Exclusive: Hughes Communications up for sale: sources

NEW YORK Thu Jan 20, 2011 9:06pm EST

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NEW YORK (Reuters) - Hughes Communications Inc HUGH.O, majority owned by private equity firm Apollo APOLO.UL, has hired Barclays Capital (BARC.L) to advise on a sale of the company, people familiar with the matter said.

Broadband satellite services company Hughes, in which Apollo has a 57 percent stake, has received a first round of bids and drawn interest mostly from other private equity firms and several satellite firms, four sources told Reuters on Thursday.

A second round of bids is expected for early February, one of the sources said.

Hughes shares surged as much as 30 percent to their highest level in about three years. The stock closed up 10.9 percent at $51.49 on the Nasdaq stock exchange on Thursday, valuing the company at more than $1.1 billion.

Headquartered in Germantown, Maryland, Hughes is one of the world's largest providers of broadband satellite services and its systems support high-speed Internet access, video conferencing and VoIP (voice over Internet protocol) telephony.

The company provides managed network services for a number of large enterprises -- including Wal-Mart (WMT.N), General Motors (GM.N) and Best Buy (BBY.N) -- as well as government agencies and households.

The sale of Hughes would allow Apollo, which has been a major shareholder in the company since late 2004, to exit its investment. Barclays has offered staple financing -- so called because details of the financing are stapled to the back of a deal sheet -- to potential buyers, one of the sources said.

The sources asked not to be named because they were not authorized to speak with the media. Representatives for Hughes and Barclays declined to comment, while Apollo was not immediately available for comment.

Leveraged buyouts of satellite companies over the past few years have left very few public. And once private, these companies have changed hands among private equity investors.

Intelsat, which was taken private in 2004 by four private equity firms -- Apax Partners, Permira, Apollo and Madison Dearborn Partners -- in a $3.1 billion leveraged buyout, sold a majority stake to BC Partners in 2007.

Meanwhile, Canadian satellite firm Telesat, which is privately held, is also up for sale and in the early stages of its auction process, said a person familiar with the situation.

It could also be shopped to the same type of buyers as those interested in Hughes, said that person.

Hughes Communications posted $54 million in operating income in the first nine months of 2010 on revenues of $761.8 million.

(Reporting by Soyoung Kim and Nadia Damouni; editing by Andre Grenon, Phil Berlowitz)

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