WASHINGTON-Motient Corp. and SkyTerra Communications Inc. 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 would 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 could enable its subscribers to use small wireless handsets.
Motient would 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 49-percent interest in MSV and a 61-percent stake in TerreStar.
The ownership realignment, filed with the Securities and Exchange Commission, requires FCC and other government approvals. Motient and SkyTerra said each MSS firm would be better positioned to pursue the deployment of separate hybrid satellite- and terrestrial-based communications networks and engage in partnerships with potential strategic partners.
Motient is locked in a fierce proxy fight with its largest investor, Highland Capital Management L.P., which owns 14 percent of Motient, and its founder/president, James Dondero. Dondero, who has accused Motient of gross mismanagement, wants to oust Motient’s entire board of directors with one of his own choosing. In March, a Delaware court threw out a lawsuit filed by Highland against Motient.
Motient recently said five of its 10 directors would not seek re-election. The Lincolnshire, Ill.-based company has yet to set a date for its annual stockholders’ meeting.
“This is an abusive transaction that disenfranchises Motient stockholders. We are evaluating how best to protect the interests of all Motient’s owners,” said Denise DesChenes, a Highland spokeswoman.
One telecom financial analyst had a different take on the Motient ownership realignment.
David Lambert, of Canadian-based Canaccord Adams, said the changes lower the risk of owning Motient shares as it reduces leverage and improves the company’s access to capital and strategic partners.
“Trends in the wireless industry are working in favor of MSV and Terrestar, which are in a position to deploy a ubiquitous North American wireless network having a significant cost advantage,” Lambert wrote in a May 9 research note. Two trends mentioned were location-based services and digital video services, which Lambert said are natural extensions of a hybrid satellite-terrestrial network.
Canaccord increased its 12-month target for Motient shares from $24 to $25.50 and maintained its speculative buy recommendation. R
