Intelsat to be acquired by consortium of private investors

Issued by Brian Gibson Issue Management for Intelsat
Johannesburg, 18 Aug 2004

Intelsat, Ltd, a global satellite communications leader providing services in over 200 countries and territories, today announced the signing of a definitive agreement that provides for the amalgamation under Bermuda law of Intelsat and a subsidiary of Zeus Holdings Limited, a company formed by a consortium of funds advised by Apax Partners, Apollo Management, Madison Dearborn Partners and Permira.

At closing, Zeus will be acquiring Intelsat, and Intelsat`s current shareholders generally will be entitled to receive $18.75 for each Intelsat share issued and outstanding immediately prior to closing, subject to adjustment in a specified circumstance. The total value of the transaction, including approximately $2 billion of existing net debt, is approximately $5 billion. The transaction was approved unanimously by the Intelsat, Ltd board of directors.

"This transaction comes at a time when Intelsat is successfully executing on its strategies for market leadership in the fixed satellite services sector. We believe that the acquisition of Intelsat by this consortium of well-respected private equity investors represents the best opportunity for Intelsat to achieve its strategic goals," said Intelsat Chief Executive Officer Conny Kullman.

"Once completed, this transaction will both satisfy our shareholders` interest in a strong valuation and allow shareholders to monetise their investments. At the same time, the deal will align Intelsat`s future with a force that can make our vision for continued leadership a reality."

"Our consortium is very pleased to begin a partnership with Intelsat, a global leader in the fixed satellite services sector. Intelsat`s healthy, young and flexible satellite fleet, seasoned management team, strong brand and solid backlog of long-term contracts create a very attractive investment opportunity," said the representatives of the consortium. "As Intelsat enters its next stage of strategic development, its operational strength, stable, diversified revenue base and global market presence offer the company a variety of exciting organic and strategic growth opportunities, and the consortium will provide the financial and strategic support Intelsat needs to capitalise on these opportunities."

At closing, all of the existing service commitments between Intelsat and its customers, including those dating from the privatisation in 2001, will remain in force. "Intelsat and members of the consortium understand that strong and stable media, communications, corporate and government customers are the lifeblood of Intelsat`s business. Although the satellite industry continues to evolve, our commitment to our customers, including continuing to deliver the `gold standard` in satellite services, remains unchanged," said Intelsat CEO Kullman.

Required approval of shareholders holding 60% of Intelsat`s outstanding shares will be sought in a general meeting of shareholders expected to be held later this year. The closing of the transaction is subject to the satisfaction or waiver of several conditions, including the receipt of shareholder and regulatory approvals. Intelsat currently expects that required approvals could be obtained and closing could occur as early as the end of 2004.

Zeus has obtained commitments for financing the acquisition, subject to the satisfaction of customary conditions. Intelsat understands that Zeus intends to finance the transaction in part with debt that, after giving effect to the transaction and consistent with the terms of Intelsat`s existing indebtedness, will be at the Intelsat (Bermuda), Ltd level. The security expected to be granted in connection with this new debt will be in compliance with the terms of Intelsat`s existing indebtedness and is not expected to result in the grant of security to the company`s existing senior notes.

Merrill Lynch and Morgan Stanley are acting as financial advisors to Intelsat in connection with the transaction. Credit Suisse First Boston, Goldman, Sachs & Co and Lehman Brothers Inc are acting as financial advisors to the consortium in connection with the transaction. The new debt financing will be led by Deutsche Bank Securities Inc, Credit Suisse First Boston and Lehman Brothers Inc.

Intelsat

Building on 40 years of leadership. As a global communications leader with 40 years of experience, Intelsat helps service providers, broadcasters, corporations and governments deliver information and entertainment anywhere in the world, instantly, securely and reliably. Intelsat`s global reach and expanding solutions portfolio enable customers to enhance their communications networks, venture into new markets, and grow their businesses with confidence. For more information, visit www.intelsat.com.

Apax Partners

Apax Partners is one of the world`s leading private equity investment groups, operating across Europe, Israel, the US and Japan. With over 30 years of direct investing experience, Apax Partners` Funds provide long-term equity financing to entrepreneurs to build and strengthen world-class companies. It pursues a balanced equity portfolio strategy, investing in companies at all stages of development from early stage to buy-out. Apax Partners` Funds invest in companies across its six chosen global sectors of information technology, telecommunications, healthcare, media, financial services, retail and consumer. Some of Apax Partners` Funds information technology and telecommunications investments include Audible, Dialog Semiconductor, Frontier Silicon, Jamdat, Kabel Deutschland, Sonim Technologies and Yell. For additional information, visit the Web site at www.apax.com.

Apollo

Apollo, founded in 1990, is among the most active and successful private investment firms in the US in terms of both number of investment transactions completed and aggregate dollars invested. Since its inception, Apollo has managed the investment of an aggregate of approximately $13 billion in equity capital in a wide variety of industries, both domestically and internationally.

Madison Dearborn Partners

Madison Dearborn Partners (MDP), based in Chicago, is one of the largest and most experienced private equity firms in the US. MDP has approximately $8 billion of equity capital under management and makes new investments through its most recent fund, Madison Dearborn Capital Partners IV, L.P., a $4 billion fund raised in 2001. MDP focuses on management buyout and other private equity investments across a broad spectrum of industries, including basic industries, communications, consumer, financial services and healthcare. Over the last decade, MDP has been an active investor in the communications industry, with investments in such companies as Omnipoint Corporation, Nextel Partners, Telemundo Communications Group, Clearnet Communications, and XM Satellite Radio, Inc. For additional information, visit the Web site at www.mdcp.com.

Permira

Permira is a leading global private equity firm, advising funds of $13 billion, including Permira Europe III, a E5.1 billion fund raised in 2003. Permira is an independent business with offices in Frankfurt, London, Madrid, Milan, New York, Paris and Stockholm, focusing on buyout transactions across a number of sectors, including technology and telecom, consumer, business services, chemicals, industrial products and services, and healthcare. Since 1985, funds advised by Permira have invested in over 260 transactions and have an investor base comprising principally public and corporate pension funds and other institutions. For additional information, visit the Web site at www.permira.com.

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Intelsat to be acquired by consortium of private investors

Transaction valued at approximately $5 billion