Global High Yield & Leveraged
Finance Conference
Finance Conference
February 2009
Safe Harbor
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995:
This presentation includes “forward looking statements.” All statements other than statements of
historical facts included in this presentation regarding the prospects of our industry and our
prospects, plans, financial position and business strategy, may constitute forward looking
statements. These statements are based on the beliefs and assumptions of our management and
on the information currently available to our management at the time of such statements. Forward
looking statements generally can be identified by the words “believes,” “expects,” “anticipates,”
“intends,” “plans,” “estimates” or similar expressions that indicate future events and trends.
Although we believe that the expectations reflected in these forward-looking statements are
reasonable, these expectations may not prove to be correct. Important factors that could cause
actual results to differ materially from our expectations are disclosed in our filings with the United
States Securities and Exchange Commission (“SEC”). All subsequent written and oral forward-
looking statements attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements included our SEC filings. Factors, risks and
uncertainties that could cause actual outcomes and results to be materially different from those
projected include, but are not limited to, our ability to obtain financing, obtain and maintain
regulatory approvals, generate sufficient cash flows, develop our universal chipset architecture,
achieve market acceptance for our services, develop our network and generate technological
innovations.
historical facts included in this presentation regarding the prospects of our industry and our
prospects, plans, financial position and business strategy, may constitute forward looking
statements. These statements are based on the beliefs and assumptions of our management and
on the information currently available to our management at the time of such statements. Forward
looking statements generally can be identified by the words “believes,” “expects,” “anticipates,”
“intends,” “plans,” “estimates” or similar expressions that indicate future events and trends.
Although we believe that the expectations reflected in these forward-looking statements are
reasonable, these expectations may not prove to be correct. Important factors that could cause
actual results to differ materially from our expectations are disclosed in our filings with the United
States Securities and Exchange Commission (“SEC”). All subsequent written and oral forward-
looking statements attributable to us or persons acting on our behalf are expressly qualified in
their entirety by the cautionary statements included our SEC filings. Factors, risks and
uncertainties that could cause actual outcomes and results to be materially different from those
projected include, but are not limited to, our ability to obtain financing, obtain and maintain
regulatory approvals, generate sufficient cash flows, develop our universal chipset architecture,
achieve market acceptance for our services, develop our network and generate technological
innovations.
The forward-looking statements in this presentation are made only as of the date of this
presentation.
presentation.
We undertake no obligation to update or revise the forward-looking statements, whether as a
result of new information, future events or otherwise.
result of new information, future events or otherwise.
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TerreStar Networks
• Owned by U.S. publicly-traded TerreStar Corporation (NASDAQ: TSTR)
• Funded into 2010
– Viable, stable and innovating
• Unique spectrum position
– 20 MHz of spectrum in 2 GHz range
– 8 MHz of nationwide 1.4 spectrum
• Most advanced, powerful commercial communications satellite
– Scheduled launch (TerreStar -1) 2nd Quarter 2009
• Channel partners in place (AT&T Roaming Agreement)
• Government CRADA extended through Oct 2010
• Holistic Technology Ecosystem
– Integrated satellite/ ground-based design
– Flexible device form factors
• Handsets similar to today’s cellular devices
• Mobile data modems
• Chipsets for OEM integration
• Typical mobile devices can be enabled
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Integrated Network Architecture
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Significant Development Progress
TerreStar Networks Strategy
| Perfect the Spectrum and Secure the License |
| ü | Successful Satellite Launch |
ü | Integrated Satellite-Terrestrial Device |
Minimize Risk |
| ü | Experienced Management |
| ü | Market-Defining Technology |
ü | Tier 1 Partners and Suppliers |
Prudent Capital Plan |
| ü | Targeted and Prioritized Technology Spend |
| ü | Aggressive Operating Expense Reduction |
ü | Restructured Agreements with Partners and Suppliers |
Assets and Capabilities
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| • | Most powerful two-way commercial communications geostationary satellite in final testing |
| • | Beam coverage: United States, Canada, Puerto Rico, Hawaii and Alaska |
| • | Capable of generating approximately 500 simultaneous spot beams |
| • | TerreStar-2 underway |
| • | 2 satellite Gateways licensed, ground segments near completion |
| • | ATC global IP license portfolio |
Industry-Leading Partners and Suppliers
Critical Partner Ecosystem is in place and executing to plan
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Satellite
OSS/BSS
Devices
Network
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TerreStar vs. the Competition
LEO, 66 satellites, global
including polar
including polar
Legacy system
Large $1500 handset
2.4k voice, 2.4k data
$1-2/min
LEO, 40 satellites,global
Legacy system
Large expensive handsets
Voice, Data up to 9.6 kbps
Failing satellite system
GEO, single satellite covering
US and Canada
US and Canada
Next gen system with
configurable spot beams
Mobile video to vehicle platform
(MIM - Mobile Interactive Media) for
video and two-way messaging
GEO, two satellite covering
US and Canada
Current legacy system: GEO two satellites
covering N, central and part of S. America
Large expensive terminals $4000+
Planned next gen system similar to TerreStar’s
Global coverage
Legacy system
Very large, expensive
terminals & devices
Voice, data up to 492 kbps
GEO, single satellite covering US and Canada
Next gen system with configurable spot beams
Voice, data up to 400 kbps
Broadcast mobile video capable
PDA size GSM/satellite handsets at prices slightly higher
than standard cellular PDAs (~$700 initially, ~$500 with volume)
Canadian public safety interoperability at
federal/provincial/local levels with US
security/public safety cross-border
counterparts
federal/provincial/local levels with US
security/public safety cross-border
counterparts
Participating in (CITIG) domestic and cross-
border Canadian public policy safety initiative
border Canadian public policy safety initiative
Leveraging Global Growth Opportunities
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Partner with Existing and Incumbent
Wireline & Wireless Opportunities
Wireline & Wireless Opportunities
Satellite Roam-in service with MNO’s (AT&T Roaming
agreement)
Remote Connectivity
Business continuity, productivity
Full Business Partnerships for new entrant
Telematics & Machine-to-Machine Business Models
Leveraging economies of scale
‘First-to-MSS-market’ competitive
advantage to drive market development
advantage to drive market development
The TerreStar Europe 2GHz MSS S-Band
Spectrum Authorization Application has been
deemed admissible to the European
Commission Global selection process
Spectrum Authorization Application has been
deemed admissible to the European
Commission Global selection process
Satellite Critical Design Review expected to be
complete by Feb 3 and submitted to the EU by
Feb 7
complete by Feb 3 and submitted to the EU by
Feb 7
Fail safe service when Land Mobile Radio
(LMR) and Cellular service is unavailable
(LMR) and Cellular service is unavailable
Focus on Emergency Responders, Law
Enforcement and National Security users
Enforcement and National Security users
Federal, State and Local
Target Opportunities
Emergency Responders & National Security
FEDERAL - - DOD DHS, DOJ. DOE, USFS, DOI, HHS
STATE - National Guard, State DHS, State Police,
First Responders
Commercial
Government
Financials
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Consolidated Condensed
Balance Sheet 9/30/2008
Balance Sheet 9/30/2008
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| Unaudited - $ in millions | |||||||||
| Cash and equivalents | $ | 296 | Accounts payable and accrued expenses | $ | 32 | ||||
| Other current assets | 12 | Dividends payable on Series A & B | 13 | ||||||
| Total current assets | 308 | Total current liabilities | 45 | ||||||
| Fixed assets | 698 | Notes and accrued interest | 877 | ||||||
| Intangible assets | 476 | Other long term liabilities | 4 | ||||||
| Other long term assets | 20 | 881 | |||||||
| Total assets | $ | 1,502 | |||||||
| Series A convertible preferred stock | 90 | ||||||||
| Series B convertible preferred stock | 319 | ||||||||
| All other equity and APIC | 1194 | ||||||||
| Accumulated deficit | (1,027 | ) | |||||||
| $ | 1,502 | ||||||||
| Projected Capital Expenditures | Oct 2008 – Sept 2009 | ||||
| Capital Expenditure Contractual Commitments [1] | $116 | ||||
| Launch Insurance | $40-$50 | ||||
| Total | $156-$166 | ||||
[1] Includes TerreStar 1, TerreStar 1 Launch and Handset/Chipset; Does not include TerreStar 2
Capitalization
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**All numbers as of 9/30/2008
**All numbers in $M unless otherwise stated
Cash and Cash Equivalents | $293 |
Escrow for TerreStar-1 construction | 3 |
Satellites and assets under construction | 682 |
Intangible assets | 476 |
Total | $1,454 |
Senior Secured PIK Notes | 633 |
New Sr. Sec. PIK Notes | 52 |
Senior Exchangeable Notes | 157 |
Credit Facility for TS-2 | $35 |
Total Debt | $877 |
Preferred Equity | 409 |
Current Share Price | 1 |
Common Shares Outstanding | 121 |
Market Value of Equity | $121 |
Enterprise Value | $1,407 |
Face Amount:
Maturity:
PIK Interest:
Key Covenants:
Face Amount:
$150M
Maturity:
6/15/2014
Interest &
Conversion
Face Amount:
$100M-
outstanding $35M
Maturity:
2/5/2013
Interest
Key Covenants:
Notification req'd 10 days prior
to satellite payment
PIK thru 2/2012 at 14% interest
2/14/2014
15% on 2/15 & 8/15
No additional indebtedness and a
greater leverage ratio of 6.75X
on a pro forma basis
PIK thru 3/2011 at 6.5%
interest. Convertible to 26.9M
TSTR common shares at
$5.57/per share
$500M $50M
Senior Secured PIK Notes:
Senior Exchangeable Notes:
Restricted Credit Facility
Preferred Stock: due 4/15/2010
Series A: $90M
Series B: : $318.5M
Convertible into Common Stock at a rate of
30:1 (strike price of $33.33). Dividends Paid
or PIK’d on 4/15 & 10/15
Series E:
1.9M shares convertible into Common Stock at
a rate of 25:1 (strike price $25.00) 1.2M
converted on 6/10/2008
Questions?
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Thank You!
TerreStar Contact:
Vincent Loiacono
Chief Accounting Officer
703-483-7807
Vincent.loiacono@terrestar.com
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