Media Release
APT Satellite signs long-term lease agreement with Loral Asia for
APSTAR-IIR transponders - 18 August 1999.
Major Transaction
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The board of directors announce that a lease agreement ("Lease Agreement") was entered
into between APT (HK), a wholly-owned subsidiary of the Company, as lessor, and Loral Asia, an independent third
party in relation to the leasing of substantially all of the transponder capacities of APSTAR-IIR, one of the satellite
of the Company, for the rest of its useful life for an aggregate lease price of US$304 million (HK$2,356 million
at an exchange rate of HK$7.75:US$1.00).
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The Lease Agreement dated 18th August, 1999
| Parties: | APT (HK), a wholly owned subsidiary of the Company, as lessor | ||
| Loral Asia, an independent third party not connected with the Company, its subsidiaries or any of their respective connected persons, as leasee | |||
| Leased Assets: | Substantially all of the transponders of APSTAR-IIR, one of the three satellites of the Company, for the remaining life of the satellite of approximately 14 years. Upon completion, Loral Asia can either use the transponders capacity itself, or effectively lease it to its own customers. | ||
| Lease Price: | An aggregate of US$304 million, payable by 18 instalments in US dollars within a period of four years | ||
| Major Conditions: | 1. | Approval by shareholders of the company; | |
| 2. | Loral Asia being satisfied with its legal and technical due diligence review; | ||
| 3. | All consents of all persons (including government entities) in connection with the execution, delivery and performance of the Lease Agreement; | ||
| 4. | Execution of a marketing agreement and a services agreement between APT(HK) and Loral Asia; | ||
| 5. | Termination of all liens in respect of APSTAR-IIR and evidence that all documentation duly filed; | ||
| 6. | Loral Asia obtain insurance of APSTAR-IIR; and | ||
| 7. | The Company having contributed to APT(HK) all rights, title and interest the Company or any of its associates may have in and to the APSTAR-IIR assets. | ||
| Guarantee in respect of APT (HK) | The Company will give a guarantee for the due performance by APT (HK) of its obligations under the Lease Agreement. | ||
| Guarantee in respect of Loral Asia | Loral Space & Communications Ltd. will give a guarantee for the due performance by Loral Asia of its obligations under the Lease Agreement. | ||
| Completion: | Two weeks from date of Lease Agreement | ||
APT (HK) will remain as the title owner of APSTAR-IIR and will exercise full control of the satellite through
its satellite control centre in Tai Po, Hong Kong, under its two existing operational licences in respect of APSTAR-IIR
granted by OFTA.
The aggregate lease price was arrived at after arm's length negotiation between the parties with reference to the
rest of the useful life of the satellite which is expected to be 14 years, Loral Asia agrees to pay the lease price
in 4 years time and to lease substantially all of the transponder capacity and the leasing arrangement between
the Company and other independent third parties. The Executive Directors are of the opinion that the lease price
is fair and reasonable so far as shareholders are concerned.
APSTAR-IIR
APSTAR-IIR, a three-axis body-stabilised FS-1300 geostationary satellite supplied by Space Systems/Loral Inc.,
is the third in-orbit satellite of the Company which was successfully launched on board a Long March 3B launch
vehicle on 17th October, 1997. Furthermore, it has very broad footprints covering over 100 countries across Asia,
Europe, Africa and Australia, or approximately 75% of the world's population.
With the rental income over the next four years, the Company will further strengthen its financial position and
will be able to re-allocate its efforts and capital resources in developing, as planned, additional high-power
satellites. The lease income will also help to finance the Company's expansion into satellite businesses, such
as VSAT (very small aperture terminal) services in the People's Republic of China, internet service network and
the satellite television uplink and downlink services as licensed by the Government of Hong Kong in July, 1999.
The Company currently does not have a definite plan to allocate the lease price towards the above proposed projects.
General
The Company and its subsidiaries are engaged in the provision of satellite transponder services for the international
and Asia-Pacific broadcasting and telecommunications sectors.
The transactions contemplated under the Lease Agreement constitute a major transaction under the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited, APT Satellite International Company Limited,
a major shareholder holding 214,200,000 shares of HK$0.10 each, representing approximately 51% of the total issued
share capital of the Company, has given its approval to the entering into the Lease Agreement and transactions
contemplated therein. A circular setting out details of the transactions described above will be despatched to
shareholders as soon as practicable.
Defined Terms used in this Agreement
| "APT" | APT Satellite Co., Ltd., a wholly-owned subsidiary of the Company, incorporated in Hong Kong; |
| "Company" | APT Satellite Holdings Limited; |
| "Loral Asia" | Loral Asia Pacific Satellite (HK) Limited, a company incorporated in Hong Kong and an wholly-owned subsidiary of Loral Space & Communications Limited, a company incorporated in Bermuda (a company listed on the New York Stock Exchange); and |
| "OFTA" | the Office of Telecommunications Authority of the HKSAR Government |
By Order of the Board
Brian Lo
Company Secretary
Hong Kong, 18th August, 1999
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