ICO Global Communications Ltd. was forced to cancel its rights offering because subscriptions did not meet the minimum total of $500 million for it to be completed by the July 27 deadline.
As a result, ICO did not issue any shares under the rights offering. All funds sent by investors who did participate will be refunded, the company said.
ICO’s board of directors has approved a new financing plan aimed at attracting several strategic investors to invest about $600 million total in the low-earth-orbit satellite company, according to ICO.
ICO initiated the rights offering May 19 with an original deadline of June 3. With only $407 million subscribed by that time, the company extended the deadline to June 24, then again to July 27. ICO declined to provide the final subscriber total, but had hoped the rights offering would have netted between $500 million and $1 billion.
The new financing proposal would create new class B stock, available at $5 per share. All current outstanding shares would be reclassified as class A stock. Class B stock would have 10 votes per share, with all other rights similar to class A shares. Class A shares will have one vote per share. However, class A shareholders would have the right to elect 40 percent of ICO’s board, as long as the class B shares represent more than 50 percent of the company’s total voting power.
ICO said several strategic investors have given non-binding indications of interest in investing about $525 million in the new class B shares, as well as another $75 million in convertible subordinated debt notes. Their binding interest is conditional, pending normal due diligence review and shareholder and governmental approvals. The deadline for their interest to become formal is Aug. 10.
Analysts say the new share class will dilute current stock by as much as 50 percent.
SoundView Financial Group lowered its recommendation of ICO following the announcement. “We cannot recommend a stock price of $7 when the strategic investors still haven’t firmly committed to keeping this company as an ongoing concern at $5,” said the firm.
JP Morgan Securities upheld its long-term buy recommendation.
