WASHINGTON—Motient Corp. and SkyTerra Communications Inc. said they signed agreements to consolidate ownership and control of mobile satellite service assets, whose value is tied to plans to build and operate next-generation hybrid satellite-terrestrial communications networks covering the United States and Canada.
As a result of a series of transactions, SkyTerra will own 70 percent of Mobile Satellite Ventures L.P., an MSS licensee that has permission by the Federal Communications Commission to combine L-band (1.5 GHz) satellite operations with land-based cellular networks in a way that will enable its subscribers to use smaller wireless handsets.
Separately, Motient will increase to 74 percent its stake in TerreStar Networks Inc., an S-band (2 GHz) MSS licensee also planning to construct and operate a hybrid satellite-terrestrial communications system.
Motient currently has a 49 percent interest in MSV and a 61 percent stake in TerreStar.
The ownership realignment, outlined today with the Securities and Exchange Commission, requires FCC and other government approvals. Motient and SkyTerra said the deals will give each MSS firm a better position to pursue the deployment of separate hybrid satellite and terrestrial based communications networks and engage in partnerships with potential strategic partners.
“In pursuing this transaction, our primary objective has been to create a clear path to value for our stockholders. After careful consideration of various structures we could pursue to achieve our goal, we concluded that the separation of MSV and TerreStar into two independent publicly traded entities will provide each company and our stockholders with the best path to unlock the current and future value of both businesses,” said Christopher Downie, chief operating officer of Motient.
Jeffrey Leddy, chief executive officer of SkyTerra, stated, “This transaction provides MSV and TerreStar a clear path to execute their respective business plans, and to maximize their abilities to capitalize on strategic opportunities and relationships.”
Motient is locked in a fierce proxy fight with its largest investor, Highland Capital Management L.P., and its founder/president, James Dondero. Highland owns 14 percent of Motient. Dondero, who has accused Motient of gross mismanagement, self-dealing, poor financial reporting controls and conflicts of interest, wants to oust Motient’s entire board of directors with one of his own choosing. In March, a Delaware court threw out a suit filed by Highland against Motient.
Last week, Motient said five of its ten directors would not seek re-election. The Lincolnshire, Ill., wireless company has yet to set a date for its annual stockholders meeting.
“This is an abusive transaction that disenfranchises Motient’s stockholders. We are evaluating how best to protect the interests of all Motient owners,” Denise DesChenes, a Highland spokeswoman.
