Item 8.01 Other Events.
As previously disclosed, on December 20, 2020, RigNet, Inc., a Delaware
corporation ("RigNet"), entered into an Agreement and Plan of Merger (the
"Merger Agreement"), by and among RigNet, Viasat, Inc., a Delaware corporation
("Viasat"), and Royal Acquisition Sub, Inc., a Delaware corporation and wholly
owned subsidiary of Viasat ("Acquisition Sub"), pursuant to which Acquisition
Sub will merge with and into RigNet, with RigNet continuing as the surviving
entity and a wholly owned subsidiary of Viasat.
On March 18, 2021, RigNet and Viasat filed a definitive proxy
statement/prospectus (the "Proxy Statement/Prospectus") in connection with the
merger with the Securities and Exchange Commission (the "SEC").
As previously disclosed, since the announcement of the Merger Agreement,
stockholders of RigNet have filed eight complaints against RigNet and its
directors related to the Merger Agreement: Waterman v. RigNet, Inc., et
al., No. 2:21-cv-01160-RBS (E.D. Pa.); Wilhelm v. RigNet, Inc., et al.,
No. 1:21-cv-00674-KMT (D. Colo.); Wheeler v. RigNet, Inc., et al., No.
1:21-cv-00341-CFC (D. Del.); DiMichele v. RigNet, Inc., No. 1:21-cv-01775-GHW
(S.D.N.Y.); Baker v. RigNet, Inc., et al., No. 1:21-cv-00566-MEH (D.
Colo.); Waugh v. RigNet, Inc., et al., No. 1:21-cv-01638-JPO (S.D.N.Y.); Waugh
v. RigNet, Inc., et al., No. 1:21-cv-00499-RM-STV (D. Colo.); and Stein v.
RigNet, Inc., et al., No. 3:21-cv-00289-JLS-BLM (S.D. Cal.). The complaints name
as defendants RigNet and each member of the RigNet board of directors, and in
the case of the Stein, Baker, and Waterman complaints, Viasat.
The complaints allege that the Proxy Statement/Prospectus omits material
information or contains misleading disclosures and that, as a result, defendants
violated Sections 14(a) and 20(a) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). The complaints seek, among other things,
(i) injunctive relief preventing the consummation of the transactions
contemplated by the Merger Agreement, (ii) damages and (iii) plaintiff's
attorneys' and experts' fees and expenses. On February 25, 2021,
the Waugh action filed in the Southern District of New York was voluntarily
dismissed. The seven other actions are still pending. Each of Viasat and RigNet
believes the claims asserted in the complaints are without merit and intends to
vigorously defend against them.
It is possible that additional, similar complaints may be filed or the
complaints described herein may be amended. If this occurs, RigNet does not
intend to announce the filing of each additional, similar complaint or any
amended complaint unless it contains materially new or different allegations.
Supplemental Proxy Statement/Prospectus Disclosure
RigNet does not believe that the supplemental disclosures are required or
necessary under applicable laws. However, in order to minimize the expense of
defending against the complaints and without admitting any liability or
wrongdoing, RigNet is electing to make the supplemental disclosures to the Proxy
Statement/Prospectus set forth below in response to the complaints and solely
for the purpose of mooting the allegations therein. RigNet denies the
allegations of the complaints, and denies any violation of law. RigNet believes
that the Proxy Statement/Prospectus disclosed all material information required
to be disclosed therein, and denies that the supplemental disclosures are
material or are otherwise required to be disclosed. Nothing in the supplemental
disclosures should be deemed an admission of legal necessity or materiality of
any supplemental disclosures under applicable law.
SUPPLEMENT TO PROXY STATEMENT/PROSPECTUS
The disclosures appear under the appropriate section heading that corresponds to
the sections in the Proxy Statement/Prospectus. The Proxy Statement/Prospectus
is amended and supplemented by, and should be read as part of, and in
conjunction with, the information set forth in this Current Report on Form 8-K.
To the extent that information herein differs from or updates information
contained in the Proxy Statement/Prospectus, the information contained herein is
more current. Capitalized terms used but not defined herein have the respective
meanings ascribed to them in the Proxy Statement/Prospectus.
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The Merger-Opinion of RigNet's Financial Advisor-RigNet Financial Analyses
The section of the Proxy/Statement Prospectus "The Merger-Opinion of RigNet's
Financial Advisor-RigNet Financial Analyses" starting on page 60 of the
Proxy/Statement Prospectus is hereby amended and supplemented as follows:
Under the caption "-Selected Comparable Company Analysis" (starting on page 60),
the current first and second paragraphs on page 60 are hereby deleted and
replaced with the following:
"Stifel compared RigNet, from a financial point of view, to seven
publicly-traded business-to-business communications services companies that
Stifel deemed to be relevant based on their business profiles using estimated
financial metrics prepared by RigNet management and provided to Stifel as well
as available public sources. Stifel believed that the companies listed below
have business models similar to those of RigNet, but noted that none of these
companies have the same management, composition, size, operations or financial
profile as RigNet. The group of selected publicly-traded companies reviewed by
Stifel, and the relevant metrics employed by Stifel in its analysis, are as
follows:
EV/Rev EV/EBITDA
Selected Comparables CY 2020 CY 2021 CY 2020 CY 2021
Comtech Telecommunications Corp. 1.0x 1.0x 8.3x 7.9x
Eutelsat Communications S.A. 3.8x 3.9x 5.0x 5.1x
Iridium Communications Inc. 11.3x 10.8x 18.4x 17.6x
KVH Industries, Inc. 1.0x 0.9x N.M. 23.7x
ORBCOMM Inc. 2.9x 2.7x 13.4x 11.4x
SES S.A. 3.6x 3.5x 6.3x 5.7x
Viasat, Inc. 1.6x 1.4x 7.5x 6.3x
Stifel calculated and compared multiples for the selected public companies of
enterprise value ("EV"), which Stifel defined as fully-diluted equity value
using the treasury stock method, plus debt, preferred stock and minority
interests, less cash and cash equivalents, to estimated calendar year 2020 and
2021 (a) revenue and (b) earnings before one-time charges, interest, taxes,
depreciation and amortization ("Adjusted EBITDA"), to the corresponding
multiplier for RigNet implied by the exchange ratio. The following table
summarizes this analysis:"
Under the caption "-Selected Precedent Transactions Analysis" (starting on page
61), the current first paragraph and table following the first paragraph on page
61 are hereby deleted and replaced with the following:
"Based on public information available to Stifel, Stifel calculated the
multiples of EV to last twelve months ("LTM") revenue and LTM EBITDA implied in
the following seven precedent transactions involving communications services
companies that Stifel deemed to have certain characteristics that are similar to
those of RigNet, although Stifel noted that none of the selected transactions or
the companies that participated in the selected transactions were directly
comparable to the merger or to RigNet, respectively. The group of selected
transactions reviewed by Stifel, and the relevant multiples employed by Stifel
in its analysis, are as follows:
Enterprise EV/Rev EV/EBITDA
Value
Announcement Date Acquirer Target ($ in M) LTM LTM
Groupe Circet Eltel AB (German
1/22/20 S.A. Comm. Business) $21 0.5x -
Apax/Warburg Inmarsat Group
3/25/19 Pincus/CPPIB/OTPP Holdings Limited 5,485 3.7x 7.2x
SpeedCast
International Globecomm Systems
8/27/18 Limited Inc. 134 0.9x 8.4x
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Hytera Norsat
Communications International
6/16/17 Co., Ltd. Inc. 54 1.5x 7.9x
SpeedCast
International CapRock
11/1/16 Limited Communications 425 1.2x 7.1x
Global Eagle
Entertainment Emerging Markets
5/9/16 Inc. Communications 550 - -
SkyWave Mobile
11/6/14 ORBCOMM Inc. Communications 130 2.1x 10.4x
Under the caption "-Discounted Cash Flow Analysis" (starting on page 62), the
current first paragraph on page 62 is hereby deleted and replaced with the
following:
"Stifel performed a discounted cash flow analysis of RigNet using the RigNet
projections by: (a) applying a range of exit multiples which Stifel, in its
professional judgment, deemed relevant to RigNet's estimated 2025 EBITDA, which
multiples ranged from 5.0x to 7.0x; and (b) applying a range of perpetuity
growth percentages from 0.00% to 2.00% which Stifel, in its professional
judgment, deemed relevant to RigNet's estimated 2025 unlevered free cash flow,
calculated using discount rates of 12.0% -14.0% based on RigNet's weighted
average cost of capital ("WACC") using the Capital Asset Pricing Model ("CAPM").
The following table reflects the ranges of implied equity values per share
resulting from these analyses:"
The Merger-Opinion of RigNet's Financial Advisor-Viasat Financial Analyses
Under the caption "-Selected Comparable Company Analysis" (starting on page 63),
the current first paragraph and following two tables on page 63 are hereby
deleted and replaced with the following:
"Stifel compared Viasat, from a financial point of view, to nine publicly-traded
satellite communications services companies and five aerospace and defense
companies that Stifel deemed to be relevant based on their business profiles
using estimated financial metrics prepared by Viasat management and provided to
Stifel by RigNet management as well as available public sources. Stifel believed
that the companies listed below have business models similar to those of Viasat
given that Viasat has both satellite communications services and government
business segments, but noted that none of these companies have the same
management, composition, size, operations or financial profile as Viasat. The
group of selected publicly-traded companies reviewed by Stifel, and the relevant
metrics employed by Stifel in its analysis, are as follows:
Satellite Communications Services
EV/Rev EV/EBITDA
Selected Comparables CY 2020 CY 2021 CY 2020 CY 2021
Comtech Telecommunications Corp. 1.0x 1.0x 8.3x 7.9x
EchoStar Corporation 0.9x 0.8x 2.8x 2.6x
Eutelsat Communications S.A. 3.8x 3.9x 5.0x 5.1x
Gogo Inc. 5.4x 5.3x 18.1x 16.7x
Iridium Communications Inc. 11.3x 10.8x 18.4x 17.6
KVH Industries, Inc. 1.0x 0.9x 6.4x 4.9x
ORBCOMM Inc. 2.9x 2.7x 13.4x 11.4x
RigNet, Inc. 1.0x 0.9x 6.4x 4.9x
SES S.A. 3.6x 3.5x 6.3x 5.7x
Aerospace and Defense
EV/Rev EV/EBITDA
Selected Comparables CY 2020 CY 2021 CY 2020 CY 2021
BAE Systems plc 0.9x 0.8x 7.1x 6.5x
General Dynamics Corporation 1.5x 1.4x 11.1x 10.8x
L3Harris Technologies, Inc. 2.5x 2.3x 13.1x 11.1x
Northrop Grumman Corporation 1.7x 1.6x 12.2x 11.5x
Thales S.A.
1.1x 1.0x 9.0x 7.4x
Under the caption "-Discounted Cash Flow Analysis" (starting on page 65), the
current first paragraph on page 65 is hereby deleted and replaced with the
following:
"Stifel performed a discounted cash flow analysis of Viasat using the Viasat
projections by: (a) applying a range of exit multiples from 5.0x to 7.0x and
8.5x to 10.5x that Stifel, in its professional judgment, deemed relevant to
Viasat's estimated 2024 EBITDA for its Satellite Services / Commercial segment
and Government segment, respectively; and (b) applying a range of perpetuity
growth percentages from 1.00% to 3.00% which Stifel, in its professional
judgment, deemed relevant to Viasat's estimated 2024 unlevered free cash flow,
calculated using discount rates of 7.0% - 9.0% based on Viasat's WACC using the
CAPM. The following table reflects the ranges of implied equity values per share
resulting from these analyses:"
Important Additional Information and Where to Find It
This communication does not constitute an offer to buy or sell or the
solicitation of an offer to buy or sell any securities or a solicitation of any
vote or approval. In connection with the proposed merger, Viasat previously
filed with the SEC a registration statement on Form S-4, which includes the
Proxy Statement/Prospectus and was declared effective by the SEC on March 18,
2021. STOCKHOLDERS ARE URGED TO READ THE PROXY STATEMENT/PROSPECTUS, THE
REGISTRATION STATEMENT AND OTHER DOCUMENTS THAT MAY BE FILED WITH THE SEC
REGARDING THE TRANSACTION CAREFULLY AND IN THEIR ENTIRETY IF AND WHEN THEY
BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. These
documents contain important information about the proposed transaction that
should be read carefully before any decision is made with respect to the
proposed transaction. These materials will be made available to stockholders of
RigNet at no expense to them. Investors are able to obtain free copies of these
documents and other documents filed with the SEC by RigNet and/or Viasat through
the website maintained by the SEC at http://www.sec.gov. Copies of the documents
filed with the SEC by RigNet are available free of charge on RigNet's internet
website at http://www.rig.net. Copies of the documents filed with the SEC by
Viasat are available free of charge on Viasat's internet website at
http://www.viasat.com.
Participants in the Solicitation
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Viasat, RigNet, their respective directors and certain of their respective
executive officers may be considered, under SEC rules, participants in the
solicitation of proxies from the stockholders of RigNet in connection with the
proposed transaction. Information about the directors and executive officers of
RigNet is set forth in its Annual Report on Form 10-K for the year ended
December 31, 2020, which was filed with the SEC on March 15, 2021, and its proxy
statement for its 2020 annual meeting of stockholders, which was filed with the
SEC on March 30, 2020. Information about the directors and executive officers of
Viasat is set forth in its Annual Report on Form 10-K for the year ended March
31, 2020, which was filed with the SEC on May 29, 2020, and its proxy statement
for its 2020 annual meeting of stockholders, which was filed with the SEC on
July 23, 2020. These documents can be obtained free of charge from the sources
indicated above.
Forward Looking Statements
This report includes "forward-looking statements" within the meaning of the safe
harbor provisions of the United States Private Securities Litigation Reform Act
of 1995 - that is, statements related to future, not past, events.
Forward-looking statements may include comments about the expected benefits of
the transaction, potential value to be realized by RigNet's stockholders, timing
of and ability to ultimately close the transaction, Viasat's financial position
and long-term strategy, the nature of any synergies, and other similar
statements. Forward-looking statements are based on current expectations and
include any statement that does not directly relate to a current or historical
fact. In this context, forward-looking statements often address RigNet's
expected future business and financial performance, and often contain words such
as "anticipate," "believe," "intend," "will," "expect," "plan" or other similar
words. These forward-looking statements involve certain risks and uncertainties,
including those risks set forth in Item 1A - Risk Factors of RigNet's most
recent 10-K filing and ultimately may not prove to be accurate. Actual results
and future events could differ materially from those anticipated in such
statements. For further discussion of risks and uncertainties, individuals
should refer to RigNet's SEC filings. RigNet undertakes no obligation and does
not intend to update these forward-looking statements to reflect events or
circumstances occurring after this report. You are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of the date of
this report. All forward-looking statements are qualified in their entirety by
this cautionary statement.
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