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1. Introduction
MEASAT Global Berhad (“MEASAT Global” or “the Company”) had on 11 November 2005 announced that its wholly-owned subsidiary, MEASAT Satellite Systems Sdn Bhd (“MSS”), entered into contracts with Orbital Sciences Corporation for the purchase of a new satellite, MEASAT-1R (now known as MEASAT-3a), associated equipment and services. It was also announced that MSS would procure the launch services and insurance for the MEASAT-3a at a later date.
On 10 March 2006, MEASAT Global announced that MSS had entered into a contract for launch and satellite program management services with PanAmSat Corporation, (now known as Intelsat Corporation).
The Board of MEASAT Global wishes to announce that MSS had on 15 June 2008, after negotiations, completed the procurement of a launch and in-orbit operations insurance policy for MEASAT-3a (“Launch and In-Orbit Insurance”).
Willis Limited and Willis (M) Sdn Bhd (“Willis Malaysia”) are the risk management advisors and insurance brokers for the Launch and In-Orbit Insurance.
2. Information on MSS, Willis Limited and Willis Malaysia
2.1 MSS
MSS was incorporated in Malaysia on 28 August 1992 and is a wholly-owned subsidiary of MEASAT Global with an issued and paid-up share capital of RM300,000,000. MSS is principally involved in the operation of a regional satellite network for broadcasting, telecommunications, multimedia and internet applications and investment holding. It is the sole Malaysian licensed commercial satellite operator.
2.2 Willis Limited and Willis Malaysia
Willis Malaysia and Willis Limited are subsidiaries of Willis Group Holdings Limited, a company listed on the New York Stock Exchange. Willis Group Holdings Limited is a leading international firm specialising in risk management.
3. Salient Terms of the Launch and In-Orbit Insurance
3.1 The Launch and In-Orbit Insurance will provide insurance cover to MSS as the insured party for a period of 12 months commencing from 15 June 2008 to 15 June 2009, subject to adjustment of the final Launch Date (“Policy Period”).
3.2 In consideration of the payment of USD27,800,000 (“Premium”), the Launch and In-Orbit Insurance provides insurance coverage of USD185,000,000 (the “Sum Insured”) where the MEASAT-3a satellite is completely lost or destroyed or unable to reach and maintain its assigned orbital location (“Total Loss”); or when the losses or failures on the MEASAT-3a satellite is such that the available satellite capacity is reduced to 25% or less of the stated satellite capacity (“Constructive Total Loss”); or indemnification for partial losses according to the loss formulae and costs arising from a Terminated Ignition, that is, following the ignition process for the purposes of launch, the launch does not occur, to restore the satellite to flight-worthy condition.
3.3 The Premium is payable by cash, in two installments comprising of 5% deposit payable within 30 days of commencement of the Policy Period and the balance within 30 days prior to the Launch Date. The Premium will be financed through borrowings and internally generated funds of MSS. There are no liabilities to be assumed by MSS or the Company arising from the Launch and In-Orbit Insurance.
3.4 The insurance coverage provided under the Launch and In-Orbit Insurance shall terminate upon the earliest of the following:
(i) Expiry of 365 days from the Launch Date; or
(ii) Total Loss or Constructive Total Loss; or
(iii) When claims equal 100% of the insurance coverage amount of the Sum Insured; or
(iv) Expiration of the Policy Period; or
(v) Terminated Ignition.
4. Rationale for the Launch and In-Orbit Insurance
MEASAT-3a will be co-located with the MEASAT-3 satellite at the 91.5°E orbital slot. The satellite will ensure expansion capacity and redundancy for the existing customers of MSS. It will allow for future growth of the MEASAT Global Group, and ensure MSS’ position as a strong regional satellite operator.
Claims payable to MSS under the Launch and In-Orbit Insurance will provide funds to meet its existing MEASAT-3a debt financing obligations and initial funds for a replacement satellite.
MSS procured the Launch and In-Orbit Insurance upon the advice and recommendation of Willis Ltd and Willis Malaysia and after taking into account key factors such as insurance market conditions, timing, and competitiveness of the commercial terms.
5. Risk Factors
The risks associated with the Launch and In-Orbit Insurance of MEASAT-3a are as follows:
Business Risks
The procurement of insurance for MEASAT-3a is subject to risks inherent in the insurance industry including non payment of claims by insurers and protracted claims and assessment process and negotiations resulting in delay in payment of claims and exclusion of payment where a claim arises from war or events of a warlike nature.
Export Licence
The MEASAT-3a is subject to U.S export control laws in respect of any information, products or materials that relate to the satellite. There is a risk that the restriction of information available for the insurers to assess a claim may result in a delay.
6. Effects of the Launch and In-Orbit Insurance
The Launch and In-Orbit Insurance will have no effect on the issued and paid-up share capital and the substantial shareholders’ shareholdings in the Company as it does not involve any new issue of shares.
It will also not have any material effect on the net assets and earnings per share of the Group for the financial year ending 31 December 2008.
7. Approvals required
The procurement of the Launch and In-Orbit Insurance does not require the approval of the shareholders of MEASAT Global or of any authorities.
8. Directors’ and Major Shareholders’ Interests
None of the Directors or major shareholders of the Company or persons connected with them have any interest, direct or indirect, in the Launch and In-Orbit Insurance, Willis Limited or Willis Malaysia.
9. Statement by the Board of Directors
The Board of Directors having taken into consideration all aspects of the Launch and In- Orbit Insurance is of the opinion that it is in the best interests of the Company.
10. Documents Available for Inspection
A copy of the Launch and In-Orbit Insurance Cover Slip is available for inspection at the registered office of the Company at Level 39, Menara Maxis, Kuala Lumpur City Centre, 50088 Kuala Lumpur during normal office hours from Mondays to Fridays (except public holidays) for a period of 14 days from the date of this announcement.
This announcement is dated 17 June 2008. |
