South Korea’s Hanwha Systems said on Thursday it was selling its entire 5.4 per cent stake in Eutelsat for 77.6 million euros ($88.5 million), as the Franco-British satellite operator seeks new investors.
Eutelsat has garnered unprecedented attention this year from governments looking for home-grown alternatives to SpaceX’s Starlink for satellite internet connectivity.
The company is working on a new financing plan to fund the second generation of its low Earth orbit (LEO) OneWeb satellites and to fulfil commitments to the European Union’s IRIS² project.
It has piled up hundreds of millions of euros in losses, particularly from its waning video business, while its 2023 acquisition of OneWeb has yet to yield the results it had hoped for due to competition and delayed deployment of technology.
Finance chief Christophe Caudrelier said in May that Eutelsat was looking for capital investors.
Hanwha’s shares were offered at 3.00 euros ($3.42) apiece, representing a 13.9 per cent discount to Eutelsat’s closing price of 3.48 euros on Wednesday, a term sheet from bookrunner Citi showed.
It also marks a steep 70.5 per cent loss on Hanwha’s initial $300 million investment made in OneWeb in 2021, with the stake now valued at just $88.5 million.
Eutelsat’s Paris-listed shares fell 14.8 per cent by 0920 GMT. Only 21 per cent of Eutelsat’s shares are publicly traded, making the stock prone to sharp price swings.
However, the yield on its 2029 9.75 per cent bond fell to 7.71 per cent, showing a positive shift in bondholder confidence.
Hanwha said the sale, which was set to be concluded on Thursday, was not driven by an investment perspective but by a strategic shift to focus more on its core business operations.
“This decision reflects a long-term strategy to concentrate on defense-related satellites and military communications, rather than on civilian satellite operations and services,” Hanwha said in a statement to Reuters.
A representative for the South Korean company resigned from Eutelsat’s board in April, signalling its diminishing involvement with the satellite operator.
MAJOR OVERHAUL
When asked by Reuters, Eutelsat said none of the other shareholders had expressed interest in selling their shares.
A company spokesperson declined to comment on media reports saying France may raise its stake in the group.
Bloomberg News and The Telegraph have reported that France is considering doubling its stake in Eutelsat and is in talks to raise 1.5 billion euros.
Eutelsat is also reshuffling its upper echelons. In a surprise move last month, it appointed Jean-François Fallacher as its new CEO and it is looking for a new chairperson after the current one announced his departure in February.
Hanwha became a shareholder in OneWeb before it merged with Eutelsat, and it is one of OneWeb’s distributors in South Korea as part of an agreement signed in 2023 with the aim of securing LEO communications for the government and providing internet access to underserved areas.
Last week, South Korea’s Science Ministry granted licenses to Starlink and Eutelsat OneWeb to operate in the country, with services expected to be launched soon.
($1 = 0.8764 euros)
