RigNet to Acquire Inmarsat's Energy Broadband Business
Houston, Tex., August 1, 2013--RigNet, Inc., aprovider of managed remote communications solutions to the oil and gas industry, today announced a strategic deal with Inmarsat plc involving the sale of Inmarsat's Energy Broadband business to RigNet and the appointment of RigNet to become a key distribution partner to deliver Inmarsat's Global Xpress ("GX") and L-band services to the energy sector worldwide.
RigNet has reached a definitive agreement to acquire Inmarsat's Energy Broadband business for US$25 million in cash, adding to RigNet's technology solutions, customer base and geographic footprint. The business being acquired represents one of the largest pure play providers of remote communications to the oil and gas industry, making it a natural and strategic fit with RigNet's complementary business.
Under the terms of the deal, Inmarsat will carve out and sell to RigNet all of its energy broadband assets, which include: microwave and WiMAX
networks in the U.S. Gulf of Mexico serving drillers, producers and energy vessel owners; VSAT interests in Russia, the United Kingdom, U.S. and Canada; an M2M SCADA VSAT network in the continental U.S. serving the pipeline industry; a telecommunications systems integration
business operating worldwide; and a global L-band MSS retail energy business. The energy carve-out includes assets, employees, contracts and working capital.
In addition, RigNet has agreed, simultaneous with the closing of the acquisition, to become a key distributor of Inmarsat's GX satellite communications network services, which will enable RigNet to offer the next-generation satellite services to existing and new customers in the global energy sector. RigNet has agreed, under certain conditions, to a significant purchase of capacity from the high-throughput GX network during the four years after it becomes operational. RigNet expects to utilize GX and L-band services across its own business as well as that of the acquired Energy Broadband business.
Rupert Pearce, Inmarsat's chief executive officer, added, "We are excited about this partnership as it enhances the strategic positioning of both companies as we seek to address the communication needs of the global energy sector together. RigNet is the perfect partner for Inmarsat, supporting a large customer base of oil & gas VSAT customers, whom we expect to be at the forefront of the transition to GX services. We also welcome the opportunity to work with RigNet's management team with its extensive knowledge of VSAT operations and customers. This partnership prepares the way for a fast and successful take up of GX services in the global energy sector.''
The business being acquired had revenues of US$ 81 million in 2012. The company expects the acquired business to achieve, on a run-rate basis within the first year of closing, an EBITDA contribution margin of 8-10%. As RigNet integrates the operations, it anticipates that it will incur $5-6 million of integration expenses through 2014. Based upon past history, annual capital expenditures for success-based opportunities and maintenance has averaged US$ 5-6 million. RigNet expects that it will make additional capital investments of US $5 million in 2014 to continue the network upgrade projects in the acquired business that are currently underway. RigNet expects to finance the transaction with a new credit facility and existing cash.
Both companies have approved the transaction, which is expected to close during or before the first quarter of 2014 after customary conditions have been met and regulatory approvals obtained. Deutsche Bank acted as RigNet's exclusive financial advisor and Norton Rose Fulbright acted as RigNet's lead legal advisor on the transaction.
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