funding LLC, and expect to enter into definitive documentation regarding financing prior to the closing of the Transaction. The Commitment

 

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Letter provides that, subject to the conditions set forth therein, the lenders commit to provide $2.3 billion of new debt facilities in connection with the Transaction (which may be secured and/or unsecured), which commitments included commitments with respect to the $700.0 million Term Loan Facility that was entered into by Viasat in March 2022 to fund Viasat’s standalone growth expenditures. The lenders had also committed to provide $3.2 billion to backstop certain amendments required under our $700 million revolving credit facility, our Ex-Im credit facility (under which we had $78.6 million outstanding as of December 31, 2021), and Inmarsat Group’s $2.4 billion senior secured credit facilities. As of the date of this proxy statement, the requisite amendments had been obtained under our $700 million revolving credit facility and Inmarsat Group’s $2.4 billion senior secured credit facilities.

In addition, in connection with the Transaction, we expect to assume $2.1 billion in principal amount of Inmarsat Group senior secured bonds and the outstanding indebtedness under Inmarsat Group’s $2.4 billion senior secured credit facilities.

Appraisal Rights

Appraisal rights are not available to our stockholders in connection with the Transaction.

Accounting and Tax Treatment

The Transaction will be accounted for using the acquisition method of accounting for business combinations. The allocation of the preliminary estimated purchase price is based upon management’s estimates of and assumptions related to the fair value of assets to be acquired and liabilities to be assumed. We expect to finalize the allocation of the purchase consideration as soon as practicable after completion of the Transaction, but we are not required to finalize for one year from the closing date of the Transaction.

For U.S. federal income tax purposes, we expect to elect to treat the Transaction as an asset purchase (such that the tax bases in the assets of Inmarsat Group will generally reflect the allocated fair value at closing) and direct liability assumption.

Regulatory Matters

The Transaction is subject to the satisfaction or receipt of certain regulatory approvals and clearances pursuant to the HSR Act, the United Kingdom’s Enterprise Act 2002, and certain other applicable antitrust, competition, communications, foreign investment or national security laws or regulations. At any time before or after consummation of the Transaction, applicable governmental agencies could take action under applicable antitrust, competition, communications, foreign investment or national security laws or regulations as each deems necessary or desirable in the public interest, including seeking to enjoin the consummation of the Transaction or conditioning the consummation of the Transaction on certain divestitures or other structural or behavioral remedies or commitments. Private parties may also seek to take legal action under such laws or regulations under certain circumstances. We cannot assure you that government authorities will not attempt to challenge the Transaction on antitrust, competition, communications, foreign investment or national security grounds, and, if such a challenge is made, we cannot assure you as to its result. Additionally, there can be no assurance that any required regulatory approvals or clearances will be obtained or that the Transaction can be consummated without certain divestitures or other structural or behavioral remedies or commitments.

Under the provisions of the HSR Act, the Transaction may not be completed until the expiration of a statutory 30-day waiting period, or the early termination of that waiting period, following the parties’ filing of their respective notification and report forms with the FTC and the DOJ. On December 13, 2021, Viasat and Inmarsat Holdings filed their respective HSR Act notification and report forms with the FTC and the DOJ. Viasat withdrew its HSR Act notification and report form on January 12, 2022 and refiled it on January 14, 2022, restarting the statutory 30-day waiting period. On February 14, 2022, Viasat and Inmarsat Holdings each

 

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received a Second Request from the DOJ in connection with the DOJ’s review of the Transaction. The effect of the Second Requests is to extend the waiting period imposed under the HSR Act until 30 days after both Viasat and Inmarsat Holdings have substantially complied with the Second Requests, unless the waiting period is terminated earlier by the DOJ. The DOJ could also seek to enjoin completion of the Transaction or impose conditions such as requiring the divestiture of assets, businesses and/or product lines of Viasat and/or Inmarsat Holdings.

Why We Need Stockholder Approval

We are seeking stockholder approval in order to comply with Rule 5635(a) of the Nasdaq Stock Market Rules. Under Rule 5635(a), stockholder approval is required prior to the issuance of common stock (or securities convertible into or exercisable for common stock) in connection with the acquisition of the stock or assets of another company (other than a public offering for cash) where the issuance equals 20% or more of the common stock or 20% of the voting power outstanding before such issuance.

As consideration for the Transaction, the Sellers will receive $850.0 million in cash, subject to certain adjustments, and Stock Consideration comprising 46,363,636 shares of Viasat common stock. For more information on the closing adjustments to the cash consideration, please see the section entitled “Proposal No. 1—Approval of the Issuance of More than 20% of the Issued and Outstanding Viasat Common Stock in Connection with the Transaction—The Purchase Agreement.” Because the Stock Consideration exceeds 20% of the voting power outstanding before the Transaction and includes a number of shares to be issued that exceeds 20% of the number of shares of the Viasat common stock before the Transaction, Rule 5635(a) requires us to obtain stockholder approval before completing the Transaction.

Effect of Proposal on Current Stockholders

If the Stock Issuance Proposal is adopted, 46,363,636 shares of Viasat common stock will be issued as Stock Consideration pursuant to the terms of the Purchase Agreement. The issuance of such shares would result in significant dilution to our stockholders, and would afford our stockholders a smaller percentage interest in the voting power, liquidation value and aggregate book value of Viasat. We anticipate that the Stock Consideration to be issued to the Sellers will represent approximately 38% of the total outstanding shares of Viasat common stock immediately after the Transaction (or approximately 37% on a fully diluted basis), and that existing Viasat stockholders would collectively own approximately 62% of the total outstanding shares of Viasat common stock immediately after the Transaction.

We will not be able to consummate the Transaction unless the Stock Issuance Proposal is adopted.

Vote Required for Approval

The Stock Issuance Proposal requires the affirmative vote of a majority of the votes cast by holders of outstanding shares of Viasat common stock present in person or represented by proxy, assuming a quorum is present. Accordingly, a stockholder’s failure to vote by proxy or to vote in person at the special meeting, as well as an abstention or broker non-vote with regard to the Stock Issuance Proposal, will have no effect on the Stock Issuance Proposal. Abstentions (but not broker non-votes) will be counted in connection with the determination of whether a valid quorum is established.

Recommendation of Our Board

Our Board unanimously recommends that you vote “FOR” the Stock Issuance Proposal.

 

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PROPOSAL 2:

Approval of the Charter Amendment to Increase the Number of Shares of Viasat Common Stock Authorized for Issuance

Overview

The Charter Amendment Proposal, if adopted, will allow us to adopt an amendment to our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance from 100,000,000 to 200,000,000. The proposed amendment to our Certificate of Incorporation is attached as Annex F to this proxy statement.

As of February 25, 2022, there were 74,420,670 shares of Viasat common stock outstanding, 7,132,962 shares of Viasat common stock issuable upon the exercise of outstanding stock options or upon the vesting of outstanding restricted stock units, 3,970,816 shares of Viasat common stock reserved for issuance pursuant to future awards under our equity participation plan, and 2,252,576 shares of Viasat common stock reserved for future issuance pursuant to our employee stock purchase plan, leaving only 12,222,976 shares of Viasat common stock available for issuance. Therefore, in order to accommodate the issuance to the Sellers under the Purchase Agreement (as well as to provide for the continued ability to issue shares of Viasat common stock under our equity participation plan and employee stock purchase plan), we need to increase the number of authorized shares of Viasat common stock.

We will not be able to consummate the Transaction unless the Charter Amendment Proposal is adopted.

Vote Required for Approval

The Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of Viasat common stock entitled to vote thereon, assuming a quorum is present. Because the Charter Amendment Proposal requires the affirmative vote of a majority of the outstanding shares of Viasat common stock entitled to vote thereon, a stockholder’s failure to vote by proxy or to vote in person at the special meeting, as well as an abstention or broker non-vote with regard to the Charter Amendment Proposal, will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.

Recommendation of the Board of Directors

Our Board unanimously recommends that you vote “FOR” the Charter Amendment Proposal.

 

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PROPOSAL 3:

The Adjournment Proposal

Overview

The Adjournment Proposal, if adopted, will allow our Board to adjourn the special meeting to a later date or dates to permit further solicitation of proxies. The Adjournment Proposal will only be presented to our stockholders in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal.

Consequences if the Adjournment Proposal is Not Approved

If the Adjournment Proposal is not approved by our stockholders, our Board may not be able to adjourn the special meeting to a later date in the event that there are insufficient votes for, or otherwise in connection with, the approval of the Stock Issuance Proposal and the Charter Amendment Proposal.

Vote Required for Approval

The approval of the Adjournment Proposal requires the affirmative vote of a majority of the votes cast by holders of outstanding shares of Viasat common stock present in person or represented by proxy, assuming a quorum is present. Accordingly, a stockholder’s failure to vote by proxy or to vote in person at the special meeting as well as an abstention or broker non-vote with regard to the Adjournment Proposal, will have no effect on the Adjournment Proposal. Abstentions (but not broker non-votes) will be counted in connection with the determination of whether a valid quorum is established.

Recommendation of the Board

Our Board unanimously recommends that you vote “FOR” the Adjournment Proposal.

 

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INFORMATION ABOUT VIASAT

Overview

We are an innovator in communications technologies and services, focused on making connectivity accessible, available and secure for all. Our end-to-end platform of high-capacity Ka-band satellites, ground infrastructure and user terminals enables us to provide cost-effective, high-speed, high-quality broadband solutions to enterprises, consumers, military and government users around the globe, whether on the ground, in the air or at sea. In addition, our government business includes a market-leading portfolio of military tactical data link systems, satellite communication products and services and cybersecurity and information assurance products and services. We believe that our diversification strategy—anchored in a broad portfolio of products and services—our vertical integration approach and our ability to effectively cross-deploy technologies between government and commercial applications and segments as well as across different geographic markets, provide us with a strong foundation to sustain and enhance our leadership in advanced communications and networking technologies.

We conduct our business through three segments: satellite services, commercial networks and government systems.

Satellite Services

Our satellite services segment uses our proprietary technology platform to provide satellite-based high-speed broadband services around the globe for use in commercial applications.

Our proprietary Ka-band satellites are at the core of our technology platform, and we also have access to a number of Ka-band and Ku-band satellites in service globally. We own three Ka-band satellites in service over North America: our second-generation ViaSat-2 satellite (launched in 2017), our first-generation ViaSat-1 satellite (launched in 2011) and the WildBlue-1 satellite (launched in 2007), and, after acquiring the remaining interest in EBI in April 2021, we also own the KA-SAT satellite over Europe, Middle East and Africa (EMEA). In addition, we have lifetime leases of Ka-band capacity on two satellites—one over North America and a second one over EMEA. We also have a global constellation of three third-generation ViaSat-3 class satellites under construction. We expect our ViaSat-3 constellation, once in service, to provide approximately eight times the capacity of our own satellite fleet in-service today, and to enable us to deliver affordable connectivity across most of the world.

The primary services offered by our satellite services segment are comprised of:

 

   

Fixed broadband services, which provide consumers and businesses with high-speed, high-quality broadband internet access and Voice over Internet Protocol (VoIP) services primarily in the United States as well as in various countries in Europe and Latin America. Our service offerings include premium data plans with download speeds up to 100 Mbps in select areas in the United States. We also offer wholesale and retail fixed broadband services to our distribution partners.

 

   

In-flight services, which provide industry-leading IFC, wireless in-flight entertainment (W-IFE) and aviation software services to commercial airlines and private business jets. The data capacity of our IFC systems enables all passengers and crew to receive in-flight internet service in the air similar to the internet service available on the ground, supporting applications such as high-speed web browsing, streaming and social media applications. Our W-IFE service is a cloud-based platform providing passengers with access to a wide range of premium entertainment, video and information services maintained on an onboard server and wirelessly delivered direct to passengers’ own devices. As of December 31, 2021, our IFC systems were installed and in service on approximately 1,880 commercial aircraft, of which, due to impacts of the COVID-19 pandemic, approximately 80 were inactive at quarter end. We anticipate that approximately 860 additional commercial aircraft under existing

 

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customer agreements with commercial airlines will be put into service with our IFC systems. However, the timing of installation and entry into service for additional aircraft under existing customer agreements may be delayed due to COVID-19 impacts. Additionally, due to the nature of commercial airline contracts, there can be no assurance that anticipated IFC services will be activated on all such additional commercial aircraft.

 

   

Community internet services, which offer innovative, affordable, satellite-based connectivity in communities that have little, or no access to the internet. The services help foster digital inclusion by enabling millions of people to connect to affordable high-quality internet services via a centralized community hotspot connected to the internet via satellite. Since launch, our Community Internet services have reached approximately 2 million people living and working in thousands of rural, suburban and urban communities in Mexico. We are trialing services in advance of full commercial launch in other countries, including Brazil, Guatemala and Nigeria.

 

   

Other mobile broadband services, which include high-speed, satellite-based internet services to seagoing vessels, such as energy offshore vessels, cruise ships, consumer ferries and yachts. In addition, we offer L-band managed services enabling real-time machine-to-machine (M2M) position tracking, management of remote assets and operations, and visibility into critical areas of the supply chain. Our high-performance M2M terminals are used for a broad range of applications including emergency responders, oil and gas pipeline monitoring, mobile fleet management, and high-value asset tracking.

 

   

Advanced software and communication infrastructure services, which include ultra-secure solutions spanning global IP connectivity, bandwidth-optimized over-the-top applications, industrial Internet-of-Things big data enablement and industry-leading machine learning analytics. These services support the evolution of digital enablement, and primarily result from our acquisition of RigNet in April 2021.

Commercial Networks

We are a leading end-to-end network technology and equipment supplier in broadband satellite markets. In addition to developing our own proprietary high-capacity Ka-band satellite systems, our commercial networks segment develops and sells a wide array of advanced satellite and wireless products, antenna systems and terminal solutions that support or enable the provision of high-speed fixed and mobile broadband services. We design, develop and produce space system solutions for multiple orbital regimes, including geostationary (GEO), medium earth orbit (MEO) and low earth orbit (LEO).

Our products, systems and solutions are generally developed through a combination of customer and discretionary internal research and development (R&D) funding, and products are often linked through common underlying technologies, customer applications and market relationships. For example, products, systems and solutions developed and sold in our commercial networks segment are often complementary to those developed and sold to government customers in our government systems segment, and our portfolio of government and military offerings in our government systems segment leverages our technological investments in our commercial networks segment. Our commercial networks segment also drives growth in our satellite services segment. For example, the IFC terminals sold and installed on commercial aircraft and business jets in our commercial networks segment are then utilized to receive IFC services, driving recurring revenues in our satellite services segment.

The primary products, systems, solutions and services offered by our commercial networks segment are comprised of:

 

   

Mobile broadband satellite communication systems, which include systems and products designed for use in aircraft, seagoing vessels, and land-mobile systems, such as the IFC systems we install on business and commercial aircraft. These systems and products are designed to provide high-speed,

 

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cost-efficient broadband access to customers while on the move, and also utilize fixed broadband satellite infrastructure.

 

   

Fixed broadband satellite communication systems, which include next-generation satellite network infrastructure and ground terminals designed to enable satellite-based broadband access for residential, enterprise and Community Internet hotspot users. Products and solutions in this category include space-to-earth connectivity systems, ground network infrastructure and user terminals. We also offer related products and services to enterprise customers to address bandwidth constraints, latency and other issues. In addition to commercial sales of these products and solutions, we also deploy our fixed broadband satellite communication systems to support our own fleet of proprietary Ka-band satellites.

 

   

Antenna systems, which include state-of-the-art ground and airborne terminals, antennas and gateways for terrestrial and satellite customer applications (such as Real-Time Earth imaging and remote sensing services, mobile satellite communication, Ka-band earth stations and other multi-band antennas).

 

   

Satellite networking development, which includes specialized design and technology services covering all aspects of satellite communication system architecture and technology. Services include analysis, design and development of satellite and ground systems, semiconductor design for Application-Specific Integrated Circuit (ASIC) and Monolithic Microwave Integrated Circuit (MMIC) chips and network function virtualization, as well as modules and subsystems for various commercial, military and space uses.

 

   

Space system design and development, which includes the design and development of high-capacity Ka-band satellites and the associated satellite payload and antenna technologies for our own satellite fleet as well as for third parties. Our space system design and development products and services include architectures for GEO, MEO and LEO and other small satellite platforms.

Government Systems

We are a leading provider of innovative communications and cybersecurity products and solutions to the U.S. Government and other military and government users around the world. Our government systems segment offers a broad array of products and services designed to enable the collection and transmission of secure real-time digital information and communications between fixed and mobile command centers, intelligence and defense platforms and individuals in the field. Customers of our government systems segment include the U.S. Department of Defense (DoD), those serving the Five Eye intelligence alliance (Australia, Canada, New Zealand, the United Kingdom and the United States), allied foreign governments, allied armed forces, public safety first-responders and remote government employees.

The primary products and services of our government systems segment include:

 

   

Government mobile broadband products and services, which provide military and government users with high-speed, real-time broadband and multimedia connectivity in key regions of the world, as well as line-of-sight (LOS) and beyond-line-of-sight (BLOS) Intelligence, Surveillance and Reconnaissance (ISR) missions. Our government mobile broadband services include high-bandwidth global communications services in support of VIP and senior-level airborne operations and emergency response, as well as LOS and BLOS ISR missions. Products include mobile broadband modems, terminals, network access control systems and antenna systems using a range of satellite frequency bands capable of being installed and operated on a wide variety of fixed wing, rotary wing, manned and unmanned aircraft, ground vehicles and maritime platforms. Services include advanced mobility services to governments for aircraft and ships, as well as for nomadic and ground based missions. Our high-capacity, secure mobile broadband products and services are enabled by our next-generation satellite network infrastructure, which will be further enhanced following the launch of our ViaSat-3 constellation.

 

   

Government satellite communication (SATCOM) systems, which offer an array of portable, mobile and fixed broadband modems, terminals, network access control systems and antenna systems using a

 

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range of satellite frequency bands for Command and Control (C2) missions, satellite networking services and network management systems for Wi-Fi and other internet access networks. Our SATCOM systems, products and services are designed to support high-throughput broadband data links, to increase available bandwidth using existing satellite capacity, and to be resilient in order to withstand certain catastrophic events. Our range of SATCOM broadband modems, terminals and systems support high-speed broadband and multimedia transmissions over point-to-point, mesh and hub-and-spoke satellite networking systems, and include products designed for manpacks, aircraft, unmanned aerial vehicles (UAVs), seagoing vessels, ground-mobile vehicles and fixed applications.

 

   

Secure networking, cybersecurity and information assurance products and services, which provide advanced, high-speed IP-based “Type 1” and High Assurance Internet Protocol Encryption (HAIPE®)-compliant encryption solutions that enable military and government users to communicate information securely over networks, and that protect the integrity of data stored on computers and storage devices. Our encryption products and modules use a programmable, high-assurance architecture that can be easily upgraded in the field or integrated into existing communication networks, and are available both on a stand-alone basis and as embedded modules within our tactical radio, information distribution and other SATCOM systems and products.

 

   

Tactical data links, which comprise advanced tactical radio and information distribution systems that enable secure voice and real-time collection and dissemination of video and data using secure, jam-resistant transmission links. These data links communicate over Link 16 or tactical VHF/UHF networks, from manned and unmanned aircraft, ground vehicles, individual warfighters and other remote platforms to each other and networked communication and command centers. Key products in this category include our Battlefield Awareness and Targeting System—Dismounted (BATS-D) handheld Link 16 radios, our Battlefield Awareness and Targeting System—Embedded (BATS-E) handheld Link 16 radios, our Small Tactical Terminal (STT) 2-channel radios for manned and unmanned applications, “disposable” defense data links, and our Multifunctional Information Distribution System (MIDS) and MIDS Joint Tactical Radio System (MIDS-JTRS) terminals for military fighter jets.

Additional Information

Our principal executive office is located at 6155 El Camino Real, Carlsbad, California 92009. Our telephone number is (760) 476-2200. We maintain an internet site at www.viasat.com. Except for our filings with the SEC that are incorporated by reference into this proxy statement, the information on or accessible through our website is not a part of this proxy statement. For further information about Viasat, please review our Annual Report on Form 10-K for the fiscal year ended March 31, 2021 and subsequent Quarterly Reports on Form 10-Q, incorporated by reference herein. See “Where You Can Find Additional Information; Incorporation of Certain Documents by Reference.”

 

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INFORMATION ABOUT INMARSAT GROUP

Overview

Inmarsat Group is an innovative, global provider of mobile satellite services, serving the maritime, government, aviation and enterprise sectors through multiple owned and operated satellite networks comprised of 15 satellites as well as ground infrastructure and user terminals. Inmarsat Group has over 40 years’ experience in designing and operating satellite-based networks.

Inmarsat Group specializes in connecting commercial mobility and government customers, particularly vessels, aircraft, vehicles and people, often in areas that conventional telecommunications networks cannot reach. Inmarsat Group offers a diverse portfolio of secure, resilient mobile satellite communications services across the globe, supporting mission critical operational systems, essential safety communications, core office applications, a growing range of IoT applications and in-flight connectivity.

Inmarsat Group’s networks are currently comprised of eight high-availability L-band satellites, five high-bandwidth Ka-band satellites, an S-band satellite that supports Inmarsat Group’s EAN and one hybrid satellite (L- and Ka-band) that has been launched but not yet entered commercial service. The satellites are underpinned by a robust ground telecommunications and IT network, and resilient operational architecture and business processes. Inmarsat Group has designed, launched and operated four L-band constellations, a Ka-band constellation and its S-band satellite for the EAN. Inmarsat Group launched its first hybrid satellite in December 2021 (the I-6 FI satellite), which incorporates both L-band and Ka-band payloads and is scheduled to enter commercial service in 2023. Inmarsat Group has a further six satellites in development, with planned launches over the next three years that are intended to underpin two new Inmarsat Group networks.

Operations

Inmarsat Group provides MSS over its satellite system directly to end-users and through a network of service providers. End-users access Inmarsat Group’s services at sea, on land and in the air, with Inmarsat Group providing mobile data and voice services on an on-demand basis through user terminals. Some of Inmarsat Group’s services are available only in specified sectors (e.g., maritime-only applications), while others are available across a number of sectors. Inmarsat Group also provides the supply of wholesale services to distribution partners and other wholesale partners of mobile satellite communications services. It also enters into spectrum coordination agreements and leasing arrangements.

Inmarsat Group’s GX satellites, its Ka-band constellation, provide broadband services globally through key products such as Fleet Xpress (FX) and Jet ConneX. Inmarsat Group’s L-band satellites provide global narrowband services through key products such as FleetBroadband (FB), SwiftBroadband (SBB) and IoT applications. Inmarsat Group’s EAN satellite is an S-band satellite that provides IFC services to airlines operating in Europe through an integrated satellite/air-to-ground network. Inmarsat Group’s data and voice communication services are provided over a range of user terminal types.

Inmarsat Group conducts its business through four business units: Maritime, Government, Aviation and Enterprise. By business unit, Maritime, Government, Aviation and Enterprise accounted for 39%, 35%, 14% and 9% of Inmarsat Group’s revenue, respectively, for the year ended December 31, 2020.

 

   

Maritime: Inmarsat Group’s Maritime business unit is focused on the provision of satellite-based communications services, including safety services, to commercial maritime users, predominantly in commercial shipping. Customers lease or buy terminals from Inmarsat Group or its distribution partners, then pay Inmarsat Group a recurring or usage-based fee for airtime. Historically, Inmarsat Group’s Maritime services consisted predominantly of L-band narrowband FB services, which offer cost-effective voice and data services globally. In 2016, Inmarsat Group launched its broadband FX service using its GX satellites as a global, high-speed broadband solution for maritime and offshore

 

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operators. As of September 30, 2021, FX had been installed on approximately 11,300 vessels. Inmarsat Group has also entered into strategic partnerships who have committed to equipping over 2,000 additional vessels with FX over the next two to three years.

 

   

Government: Inmarsat Group’s Government business unit offers satellite-based communications services to U.S. Government and other government and military customers around the world. Inmarsat Group’s mission-critical voice, video and data communications solutions support government customers on land, at sea and in the air to maintain their security, ensure public safety and deliver crucial services where terrestrial networks are not able to be reached. Inmarsat Group’s Government business derives revenue from military applications through Inmarsat Group’s global Ka-band coverage via geostationary satellite constellations, and also offers a range of L-band services for military and government users, including L-band Tactical Beyond Line of Sight (L-TAC) communications, L-band Airborne Intelligence, Surveillance and Reconnaissance (LAISR) services and an L-band Advanced Communications Element (LACE) terminal which provides an on-demand lease service.

 

   

Aviation: Inmarsat Group’s Aviation business unit includes the provision of cockpit, voice, data and safety services (collectively, AOS), as well as the provision of IFC services to non-U.S. commercial airlines and business jets. Inmarsat Group’s IFC services include satellite-based broadband connectivity using Inmarsat Group’s GX satellites, EAN connectivity services over European airspace, and legacy L-band services. As of September 30, 2021, there were over 1,800 aircraft under contract for Inmarsat Group’s IFC services or hardware, of which over 800 were installed and commercially active and approximately 1,000 in contracted backlog for future installation. Jet ConneX, Inmarsat Group’s IFC product for business jets, had over 1,000 terminals installed as of September 30, 2021. Inmarsat Group also offers aviation customers SBB, which offers simultaneous voice and data connectivity. SBB is suitable for a range of applications from aircraft operation and management to cabin applications such as voice, email, internet access, SMS text messaging and integration into in-flight entertainment systems. Inmarsat Group launched SwiftBroadband-Safety (SB-S) in 2018 to enable faster transmission of Inmarsat Group’s existing voice and data safety services for its AOS segment, including oceanic communication, surveillance and electronic flight bag applications. A second generation SB-S service was placed into service at the end of 2021 with additional cybersecurity and features to support future improvements to air navigation, which is expected to be the basis for the future European Iris air traffic management system.

 

   

Enterprise: Inmarsat Group’s Enterprise business unit is focused on the provision of land-based IoT, leasing, broadband and voice services worldwide, including the IsatPhone service and fixed-to-mobile services. M2M and IoT—services are primarily targeted at M2M and IoT segments through managed services and lease products.

By geographic region, Inmarsat Group generated 33%, 39% and 19% of revenue from the Europe, North America and Asia Pacific regions, respectively, for the year ended December 31, 2020. The remaining 9% of Inmarsat Group’s revenue was attributable to other geographic regions and to the Ligado Cooperation Agreement described below.

Inmarsat Group employs approximately 1,800 employees globally.

Distribution

Inmarsat Group sells its services directly to end-customers as well as via wholesale distributors. Inmarsat Group has a number of distribution and reseller partners who sell Inmarsat Group’s services to end-users, as well as a growing direct distribution capability, built up organically and through acquisition. For the year ended December 31, 2020, Inmarsat Group’s largest distribution partner accounted for 7% of Inmarsat Group’s total revenue, compared to 6% for the pro forma year ended December 31, 2019.

 

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Inmarsat Group’s distribution partners have all signed agreements with Inmarsat Group to distribute Inmarsat Group’s services. While the agreements specify the prices distributors pay for Inmarsat Group’s services on a wholesale basis, Inmarsat Group does not control or set the price charged by its independent distributors to end-users or service providers. Inmarsat Group also leases capacity on its satellites to distribution partners who in turn provide the capacity to end-users on an on-demand or fixed term basis. The lease contracts are typically short-term, with terms of up to one year, although they can be as long as five years.

Inmarsat Group has also signed agreements for the distribution of GX services with a number of GX value-added resellers who are appointed to distribute Inmarsat Group’s Maritime, Enterprise, Government and Aviation products and services.

Ligado Cooperation Agreement

In December 2007, Inmarsat Group signed a cooperation agreement (the Ligado Cooperation Agreement) with Ligado, for the use of L-band spectrum in North America to enable ATC services. The Ligado Cooperation Agreement includes conditional provisions for the coordination of the parties’ respective existing and planned satellites serving North America, and provides Ligado with certain options for using portions of Inmarsat Group’s spectrum.

In 2016, Ligado elected the 30 MHz option under the Ligado Cooperation Agreement (the 30 MHz Plan), and Inmarsat Group subsequently entered into an amendment with Ligado to that agreement. In exchange for deferral of payments from Ligado to Inmarsat Group, Inmarsat Group agreed to delay the transition to the 30 MHz Plan, with Ligado providing Inmarsat Group with enhanced spectrum usage rights for Inmarsat Group’s satellite operations for a minimum period of two years.

In June 2020, a further amendment to the Cooperation Agreement was entered into with Ligado under which Ligado paid $700 million upfront in October 2020. The amendment also reduced all future quarterly payments by 60% and deferred all outstanding 2016 to 2022 amounts to January 1, 2023, at which date a payment of $395 million, including interest, falls due. Additionally there is a call option available until October 2025 for Ligado to buy out all remaining lease payment obligations to 2107 for a cash payment ranging between $825 million to $968 million.

Legal Proceedings

Inmarsat Group is party to lawsuits arising in the ordinary course of its business. Inmarsat Group cannot predict the outcome of any lawsuit with certainty, but Inmarsat Group’s management does not expect the outcome of pending or threatened legal proceedings to have a material adverse effect on Inmarsat Group’s financial position.

 

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INMARSAT MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following is a discussion of Inmarsat Group’s financial condition and results of operations for the year ended December 31, 2020, the period January 1, 2019 to December 3, 2019 (predecessor), the period to December 31, 2019 (successor), the pro forma year ended December 31, 2019 and the nine months ended September 30, 2021 and 2020. We did not own the Inmarsat Group for any of these periods, and therefore these results may not be indicative of the results that the combined company would expect to recognize for future periods in the event the Transaction is completed. The discussion below may include forward-looking statements, and actual results may differ substantially from those discussed in these forward-looking statements. See the section in this proxy statement entitled “Cautionary Note Regarding Forward-Looking Statements.”

On December 4, 2019, Inmarsat Holdings, through its wholly owned subsidiary, Connect Bidco Limited (Inmarsat Intermediary Holdings), acquired the entire issued ordinary share capital of Inmarsat plc (which was subsequently renamed Inmarsat Group Holdings Limited on December 5, 2019, and is referred to herein and in the financial statements included elsewhere in this proxy statement as Inmarsat). Inmarsat Holdings was incorporated on March 15, 2019, Inmarsat Intermediary Holdings was incorporated on March 15, 2019 and Inmarsat was incorporated on September 3, 2003. Prior to the acquisition of Inmarsat, Inmarsat Holdings had no operations of its own. As required under IFRS, the consolidated income statement for Inmarsat Holdings only includes the financial results of Inmarsat post acquisition. Since Inmarsat Holdings had no operations of its own prior to the acquisition, Inmarsat is considered to be the predecessor of Inmarsat Holdings, and Inmarsat Holdings is then considered to be the successor entity. Accordingly, financial statements of Inmarsat are presented for the year ended December 31, 2018 and the period January 1, 2019 to December 3, 2019. The financial statements of the predecessor and the successor entities are separated by a “black line” as they are not considered comparable as a consequence of the application of acquisition accounting, which results in the net assets of Inmarsat being recorded at fair value and the recognition of goodwill. In addition, the successor financial statements include higher depreciation and amortization charges as a result of the fair value adjustments made in the purchase price allocation. References in this section to the “Inmarsat Group” refer to the successor entity or the predecessor entity, as the context requires, and its subsidiaries.

The following section presents Inmarsat Holdings’ supplemental analysis of its results of operations based on pro forma financial information, which assumes that the acquisition of Inmarsat by Inmarsat Holdings took place on January 1, 2019 in order to provide a more meaningful analysis of the underlying performance of the business for 2019 and the comparative period. Neither the assumptions underlying the pro forma adjustments nor the resulting pro forma non-IFRS measures have been audited or reviewed in accordance with any generally accepted auditing standards. You should not consider such items as an alternative to the historical financial position or results of Inmarsat or Inmarsat Holdings, or other indicators of their financial position or performance based on IFRS measures. This unaudited pro forma financial information has been prepared for illustrative purposes only and differs from Inmarsat Holdings’ actual financial information prepared in accordance with IFRS. See the section below entitled “Reconciliation of pro forma year ended December 31, 2019” for the calculation of the unaudited pro forma financial information of Inmarsat Holdings for 2019 as if the acquisition of Inmarsat by Inmarsat Holdings occurred on January 1, 2019.

Information regarding Inmarsat Holdings’ critical accounting judgments and key sources of estimation uncertainty can be found in Note 4 of the consolidated financial statements of Inmarsat Holdings for the year ended December 31, 2020 included elsewhere in this proxy statement. Results have been restated from Inmarsat Holdings’ previously published statutory financial statements. See the consolidated financial statements of Inmarsat Holdings included elsewhere in this proxy statement for additional information.

 

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Results of Operations

The following table represents the selected results of operations of the Inmarsat Group for the periods indicated.

 

 

     Successor Entity                 Predecessor Entity     Pro Forma  

($ in millions)

   Nine
Months
Ended

Sept. 30,
2021
    Nine
Months
Ended

Sept. 30,
2020
    Year
Ended
Dec. 31,
2020(1)
    Period
Ended
Dec. 31,
2019(1)(2)
                Period
Jan. 1 to
Dec. 3,
2019
    Year
Ended
Dec. 31,
2018(1)
    Pro Forma
Year Ended
Dec. 31,

2019(3)
 

Revenue

   $ 1,010.8     $ 941.8     $ 1,272.1     $ 93.4           $ 1,302.7     $ 1,465.2     $ 1,396.1  

Employee benefit costs

     (221.9     (209.5     (280.3     (25.9           (299.3     (301.4     (325.2

Network and satellite operations costs

     (120.5     (112.8     (158.6     (11.7           (155.5     (183.3     (167.2

Impairment of financial assets

     (2.0 )      (17.3 )      (16.8 )      5.2             (12.8 )      (33.6 )      (7.6

Other operating costs

     (122.1     (100.2     (154.1     (122.7           (226.1     (230.0     (348.8

Own work capitalized

     22.8       29.1       36.2       2.9             39.1       40.8       42.0  
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Total net operating costs

   $ (443.7   $ (410.7   $ (573.6   $ (152.2         $ (654.6   $ (707.5   $ (806.8
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Depreciation and amortization

     (474.0     (505.7     (673.0     (55.5           (447.9     (468.3     (703.8

Impairment of assets

     0.6       (9.2     (10.5     —               (1.8     (14.5     (1.8

Loss on disposals of assets

     (0.9     (1.2     (3.2     —               (12.4     (2.5     (12.4

Share of profit of associates

     3.2       3.0       4.2       0.6             3.4       3.9       4.0  
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Operating profit / (loss)

   $ 96.0     $ 18.0     $ 16.0     $ (113.7         $ 189.4     $ 276.3     $ (124.7
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Financing income

     1.4       2.5       3.8       5.5             8.2       8.2       13.7  

Financing costs

     (144.2     (156.0     (202.9     (59.0           (70.9     (101.9     (147.7

Fair value changes in financial assets and liabilities

     76.4       0.2       0.2       —               (249.5     (23.2     —    
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Net financing costs

     (66.4     (153.3     (198.9     (53.5           (312.2     (116.9     (134.0
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Profit / (loss) before tax

   $ 29.6     $ (135.3   $ (182.9   $ (167.2         $ (122.8   $ 159.4     $ (258.7
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Taxation (charge) / income

     (176.9     (29.1     (32.8     10.2             (29.4     (55.1     (25.1
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

(Loss) / profit for the period

   $ (147.3   $ (164.4   $ (215.7   $ (157.0         $ (152.2   $ 104.3     $ (283.8
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

   

 

 

 

Attributable to:

                    

Equity holders

     (146.5     (163.9     (215.0     (157.0           (152.9     103.5       (284.5

Non-controlling interest(4)

     (0.8     (0.5     (0.7     —               0.7       0.8       0.7  

 

(1)

Results have been restated from Inmarsat Holdings’ previously published statutory financial statements. See the consolidated financial statements of Inmarsat Holdings included elsewhere in this proxy statement for additional information.

(2)

Covers the successor entity period from the date of incorporation of Inmarsat Holdings on March 15, 2019 to December 31, 2019.

(3)

Covers the pro-forma 12-month successor entity period as if the acquisition of Inmarsat by Inmarsat Holdings had occurred on January 1, 2019. See the section below entitled “Reconciliation of Pro Forma Year Ended December 31, 2019.”

(4)

Non-controlling interest refers to the Inmarsat Group’s 51% shareholding in Inmarsat Solutions ehf and NCI resulting from the management incentive plan (2020/2021 only).

 

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The following table represents revenue by business unit of the Inmarsat Group for the periods indicated.

 

     Successor Entity                 Predecessor Entity      Pro Forma  

($ in millions)

   Nine
Months
Ended

Sept. 30,
2021
     Nine
Months
Ended

Sept. 30,
2020
     Year
Ended
Dec. 31,
2020
     Period
Ended
Dec. 31,
20191
                Period
Jan. 1 to
Dec. 3,
2019
     Year
Ended
Dec. 31,
2018
     Pro Forma
Year Ended
Dec. 31,

20192
 

Group revenue

   $ 1,010.8      $ 941.8      $ 1,272.1      $ 93.4           $ 1,302.7      $ 1,465.2      $ 1,396.1  
  

 

 

    

 

 

    

 

 

    

 

 

         

 

 

    

 

 

    

 

 

 

Maritime

     380.4        366.7        490.6        34.8             473.0        552.8        507.8  

Government

     374.9        320.2        442.8        31.4             387.2        381.0        418.6  

Aviation

     159.2        126.3        178.2        18.4             275.5        256.1        293.9  

Enterprise

     86.4        84.8        113.5        8.4             104.0        130.0        112.4  

Central services

     9.9        43.8        47.0        0.4             63.0        145.3        63.4  

 

(1)

Covers the successor entity period from the date of incorporation of Inmarsat Holdings on March 15, 2019 to December 31, 2019.

(2)

Covers the pro-forma 12-month successor entity period as if the acquisition of Inmarsat by Inmarsat Holdings had occurred on January 1, 2019. See the section below entitled “Reconciliation of pro forma year ended December 31, 2019.”

Nine Months Ended September 30, 2021 vs. Nine Months Ended September 30, 2020

Revenue

Revenue for the nine months ended September 30, 2021 increased by $69.0 million, to $1,010.8 million from $941.8 million for the corresponding period in 2020. Movements in revenue by business unit were as follows:

 

   

Maritime: Revenue continued to stabilize, increasing by 3.7% ($13.7 million) including new revenue from Speedcast customers acquired by Inmarsat Group in January 2021. $9.3 million of new revenue related to Speedcast was recognized, including $5.3 million related to installed terminals in the first quarter of 2021. Excluding these new Speedcast revenues, revenue increased by 1.2% ($4.4 million) reflecting continued strong growth of FX now exceeding the decline of FB services. FX vessels increased by 23% (9,200 to 11,300) year-over-year, and FX average revenue per unit (ARPU—defined as revenue per average number of active vessels for the period) decreased by 7% ($1,955 to $1,810) as Inmarsat Group wholesale partners continued to provide an increasing share of revenues. FB vessels decreased by 14% (27,000 to 23,200) as customers migrated to FX and other third party Very Small Aperture Terminals (VSAT) services, FB ARPU declined by 6% ($651 to $613) as migrations remained skewed to higher value customers.

 

   

Government: Revenue increased by 17.1% ($54.7 million). Strong U.S. Government revenue, rising by 21.9% ($48.6 million), was driven by new business, higher equipment sales, expanded mandates and high stage payments on one large contract. Outside the United States, revenue increased by 6.2% ($6.1 million), with growth in GX and managed services revenue from higher usage and activations from both new and existing business. These increases were partially offset by lower usage of L-band services.

 

   

Aviation: Revenue increased by 26.0% ($32.9 million) reflecting continued recovery in the aviation industry. Core aviation revenue, comprising Business Aviation (BGA) and AOS continued their strong recovery and were 29.6% ($28.5 million) higher than the corresponding period in 2020. The number of installed Jet ConneX aircraft increased by 26% (830 to 1,043) during the nine months ended September 30, 2021. IFC revenue and airline activity steadily improved, with revenue increasing 14.7% ($4.4 million) reflecting more aircraft returning to service, but nevertheless activity remained low. The number of IFC-installed aircraft increased by 6% (798 to 849), after adjusting for the loss of 109 aircraft due to the bankruptcy of Norwegian Air Shuttle in the second quarter of 2021.

 

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Enterprise: Revenue increased by 1.9% ($1.6 million), driven primarily by new lease contracts and satellite phone handset sales. Market pressure on the legacy product base remains.

Employee Benefit Costs

Employee benefit costs for the nine months ended September 30, 2021 increased by $12.4 million to $221.9 million, compared to $209.5 million for the corresponding period in 2020. This increase was driven primarily by an additional $22.1 million of performance-related employee costs, offset by a reduction in other employee costs of $9.9 million.

Network and Satellite Operations Costs

Network and satellite operations costs for the nine months ended September 30, 2021 increased by $7.7 million to $120.5 million, compared to $112.8 million for the corresponding period in 2020. This increase was driven primarily by higher costs in support of revenue mainly from the use of third party airtime.

Impairment of Financial Assets

Impairment of financial assets for the nine months ended September 30, 2021 decreased by $15.3 million to $2.0 million, compared to $17.3 million for the corresponding period in 2020. This decrease was driven primarily by a reduction in bad debt provisions from the high levels caused by the COVID-19 pandemic in the prior period.

Other Operating Costs

Other operating costs for the nine months ended September 30, 2021 increased by $21.9 million to $122.1 million, compared to $100.2 million for the corresponding period in 2020. This increase was driven primarily by higher costs in support of revenue from equipment sales, adverse currency movements as the Sterling strengthened against the U.S. Dollar, and a gradual return to more normal activity levels following the pandemic.

Own Work Capitalized

Own work capitalized for the nine months ended September 30, 2021 decreased by $6.3 million to $22.8 million, compared to $29.1 million for the corresponding period in 2020. This decrease was driven primarily by lower headcount and the timing of work on major infrastructure investments.

Depreciation, Amortization and Other Costs

Depreciation, amortization and other costs for the nine months ended September 30, 2021 decreased by $42.0 million to $471.1 million, compared to $513.1 million for the corresponding period in 2020. This decrease was due primarily to the impact of assets having become fully depreciated exceeding the impact of the addition of new assets.

Operating Profit / (Loss)

Operating profit for the nine months ended September 30, 2021 increased by $78.0 million to $96.0 million, compared to $18.0 million for the corresponding period in 2020. This increase was primarily driven by higher revenue and the reduction in depreciation, amortization and other costs.

Net Financing Costs

Net financing costs for the nine months ended September 30, 2021 decreased by $86.9 million to $66.4 million, compared to $153.3 million for the corresponding period in 2020. The decrease related primarily to an IFRS-9

 

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related gain of $68.7 million ($76.4 million initial gain, less amortization of $7.7 million) and subsequent lower interest costs following repricing of Inmarsat Group’s term loan on January 25, 2021 from USD LIBOR plus an applicable margin of 4.5% to USD LIBOR plus an applicable margin of 3.5%. The reduction of 1% on the applicable margin in the repricing resulted in the Inmarsat Group recognising a gain of $76.4 million in its income statement. The carrying value of the term loan on Inmarsat Group’s balance sheet was reduced by a similar value, offset by amortization of this initial gain, which is charged over the term of the loan.

(Loss) / Profit Before Tax

(Loss) / profit before tax for the nine months ended September 30, 2021 increased by $164.9 million to a profit before tax of $29.6 million, compared to a loss before tax of $135.3 million for the corresponding period in 2020, reflecting the factors discussed above.

Taxation (Charge) / Income

Taxation charge for the nine months ended September 30, 2021 increased by $147.8 million to $176.9 million, compared to $29.1 million for the corresponding period in 2020. The effective tax rate for the nine months ended September 30, 2021 was 597.6%, compared to 21.5% for the corresponding period in 2020. This increase was mainly due to higher taxable profits and revaluation of Inmarsat Group’s U.K. deferred tax liability from 19% to 25% following enactment of a change in the U.K. headline tax rate from April 2023 (recognized as $175.4 million), partially offset by a revaluation of the U.K. deferred tax liability from 17% to 19%, following enactment of a change in the U.K. headline tax rate in 2020.

Loss for the Period

Loss for the nine months ended September 30, 2021 was $147.3 million, compared to a loss of $164.4 million for the year ended December 31, 2020, reflecting the factors discussed above.

Year Ended December 31, 2020 vs. Successor Period, Predecessor Period, and Pro Forma Year Ended December 31, 2019

Revenue

Revenue of Inmarsat Holdings for the year ended December 31, 2020 was $1,272.1 million, compared to $93.4 million for Inmarsat Holdings for the period from the date of its incorporation on March 15, 2019 to December 31, 2019 (the Successor Period), $1,302.7 million for Inmarsat for the period from January 1, 2019 to December 3, 2019 (the Predecessor Period), and $1,396.1 million for the pro forma year ended December 31, 2019. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Inmarsat Holdings’ results for 2020 reflect the impact of COVID-19, particularly on its Aviation business unit. Outside Aviation, Inmarsat Group believes its business units performed well, demonstrating the resilience and diversity of its business model. Lower revenue in 2020 also reflected the litigation settlement with RigNet of $50.8 million received in 2019, partially offset by the receipt of the $33.3 million quarterly payment from Ligado in the second quarter of 2020. Both were recognised within central services.

Movements in revenue by business unit were as follows:

 

   

Maritime: Revenue was $490.6 million for the year ended December 31, 2020, compared to $34.8 million for Inmarsat Holdings for the Successor Period, $473.0 million for Inmarsat for the Predecessor Period and $507.8 million for the pro forma year ended December 31, 2019. The decline in revenue in 2020 reflected the continued trend of customers transitioning from FB to VSAT services offered by both Inmarsat Group and its competitors. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the

 

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acquisition of Inmarsat on December 4, 2019. Compared to the pro forma year ended December 31, 2019, Maritime revenue declined 3.4% ($17.2 million) year-over-year. FB revenues fell by 16% ($39.0 million) year-over-year due to 14% fewer vessels (29,900 to 25,600) and FB ARPU reduced by 4% year-over-year ($685 to $647) as migrations were skewed towards heavier bandwidth users. VSAT revenues increased by 11.0% ($20.6 million), driven by 24% higher FX vessels (7,900 to 9,800), partially offset by 7% lower FX ARPU ($2,080 to $1,940) as Inmarsat Group’s wholesale partners continued to provide an increasing share of revenues. The rate of decline in Maritime revenues slowed in 2020.

 

   

Government: Revenue was $442.8 million for the year ended December 31, 2020, compared to $31.4 million for Inmarsat Holdings for the Successor Period, $387.2 million for Inmarsat for the Predecessor Period and $418.6 million for the pro forma year ended December 31, 2019. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Compared to the pro forma year ended December 31, 2019, Government revenue declined 5.8% ($24.2 million) year-over-year, with U.S. Government revenue increasing by 10.1% ($28.3 million), driven primarily by new business wins and expanded mandates across GX and L-band, and other satellite services. Outside of the United States, Government revenue declined by 3.0% ($4.1 million) compared to the pro forma year ended December 31, 2019, reflecting lower hardware sales and reduced usage of L-band services, partially offset by continued growth in GX revenue and new projects and services.

 

   

Aviation: Revenue was $178.2 million for the year ended December 31, 2020, compared to $18.4 million for Inmarsat Holdings for the Successor Period, $275.5 million for Inmarsat for the Predecessor Period and $293.9 million for the pro forma year ended December 31, 2019. Lower Aviation revenue in 2020 was mainly attributable to COVID-19 and the massive impact this has had on the aviation industry. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Compared to the pro forma year ended December 31, 2019, Aviation revenue declined 39.4% ($115.7 million) year-over-year, reflecting a decline in IFC revenue of 61.1% ($72.9 million), driven primarily by a reduction in both low margin hardware sales and airtime revenue due to reduced activity. The number of IFC installed aircraft increased by 22% (749 to 915). Core Aviation revenue decreased by 21.9% ($37.1 million) for the year ended December 31, 2020 compared to the pro forma

  year ended December 31, 2019, similarly driven by reduced customer activity. The number of installed Jet ConneX aircraft increased by 31% (677 to 884).

 

   

Enterprise: Revenue was $113.5 million for the year ended December 31, 2020, compared to $8.4 million for Inmarsat Holdings for the Successor Period, $104.0 million for Inmarsat for the Predecessor Period and $112.4 million for the pro forma year ended December 31, 2019. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Compared to the pro forma year ended December 31, 2019, Enterprise revenue increased 1.0% ($1.1 million), driven primarily from increased usage, lease upgrades and equipment sales, partially offset by on-going market pressure on the legacy product base.

Employee Benefit Costs

Employee benefit costs for the year ended December 31, 2020 were $280.3 million, compared to $25.9 million for Inmarsat Holdings for the Successor Period, $299.3 million for Inmarsat for the Predecessor Period and $325.2 million for the pro forma year ended December 31, 2019. Employee benefit costs of Inmarsat Holdings for the Successor Period represent approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the year ended December 31, 2020 to the pro forma year ended December 31, 2019, the decrease of $44.9 million was driven primarily by the response to COVID-19 (which drove a material reduction in the number of staff), $11.1 million lower temporary staff costs,

 

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and $50.9 million lower performance related employee costs, offset by $14.1 million additional staff restructuring costs.

Network and Satellite Operations Costs

Network and satellite operations costs for the year ended December 31, 2020 were $158.6 million, compared to $11.7 million for Inmarsat Holdings for the Successor Period, $155.5 million for Inmarsat for the Predecessor Period and $167.2 million for the pro forma year ended December 31, 2019. Network and satellite operations costs of Inmarsat Holdings for the Successor Period represent approximately one month of operating activities

following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the year ended December 31, 2020 to the pro forma year ended December 31, 2019, the decrease of $8.6 million was driven primarily by lower leased capacity charges due to the migration of XpressLink (XL) vessels to FX.

Impairment of Financial Assets

Impairment of financial assets for the year ended December 31, 2020 was $16.8 million, compared to $5.2 million income for Inmarsat Holdings for the Successor Period, $12.8 million impairment for Inmarsat for the Predecessor Period and $7.6 million impairment for the pro forma year ended December 31, 2019. For the Successor Period, this represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the year ended December 31, 2020 to the pro forma year ended December 31, 2019, the increase of $9.2 million was driven by an increase in bad debt provisions in response to COVID-19.

Other Operating Costs

Other operating costs for the year ended December 31, 2020 were $154.1 million, compared to $122.7 million for Inmarsat Holdings for the Successor Period, $226.1 million for Inmarsat for the Predecessor Period and $348.8 million for the pro forma year ended December 31, 2019. Other operating costs of Inmarsat Holdings for the Successor Period represent approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019 and mainly related to costs associated with the acquisition. Comparing the year ended December 31, 2020 to the pro forma year ended December 31, 2019, the decrease of $194.7 million was driven primarily by the reduction in terminal and equipment costs correlating to reduced hardware sales, reduced travel costs reflecting COVID-19 impacts, and $136.9 million of acquisition-related costs (funding, legal and advisor costs) in the pro forma 2019 period.

Own Work Capitalized

Own work capitalized for the year ended December 31, 2020 was $36.2 million, compared to $2.9 million for Inmarsat Holdings for the Successor Period, $39.1 million for Inmarsat for the Predecessor Period and $42.0 million for the pro forma year ended December 31, 2019. Own work capitalized of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the year ended December 31, 2020 to the pro forma year ended December 31, 2019, the decrease of $5.8 million was driven primarily by lower headcount and the timing of work on major infrastructure investments.

Depreciation, Amortization and Other Costs

Depreciation, amortization and other costs for the year ended December 31, 2020 were $682.5 million, compared to $54.9 million for Inmarsat Holdings for the Successor Period, $458.7 million for Inmarsat for the Predecessor Period and $714.0 million for the pro forma year ended December 31, 2019. Depreciation, amortization and other costs in 2020 reflected lower depreciation and amortization charges following an increase in disposal of tangible and intangible assets during the year, attributable to replacements in billing software. Depreciation, amortization

 

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and other costs of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019.

Operating Profit / (Loss)

Operating profit for the year ended December 31, 2020 was $16.0 million, compared to an operating loss for Inmarsat Holdings of $113.7 million for the Successor Period, an operating profit of $189.4 million for Inmarsat for the Predecessor Period and an operating loss of $124.7 million for the pro forma year ended December 31, 2019, reflecting the factors discussed above.

Net Financing Costs

Net financing costs for the year ended December 31, 2020 were $198.9 million, compared to $53.5 million for Inmarsat Holdings for the Successor Period, $312.2 million for Inmarsat for the Predecessor Period and $134.0 million for the pro forma year ended December 31, 2019. Net financing costs of Inmarsat Holdings for the Successor Period represent approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019 and interest on restructured debt due to such acquisition. Higher net financing costs in 2020 compared to the pro forma year ended December 31, 2019 reflected additional interest in the pro forma period, following pro forma debt financing cost adjustments (see the section below entitled “Reconciliation of pro forma year ended December 31, 2019”).

Loss Before Tax

Loss before tax for the year ended December 31, 2020 was $182.9 million, compared to losses before tax of $167.2 million for Inmarsat Holdings for the Successor Period, $122.8 million for Inmarsat for the Predecessor Period and $258.7 million for the pro forma year ended December 31, 2019, reflecting the factors discussed above.

Taxation (Charge) / Income

Taxation charge for the year ended December 31, 2020 was $32.8 million, compared to taxation income of $10.2 million for Inmarsat Holdings for the Successor Period, a taxation charge of $29.4 million for Inmarsat for the Predecessor Period and a taxation charge of $25.1 million for the pro forma year ended December 31, 2019. The effective tax rate for the year ended December 31, 2020 was 17.9%, compared to 6.1% for the Successor Period, 23.9% for the Predecessor Period and 9.7% for the pro forma year ended December 31, 2019. Taxation of Inmarsat Holdings for the Successor Period was on income of $10.2 million, representing one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Compared to the pro forma year ended December 31, 2019, the increase in taxation charge was primarily due to the decrease in loss before tax ($14.5 million) and revaluation of Inmarsat Group’s U.K. deferred tax from 17% to 19% ($67.0 million), offset by disallowed expenditure ($68.7 million, related to legal and professional fees for the acquisition of Inmarsat) and the release of prior period overseas tax provisions ($6.4 million).

Loss for the Period

Loss for the year ended December 31, 2020 was $215.7 million, compared to losses of $157.0 million for Inmarsat Holdings for the Successor Period, $152.2 million for Inmarsat for the Predecessor Period and $283.8 million for the pro forma year ended December 31, 2019, reflecting the factors discussed above.

 

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Successor Period, Predecessor Period, and Pro Forma Year Ended December 31, 2019 vs. Year Ended December 31, 2018

Revenues

Revenues were $93.4 million for Inmarsat Holdings for the Successor Period, $1,302.7 million for Inmarsat for the Predecessor Period and $1,396.1 million for the pro forma year ended December 31, 2019, compared to $1,465.2 million for the year ended December 31, 2018. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, the revenue decrease was impacted by a $130.3 million reduction in Ligado revenues, offset by $50.8 million received from the litigation settlement with RigNet, both recognized within central services. In line with the Ligado Cooperation Agreement, payments from Ligado to Inmarsat Group were paused during 2019 and revenue from Ligado consequently reduced from $130.5 million in 2018 to $0.2 million in 2019. $50.8 million of revenue was recognized from the litigation settlement relating to Inmarsat Group’s GX Take-or-Pay contract with RigNet. Excluding RigNet and Ligado, revenue increased by $10.4 million for the pro forma year ended December 31, 2019 compared with the year ended December 31, 2018.

Movements in revenue by business unit were as follows:

 

   

Maritime: Revenue was $34.8 million for Inmarsat Holdings for the Successor Period, $473.0 million for Inmarsat for the Predecessor Period and $507.8 million for the pro forma year ended December 31, 2019, compared to $552.8 million for the year ended December 31, 2018. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, Maritime revenue declined 8.1% ($45.0 million) year-over-year. FB revenues were 17.8% lower ($55.5 million) as a result of vessel migrations to FX and other third party VSAT services. FB vessels reduced by 8% (32,400 to 29,900) and ARPU reduced by 11% ($768 to $685) driven by higher value customers migrating. These decreases were partially offset by a 12.8% increase ($21.3 million) in VSAT revenues, driven primarily by 27% higher FX vessels (6,200 to 7,900). FX ARPU decreased by 13% ($2,390 to $2,080) as Inmarsat Group’s wholesale partners continued to provide an increasing share of revenues. Maritime revenue was also impacted by the end of life of some products and the continued decline in revenues from legacy services.

 

   

Government: Revenue was $31.4 million for Inmarsat Holdings for the Successor Period, $387.2 million for Inmarsat for the Predecessor Period and $418.6 million for the pro forma year ended December 31, 2019, compared to $381.0 million for the year ended December 31, 2018. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, Government revenue increased by 9.9% ($37.6 million), with U.S. Government business revenue increasing by 8.8% ($22.9 million). These increases reflected new business wins, expanded mandates and increased GX and L-band services. Outside of the United States, Government revenues were up 12.0% ($14.7 million) year over year, driven mainly by growth in GX revenues and additional hardware sales to existing major customers.

 

   

Aviation: Revenue was $18.4 million for Inmarsat Holdings for the Successor Period, $275.5 million for Inmarsat for the Predecessor Period and $293.9 million for the pro forma year ended December 31, 2019, compared to $256.1 million for the year ended December 31, 2018. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, Aviation revenue increased by 14.8% ($37.8 million), reflecting a year-over-year increase of 18.0% ($18.6 million)

 

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driven by IFC equipment sales and further growth in GX airtime revenue. The number of IFC installed aircraft increased by 66% (452 to 749). This was complemented by 12.4% ($19.2 million) continued stable growth from Inmarsat Group’s Core Aviation business which included a 45% increase in installed Jet ConneX aircraft (467 to 677).

 

   

Enterprise: Revenue was $8.4 million for Inmarsat Holdings for the Successor Period, $104.0 million for Inmarsat for the Predecessor Period and $112.4 million for the pro forma year ended December 31, 2019 compared to $130.0 million for the year ended December 31, 2018. Revenue of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, Enterprise revenue declined by 13.5% ($17.6 million), resulting primarily from on-going market pressure on Inmarsat Group’s legacy product base and lower satellite phone handset sales.

Employee Benefit Costs

Employee benefit costs were $25.9 million for Inmarsat Holdings for the Successor Period, $299.3 million for Inmarsat for the Predecessor Period and $325.2 million for the pro forma year ended December 31, 2019, compared to $301.4 million for the year ended December 31, 2018. Employee benefit costs of Inmarsat Holdings for the Successor Period represent approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, the increase of $23.8 million was driven primarily by $16.8 million of accelerated stock compensation costs and higher performance-related employee costs due to the acquisition of Inmarsat on December 4, 2019.

Network and Satellite Operations Costs

Network and satellite operations costs were $11.7 million for Inmarsat Holdings for the Successor Period, $155.5 million for Inmarsat for the Predecessor Period and $167.2 million for the pro forma year ended December 31, 2019, compared to $183.3 million for the year ended December 31, 2018. Network and satellite operations costs of Inmarsat Holdings for the Successor Period represent approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, the decrease of $16.1 million was attributable primarily to leased capacity cost savings from the migration of XL vessels to FX.

Impairment of Financial Assets

Impairment of financial assets was $5.2 million income for Inmarsat Holdings for the Successor Period, $12.8 million impairment for Inmarsat for the Predecessor Period and $7.6 million impairment for the pro forma year ended December 31, 2019, compared to $33.6 million impairment for the year ended December 31, 2018. For the Successor Period, this represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, the decrease of $26.0 million was driven primarily by higher bad debt provisions in 2018 to provide for possible future bad debts, particularly due to uncertainty within the Maritime market, which uncertainty was not repeated in 2019.

Other Operating Costs

Other operating costs were $122.7 million for Inmarsat Holdings for the Successor Period, $226.1 million for Inmarsat for the Predecessor Period and $348.8 million for the pro forma year ended December 31, 2019, compared to $230.0 million for the year ended December 31, 2018. Other operating costs of Inmarsat Holdings for the Successor Period represent approximately one month of operating activities following the consummation

 

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of the acquisition of Inmarsat on December 4, 2019 and mainly relate to costs associated with the acquisition. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, the increase of $118.8 million was driven primarily by $136.9 million of acquisition-related costs (funding, legal, and advisor costs), partially offset by lower terminal and equipment, advertising, and travel costs.

Own Work Capitalized

Own work capitalized was $2.9 million for Inmarsat Holdings for the Successor Period, $39.1 million for Inmarsat for the Predecessor Period and $42.0 million for the pro forma year ended December 31, 2019, compared to $40.8 million for the year ended December 31, 2018. Own work capitalized of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, the increase of $1.2 million was driven primarily by the timing of work on major infrastructure investments.

Depreciation, Amortization and Other Costs

Depreciation, amortization and other costs were $54.9 million for Inmarsat Holdings for the Successor Period, $458.7 million for Inmarsat for the Predecessor Period and $714.0 million for the pro forma year ended December 31, 2019, compared to $481.4 million for the year ended December 31, 2018. Depreciation, amortization and other costs of Inmarsat Holdings for the Successor Period represents approximately one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, this increase was mainly attributable to amortization from the revised assessment of the value of customer relationships and other intangible assets recorded on the balance sheet due to the acquisition.

Operating Profit / (Loss)

Operating loss was $113.7 million for Inmarsat Holdings for the Successor Period, operating profit was $189.4 million for Inmarsat for the Predecessor Period and operating loss was $124.7 million for the pro forma year ended December 31, 2019, compared to an operating profit of $276.3 million for the year ended 2018, reflecting the factors discussed above.

Net Financing Costs

Net financing costs were $53.5 million for Inmarsat Holdings for the Successor Period, $312.2 million for Inmarsat for the Predecessor Period and $134.0 million for the pro forma year ended December 31, 2019, compared to $116.9 million for the year ended December 31, 2018. Net financing costs in the Successor Period and for the pro forma year ended December 31, 2019 reflect additional interest as a result of higher debt levels following acquisition debt restructuring in December 2019 (2019 closing total borrowings were $3,746.2 million vs $2,465.5 million in 2018).

(Loss) / Profit Before Tax

Losses before tax were $167.2 million for Inmarsat Holdings for the Successor Period, $122.8 million for Inmarsat for the Predecessor Period and $258.7 million for the pro forma year ended December 31, 2019, compared to a profit before tax of $159.4 million for the year ended December 31, 2018, reflecting the factors discussed above.

 

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Taxation (Charge) / Income

Taxation income was $10.2 million for Inmarsat Holdings for the Successor Period, taxation charge was $29.4 million for Inmarsat for the Predecessor Period and taxation charge was $25.1 million for the pro forma year ended December 31, 2019, compared to a taxation charge of $55.1 million for the year ended December 31, 2018. The effective tax rate was 6.1% for the Successor Period, 23.9% for the Predecessor Period and 9.7% for the pro forma year ended December 31, 2019, compared to 34.6% for the year ended December 31, 2018. Taxation of Inmarsat Holdings for the Successor Period was on income of $10.2 million, representing one month of operating activities following the consummation of the acquisition of Inmarsat on December 4, 2019. Comparing the pro forma year ended December 31, 2019 to the year ended December 31, 2018, the decrease was mainly attributable to a reduction in overall taxable profits for the period ($17.4 million) and the release of tax provisions ($12.5 million).

(Loss) / Profit for the Period

Losses were $157.0 million for Inmarsat Holdings for the Successor Period, $152.2 million for Inmarsat for the Predecessor Period and $283.8 million for the pro forma year ended December 31, 2019, compared to a profit of $104.3 million for the year ended 2018, reflecting the factors discussed above.

Balance Sheet

 

     As of  

($ in millions)

   Sept. 30,
2021
     Dec. 31,
2020
     Dec. 31,
2019(1)
 

Non-current assets

   $  6,273.5      $  6,516.1      $  6,872.7  

Current assets

     779.8        1,254.8        532.3  
  

 

 

    

 

 

    

 

 

 

Total assets

   $ 7,053.3      $ 7,770.9      $ 7,405.0  
  

 

 

    

 

 

    

 

 

 

Current liabilities

   $ 1,493.0      $ 1,420.1      $ 1,808.7  

Non-current liabilities

     4,463.8        4,392.1        3,403.1  
  

 

 

    

 

 

    

 

 

 

Total liabilities

   $ 5,956.8      $ 5,812.2      $ 5,211.8  
  

 

 

    

 

 

    

 

 

 

Net assets

   $ 1,096.5      $ 1,958.7      $ 2,193.2  
  

 

 

    

 

 

    

 

 

 

 

(1)

Results have been restated from Inmarsat Holdings’ previously published statutory financial statements. See the consolidated financial statements of Inmarsat Holdings included elsewhere in this proxy statement for additional information.

Non-Current Assets

Non-current assets as of September 30, 2021 decreased by $242.6 million to $6,273.5 million, compared to $6,516.1 million as of December 31, 2020. This decrease was driven primarily by depreciation and amortization being greater than fixed asset additions.

Non-current assets as of December 31, 2020 decreased by $356.6 million to $6,516.1 million, compared to $6,872.7 million as of December 31, 2019. This decrease was driven primarily by $673.0 million in depreciation of property, plant and equipment (PPE), amortization of intangible assets and a $26.1 million reduction in the net pension asset, mainly attributable to a ‘buy-in’ of Inmarsat Group’s global defined benefit pension plan during October 2020. Under this buy-in, the Inmarsat Group retained the legal obligation for the benefits provided under the pension plan, however an insurer (Aviva Life & Pensions UK Limited) undertook to pay the plan’s benefit obligations as they fall due. This decrease was partially offset by additions to PPE and intangible assets.

 

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Current Assets

Current assets as of September 30, 2021 decreased by $475.0 million to $779.8 million, compared to $1,254.8 million as of December 31, 2020. This decrease was mainly due to the cash outflows to shareholders, net of cash generation during the nine months ended September 30, 2021. Distributions of $567.9 million and $149.5 million were remitted to Inmarsat Shareholders during the quarters ended March 31 and September 30, 2021 respectively.

Current assets as of December 31, 2020 increased by $722.5 million to $1,254.8 million, compared to $532.3 million as of December 31, 2019. This was due primarily to an increase in cash and cash equivalents of $91.5 million and short-term deposits of $688.0 million following receipt of the $700 million payment from Ligado, and was partially offset by a $59.6 million decrease in trade and other receivables due to the lower revenue and higher bad debt provisions in the Maritime and Aviation business units.

Current Liabilities

Current liabilities as of September 30, 2021 increased by $72.9 million to $1,493.0 million, compared to $1,420.1 million as of December 31, 2020. This increase was mainly due to timing of cash received from customers in advance of services provided and capex-related milestone payments, partially offset by reductions in restructuring provisions accrued in 2020 and paid during the nine months ended September 30, 2021.

Current liabilities as of December 31, 2020 decreased by $388.6 million to $1,420.1 million, compared to $1,808.7 million as of December 31, 2019. This decrease was driven by the repayment of legacy borrowings in early 2020 due to the refinancing undertaken as part of the acquisition of Inmarsat, partially offset by receipt of the $700 million payment from Ligado during 2020.

Non-Current Liabilities

Non-current liabilities as of September 30, 2021 increased by $71.7 million to $4,463.8 million, compared to $4,392.1 million as of December 31, 2020. This increase was driven primarily by the $175.4 million revaluation of the deferred tax asset to 25% as discussed above, partially offset by a $76.4 million IFRS-9 related reduction in the carrying value of the term loan following its repricing in January 2021.

Non-current liabilities as of December 31, 2020 increased by $989.0 million to $4,392.1 million, compared to $3,403.1 million as of December 31, 2019. This increase was due primarily to the drawdown of new term loan borrowings as part of the refinancing undertaken as part of the acquisition of Inmarsat.

Liquidity and Capital Resources

Inmarsat Group’s primary sources of liquidity and capital resources are cash flow from operations, financing activities and access to financial markets. Inmarsat is exposed to liquidity risk with respect to its contractual obligations and financial liabilities. Inmarsat Group manages liquidity risk by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Inmarsat Group’s available liquidity is comprised of available cash and short term deposits presented within net borrowings below, along with Inmarsat Group’s $700 million revolving credit facility, which was undrawn as of September 30, 2021. From this available liquidity, the Inmarsat Group believes it has sufficient working capital to meet its obligations as they fall due.

Inmarsat Group’s material cash requirements relate to capital and purchase requirements. At December 31, 2020, Inmarsat Group had lease and purchase commitments of $330.9 million and capital commitments of $553.2 million. Lease and purchase commitments mainly comprised the commitment for development of Arctic capabilities for GX in partnership with Space Norway. Capital commitments mainly related to Inmarsat Group’s I-6 satellite programs. Inmarsat Group has historically relied on its cash flow from operations and various debt and equity financings for liquidity.

 

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Inmarsat Group continues to invest in new services and technology necessary to support its activities through research and development programs. Research costs related to internally generated intangibles are expensed in the period that the expenditure is incurred. Development costs are only capitalized if the technical feasibility, availability of appropriate technical, financial and other resources and commercial viability of developing the asset for subsequent use or sale have been demonstrated and the costs incurred can be measured reliably.

Details on treasury policy and objectives, and exposure to liquidity, credit, and market risk, along with details on financial instruments, including hedging, debt profile, maturity, interest and currencies can be found in Notes 31, 3 and 20 of Inmarsat Holdings’ consolidated financial statements for the year ended December 31, 2020 included elsewhere in this proxy statement.

Cash Flow

 

     Successor Entity                 Predecessor Entity  

($ in millions)

   Nine Months
Ended

Sept. 30,
2021
    Nine Months
Ended

Sept. 30
2020
    Year
Ended
Dec. 31,
2020
    Period
Ended
Dec. 31,
2019(1)(2)
                Period
Jan. 1 to
Dec. 3,
2019
    Year
Ended
Dec. 31,
2018
 

Net cash flow from / (used in) operating activities

   $ 565.5     $ 499.8     $ 1,375.7     $ (16.2         $ 699.8     $ 721.7  

Net cash flow from / (used in) investing activities

   $ 307.4     $ (253.1   $ (975.9   $ (3,073.4         $ (197.3   $ (394.4

Net cash flow (used in) / from financing activities

   $ (877.6   $ (205.1   $ (308.3   $ 3,249.6           $ (294.5   $ (331.6
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

 

Net (decrease) / increase in cash and cash equivalents

   $ (4.7   $ 41.6     $ 91.5     $ 160.0           $ 208.0     $ (4.3
  

 

 

   

 

 

   

 

 

   

 

 

         

 

 

   

 

 

 

 

(1)

Covers the successor entity period from the date of incorporation of Inmarsat Holdings on March 15, 2019 to December 31, 2019.

(2)

Results have been restated from Inmarsat Holdings’ previously published statutory financial statements. See the consolidated financial statements of Inmarsat Holdings included elsewhere in this proxy statement for additional information.

Net Cash Flow From / (Used In) Operating Activities

Cash generated from operations increased by $65.7 million to $565.5 million for the nine months ended September 30, 2021, compared to $499.8 million for the nine months ended September 30, 2020. This increase was driven primarily by improved profit before tax and higher working capital inflows mainly due to the timing of payments related to employee incentive plans, partially offset by an increase in receivables due to higher revenues and the timing of tax payments.

Cash generated from operations for the year ended December 31, 2020 was $1,375.7 million compared to $16.2 million used in operations for the Successor Period and $699.8 million generated from operations for the Predecessor Period. Cash flow from operating activities for the year ended December 31, 2020 reflected the $700 million payment from Ligado in 2020. Cash flow for the Successor Period only represents approximately one month of trading activity. The cash flow from operating activities for the Predecessor Period was broadly in line with the year ended December 31, 2018.

 

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Net Cash Flow From / (Used In) Investing Activities

Cash generated from investing activities increased by $560.5 million to $307.4 million for nine months ended September 30, 2021, compared to $253.1 million cash used in investing activities for the nine months ended September 30, 2020. This was driven mainly by the timing of contractual payments on major infrastructure investments and IT projects and an increase in cash received from short-term deposits in support of the distributions to shareholders.

Cash used in investing activities for the year ended December 31, 2020 was $975.9 million compared to $3,073.4 million for the Successor Period and $197.3 million for the Predecessor Period. The cash flow used in investing activities for the year ended December 31, 2020 was driven primarily by investment in additional short term deposits following receipt of the $700 million payment from Ligado, whereas cash used in investing activities for the Successor Period was mainly driven by the purchase of Inmarsat shares as part of the acquisition of Inmarsat by Inmarsat Holdings. Cash flow used in investing activities for the Predecessor Period was $197.3 million, compared to $394.4 million for the year ended December 31, 2018. Both were driven primarily by capital asset purchases, offset by proceeds from the investment in short term deposits.

Net Cash Flow (Used In) / From Financing Activities

Cash used in financing activities increased by $672.5 million to $877.6 million for the nine months ended September 30, 2021, compared to $205.1 million for the nine months ended September 30, 2020. This increase was mainly due to the payment of $716.5 million of distributions to shareholders in the quarters ending March 31 and September 30, 2021, offset by lower interest costs following the term loan repricing in January 2021 and $60.4 million of debt arrangement fees in 2020 in support of acquisition debt restructuring.

Cash used in financing activities for the year ended December 31, 2020 was $308.3 million compared to $3,249.6 million cash flow from financing activities for the Successor Period and $294.5 million cash used in financing activities for the Predecessor Period. Cash used in financing activities for the year ended December 31, 2020 was mainly driven by interest paid, whereas cash from financing activities for the Successor Period was mainly driven by acquisition-related debt refinancing and cash inflow from the issue of shares to Inmarsat Shareholders in connection with the acquisition of Inmarsat. The cash flow used in financing activities for the Predecessor Period was broadly in line with the year ended December 31, 2018.

Quantitative and Qualitative Disclosures about Market Risk

Inmarsat Group’s interest rate exposure is related primarily to its $2.4 billion senior secured credit facilities, as Inmarsat Group’s senior secured bonds bear interest at a fixed rate of 6.75%. Borrowings under Inmarsat Group’s senior secured credit facilities bear interest at variable rates. The weighted average interest rate under Inmarsat Group’s senior secured credit facilities for the nine months ended September 30, 2021 and year ended December 31, 2020 was approximately 3.49% and 5.50%, respectively. As of September 30, 2021, Inmarsat Group had $1.72 billion in aggregate principal amount outstanding under its senior secured credit facilities. Assuming the outstanding balance remained constant over a year, a 50 basis point increase in the interest rates would increase interest incurred, prior to effects of capitalized interest, under Inmarsat Group’s senior secured credit facilities by approximately $8.5 million over a 12-month period. The Inmarsat Group has entered into interest rate cap arrangements to hedge the variable interest rates on its senior secured credit facilities, which arrangements provide protection when USD LIBOR is above 2% and cover 97% of the total nominal amount of the senior secured credit facilities.

Inmarsat Group generally conducts its business in U.S. dollars. However, as Inmarsat Group’s business is conducted in a variety of foreign currencies, it is exposed to fluctuations in foreign currency exchange rates (see Inmarsat Holdings’ consolidated financial statements and the related notes appearing elsewhere in this proxy statement for additional information). For the year ended December 31, 2020, approximately 30% of Inmarsat

 

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Group’s operating costs were denominated in Pounds Sterling. It is estimated that a hypothetical 10% increase in the U.S. Dollar/Sterling year-end exchange rate (U.S.$1.37/£1.00 to U.S.$1.51/£1.00) would have decreased the 2020 profit before tax by approximately $4.7 million. From time to time, Inmarsat Group may enter into foreign currency forward contracts to mitigate risks associated with foreign currency denominated assets, liabilities, commitments and anticipated foreign currency transactions.

Reconciliation of Pro Forma Year Ended December 31, 2019

The unaudited pro forma consolidated financial information for the year ended December 31, 2019 has been prepared by Inmarsat Holdings in accordance with Article 11 of Regulation S-X, as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses.” The unaudited pro forma consolidated financial information has been prepared for illustrative purposes only and is not necessarily indicative of what the actual results of operations of Inmarsat Group would have been had the acquisition of Inmarsat by Inmarsat Holdings taken place on the dates indicated or if the businesses of Inmarsat and Inmarsat Holdings had always been consolidated, nor is it indicative of the future consolidated results of operations of the Inmarsat Group. The unaudited pro forma adjustments were prepared by Inmarsat Group based on currently available information and certain assumptions that Inmarsat Group believes are reasonable and supportable.

The unaudited pro forma consolidated financial information is comprised of the unaudited pro forma consolidated statement of loss for the year ended December 31, 2019, giving effect to the acquisition of Inmarsat by Inmarsat Holdings as if it had occurred on January 1, 2019. A pro forma balance sheet is not presented as the acquisition of Inmarsat is reflected in the consolidated statement of financial position of Inmarsat Holdings at December 31, 2019.

The unaudited pro forma consolidated statement of loss for the year ended December 31, 2019 has been prepared by Inmarsat Group based on (i) the historical audited consolidated income statement of Inmarsat Holdings for the period ended December 31, 2019 and (ii) the historical audited consolidated income statement of Inmarsat for the period January 1 to December 3, 2019. The historical audited income statements for Inmarsat Holdings for the period ended December 31, 2019 and the historical audited income statement for Inmarsat for the period ended December 3, 2019 were prepared in accordance with IFRS on a basis consistent with the accounting policies and presentation adopted by Inmarsat Group. The unaudited pro forma adjustments were prepared by Inmarsat Group based on currently available information and certain assumptions that Inmarsat Group believes are reasonable and supportable.

 

     Successor
Entity
                Predecessor
Entity
    Acquisition Adjustments      Pro Forma  

($ in millions)

   Period
Ended

Dec. 31,
2019
                Period
Jan. 1 to
Dec. 3,
2019
    Acquisition
Adjustments
    Drawdown
of New
Debt
    Repayment
of Old Debt
     Pro Forma
Year Ended
Dec. 31,
2019
 

Business unit revenue:

                   

Maritime

   $ 34.8           $ 473       —         —         —        $ 507.8  

Government

     31.4             387.2       —         —         —          418.6  

Aviation

     18.4             275.5       —         —         —          293.9  

Enterprise

     8.4             104       —         —         —          112.4  

Central services

     0.4             63       —         —         —          63.4  
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total revenue

   $ 93.4           $ 1,302.7       —         —         —        $ 1,396.1  
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Employee benefit costs(1)

     (25.9           (299.3     —         —         —          (325.2

Network and satellite operations costs

     (11.7           (155.5     —         —         —          (167.2

Impairment of financial assets

     5.2             (12.8     —         —         —          (7.6

Other operating costs(1)

     (122.7           (226.1     —         —         —          (348.8

Own work capitalized

     2.9             39.1       —         —         —          42.0  
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

Total net operating costs

   $ (152.2         $ (654.6     —         —         —        $ (806.8
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

    

 

 

 

 

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     Successor
Entity
                Predecessor
Entity
    Acquisition Adjustments     Pro Forma  

($ in millions)

   Period
Ended

Dec. 31,
2019
                Period
Jan. 1 to
Dec. 3,
2019
    Acquisition
Adjustments
    Drawdown
of New
Debt
    Repayment
of Old Debt
    Pro Forma
Year Ended
Dec. 31,
2019
 

Depreciation and amortization

     (55.5           (447.9     (200.4 )A      —         —         (703.8

Impairment of assets

     —               (1.8     —         —         —         (1.8

Loss on disposals of assets

     —               (12.4     —         —         —         (12.4

Share of profit of associates

     0.6             3.4       —         —         —         4.0  
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating (loss) / profit

   $ (113.7         $ 189.4     $ (200.4     —         —       $ (124.7
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Financing income(1)

     5.5             8.2       —         —         —         13.7  

Financing costs

     (59.0           (70.9     —         (158.3 )C      140.5  D      (147.7

Fair value changes in financial assets and liabilities

     —               (249.5     —         —         249.5  D      —    
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Net financing costs

     (53.5           (312.2     —         (158.3     390.0       (134.0
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss before tax

   $ (167.2         $ (122.8   $ (200.4   $ (158.3   $ 390.0     $ (258.7
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Taxation income / (charge)

     10.2             (29.4     38.1  B      30.1  B      (74.1 )B      (25.1
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Loss for the period

   $ (157.0         $ (152.2   $ (162.3   $ (128.2   $ 315.9     $ (283.8
  

 

 

         

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Attributable to:

                  

Equity holders

     (157.0           (152.9     (162.3     (128.2     315.9       (284.5

Non-controlling interest(2)

     —               0.7       —         —         —         0.7  

 

(1)

Pro forma employee benefit costs includes $16.8 million of charges related to early vesting of certain employee share schemes as a consequence of the acquisition. Other operating costs includes $136.9 million of charges related to acquisition transaction costs (e.g. funding, legal, and advisor costs). Financing income includes $4.1 million of bank interest earned from timing differences on acquisition-related debt restructuring. None of these items have a continuing impact of the Inmarsat Group.

(2)

Non-controlling interest refers to the Inmarsat Group’s 51% shareholding in Inmarsat Solutions ehf and NCI resulting from the management incentive plan (2020/2021 only).

Acquisition Adjustments

Inmarsat Group has adjusted for the effect on the unaudited pro forma financial information of certain of the acquisition accounting adjustments to the carrying amount of the identifiable assets and liabilities of Inmarsat as at the effective date of the acquisition of Inmarsat by Inmarsat Holdings as follows:

 

A)

Pro forma depreciation and amortization has increased $200.4 million to reflect the additional expense that would have been recognized during the period January 1, 2019 to December 3, 2019 on the fair value uplift to the carrying amount of the identifiable fixed assets on the date of the acquisition of Inmarsat by Inmarsat Holdings. A summary by asset class is provided below:

 

     Pro Forma  

($ in millions)

   Useful Life      Total
Depreciation /
Amortization
 

Tangible assets

     

Land & buildings

     20-50 years      $ 0.1  

Service equipment, fixtures and fittings

     3-15 years        15.9  

Space segment

     5-15 years        61.8  

Intangible assets

     

 

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     Pro Forma  

($ in millions)

   Useful Life      Total
Depreciation /
Amortization
 

Trademarks

     7-25 years        5.0  

Customer relationships

    
12-14
years
 
 
     100.9  

Software

     3-8 years        5.7  

Terminal development

     3-10 years        (1.0

Other

     4-15 years        12.0  
     

 

 

 

Total depreciation and amortization

      $ 200.4  
     

 

 

 

 

B)

Pro forma taxation income / (charge) has been calculated using pro forma adjusted profit before tax, applying the U.K. statutory tax rate of 19% as that is the primary operating jurisdiction of the Inmarsat Group. The pro forma adjustments relate to this primary jurisdiction.

Drawdown of New Debt

 

C)

Pro forma financing costs have been increased $158.3 million to reflect the additional interest expense and deferred financing charges that would have been recognized had Inmarsat Group’s Senior Notes due 2026, term loan and revolving credit facility been outstanding as of January 1, 2019. Inmarsat Group has calculated the additional expense using the effective interest rate method using the terms of the facilities as they existed at December 31, 2019 and taking into account the deferred financing charges that were attributable to the facilities. The revolving credit facility was not drawn until 2020, and therefore no pro forma adjustments to interest have been made in respect of that facility. Details on existing debt profile, maturity, interest, effective interest, currency, etc. can be found in Note 20 of the consolidated financial statements of Inmarsat Holdings for the year ended December 31, 2020 included elsewhere in this proxy statement.

The pro forma adjustments can be analyzed as follows:

 

     Pro Forma  

($ in millions)

   Interest
Charges
     Other
Financing
Costs
     Total  

Senior notes due 2026

   $  107.3      $  4.7      $  112.0  

Term loan

     41.1        3.0        44.1  

Revolving credit facility

     —          2.2        2.2  
  

 

 

    

 

 

    

 

 

 

Total financing costs

   $  148.4      $  9.9      $  158.3  
  

 

 

    

 

 

    

 

 

 

 

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Repayment of Old Debt

 

D)

Pro forma financing costs have been decreased by $140.5 million to remove interest expense and deferred finance charges on debt that was replaced as part of the acquisition of Inmarsat by Inmarsat Holdings. Furthermore, $249.5 million of mark-to-market fair value movements have been removed as they related to pre-acquisition charges arising from a change in control clause in Inmarsat’s former convertible bond. The convertible bond was a net share settled instrument, meaning upon conversion Inmarsat would repay the principal in cash and satisfy the remaining conversion value in ordinary shares. Following the acquisition of Inmarsat by Inmarsat Holdings, a change of control clause was triggered, resulting in an adjustment in the conversion price to the undisturbed share price prior to the offer. On December 16, 2019, the majority (99.8%) of the offer purchase price of $992 million was paid to bondholders, which included the notionally converted ordinary shares. The pro forma adjustments can be analyzed as follows:

 

     Pro Forma  

($ in millions)

   Interest
Charges
     Other
Financing
Costs
     Convertible
Bond

Mark-to-Market
Release
     Total  

Ex-Im facility

   $ 14.3      $ 6.5      $ —        $ 20.8  

Revolving credit facility

     —          3.6        —          3.6  

Senior notes due 2022

     48.8        2.1        —          50.9  

Senior notes due 2024

     25.0        4.2        —          29.2  

Convertible bond

     30.5        5.5        249.5        285.5  
  

 

 

    

 

 

    

 

 

    

 

 

 

Total financing costs

   $ 118.6      $ 21.9      $ 249.5      $ 390.0  
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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UNAUDITED PRO FORMA COMBINED FINANCIAL INFORMATION

The unaudited pro forma condensed combined statements of operations for the fiscal year ended March 31, 2021 and the nine months ended December 31, 2021 combine the historical consolidated statements of operations and comprehensive income of Viasat incorporated by reference herein with the historical consolidated income statements of Inmarsat Holdings included elsewhere in this proxy statement, giving effect to the Transaction and the financing transactions contemplated by the financing commitments obtained in connection therewith as if they had each occurred on April 1, 2020, and the assumptions and adjustments set forth in the accompanying explanatory notes. The unaudited pro forma condensed combined balance sheet as of December 31, 2021 combines the historical unaudited condensed consolidated balance sheets of Viasat and Inmarsat Holdings as of December 31, 2021 and September 30, 2021, respectively, giving effect to the Transaction and the financing transactions contemplated by the financing commitments obtained in connection therewith as if they had each occurred on December 31, 2021, and the assumptions and adjustments set forth in the accompanying explanatory notes.

Viasat and Inmarsat Holdings have different fiscal years. Viasat’s fiscal year ends on March 31, while Inmarsat Holdings’ fiscal year ends on December 31. Given that the fiscal year end of Inmarsat Holdings is within one quarter of Viasat’s fiscal year end, in accordance with Article 11 of Regulation S-X, the historical financial statements of each entity for its most recent fiscal year have been combined without any conforming adjustments with respect to the difference in fiscal periods. The unaudited pro forma condensed combined statement of operations for the nine months ended December 31, 2021 combines the historical unaudited condensed consolidated statement of operations and comprehensive income of Viasat for the nine months ended December 31, 2021 incorporated by reference herein with the historical unaudited condensed combined statement of income of Inmarsat Holdings for the nine months ended September 30, 2021 included elsewhere in this proxy statement.

The unaudited pro forma condensed combined financial statements have been prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses,” and should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial information.

In addition, the unaudited pro forma combined financial information was derived from and should be read in conjunction with the following historical consolidated financial statements and accompanying notes:

 

   

The historical audited consolidated financial statements of Viasat as of and for the fiscal year ended March 31, 2021, and the related notes, included in Viasat’s Annual Report on Form 10-K for the fiscal year ended March 31, 2021 and incorporated herein by reference;

 

   

The historical unaudited condensed consolidated financial statements of Viasat as of and for the nine months ended December 31, 2021, and the related notes, included in Viasat’s Quarterly Report on Form 10-Q for the fiscal quarter ended December 31, 2021 and incorporated herein by reference;

 

   

The historical audited consolidated financial statements of Inmarsat Holdings as of and for the fiscal year ended December 31, 2020, and the related notes, included elsewhere in this proxy statement; and

 

   

The historical unaudited condensed consolidated financial statements of Inmarsat Holdings as of and for the nine months ended September 30, 2021, and the related notes, included elsewhere in this proxy statement.

The unaudited pro forma condensed combined financial information was prepared using the acquisition method of accounting for business combinations in accordance with US GAAP, with Viasat considered the acquirer of Inmarsat Holdings for accounting purposes.

 

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Under the Purchase Agreement, the purchase price for the shares of Inmarsat Holdings consists of $850.0 million in cash, subject to adjustments, and approximately 46.36 million shares of Viasat common stock. The closing of the Transaction is subject to customary closing conditions, including receipt of regulatory approvals and clearances, and approval by our stockholders of both the issuance of shares in the Transaction and an amendment to our Certificate of Incorporation to increase the number of shares of Viasat common stock authorized for issuance, and there can be no assurance that the Transaction will occur on or before a certain time, on the terms described herein, or at all. The Purchase Agreement may be terminated at any time prior to the consummation of the Transaction upon agreement of the parties thereto, or by Viasat or the Investor Sellers in specified circumstances. If the Purchase Agreement is terminated under specified circumstances, Viasat may be obligated to pay a termination fee of either $150.0 million or $200.0 million or to reimburse certain out-of-pocket expenses of the Sellers up to $40.0 million.

The cash portion of the consideration under the Purchase Agreement is expected to be funded primarily through acquisition financing, and Viasat obtained financing commitments for $2.3 billion of new debt facilities in connection with the Transaction (which may be secured and/or unsecured), which commitments included commitments with respect to the $700.0 million Term Loan Facility that was entered into by Viasat in March 2022 to fund Viasat’s standalone growth expenditures. As part of the Transaction, Viasat will assume $2.1 billion in principal amount of Inmarsat Group’s senior secured bonds as well as the outstanding indebtedness under Inmarsat Group’s $2.4 billion senior secured credit facilities (of which $1.7 billion in aggregate principal amount was outstanding as of September 30, 2021). In addition, at the time of entry into the Purchase Agreement, Viasat obtained $3.2 billion of commitments to backstop certain amendments required under Viasat’s revolving credit facility, Viasat’s Ex-Im credit facility and Inmarsat Group’s $2.4 billion senior secured credit facilities. As of the date of this proxy statement, the requisite amendments had been obtained under Viasat’s revolving credit facility and Inmarsat Group’s $2.4 billion senior secured credit facilities.

The unaudited pro forma condensed combined financial information set forth below has been prepared for illustrative purposes only. The unaudited pro forma condensed combined financial information set forth below contains adjustments that are based on preliminary estimates, many of which are inherently uncertain. We believe that some of these estimates are likely to change, and could change materially, between the date of this proxy statement and the closing date of the Transaction. The actual results reported in periods following the date of this proxy statement and the Transaction may differ significantly from those reflected in these unaudited pro forma condensed combined financial statements for a number of reasons, including but not limited to: differences between the assumptions used to prepare these unaudited pro forma condensed combined financial statements and actual amounts, preliminary allocation of the total estimated purchase price, cost savings from operating efficiencies, differences resulting from potential synergies, the impact of the incremental costs incurred in integrating the Inmarsat business, or Viasat’s or Inmarsat Holdings’ results of operations, financial condition or other transactions or developments since December 31, 2021 (or September 30, 2021, with respect to Inmarsat). In addition, before completion of the Transaction, there are certain limitations regarding what Viasat can learn about Inmarsat. Until the Transaction is completed, Viasat will not have complete access to all relevant information. The assets and liabilities of Inmarsat have been measured based on various preliminary estimates using assumptions that Viasat believes are reasonable based on information that is currently available. Accordingly, the following unaudited pro forma condensed combined financial information should not be considered illustrative of what our financial condition or results of operations would have been had the Transaction and the related financing for the Transaction been completed on the dates indicated in the unaudited pro forma condensed combined financial information and does not purport to project Viasat’s or Inmarsat Holdings’ future financial condition and results of operations after giving effect to these transactions. We therefore caution you not to place undue reliance on the following unaudited pro forma condensed combined financial information.

 

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