In a significant development within the satellite communications industry, Appaloosa LP, which oversees funds with substantial economic stakes in both SES and Intelsat, has submitted proposals to the SES Board of Directors. These recommendations aim to address critical issues related to corporate governance, capital allocation, and management accountability. The investment firm believes that while the merger between SES and Intelsat offers potential synergies, further reforms are necessary for SES to thrive in today's competitive market. Appaloosa’s proposals include revising the shareholder structure to eliminate disparities between voting rights and economic interests, as well as addressing the company's historical underperformance in generating shareholder returns. The SES Board has acknowledged receipt of the letter and will evaluate the proposals before making recommendations to shareholders.

On February 27th, Appaloosa LP issued a statement emphasizing its long-term commitment as a major investor in SES. The firm expressed support for the proposed merger with Intelsat, recognizing the potential benefits this combination could bring. However, Appaloosa also highlighted the urgent need for SES to adapt to modern business practices. According to Appaloosa, SES must move away from its traditional government-backed model and embrace a more commercially driven culture. This shift is deemed crucial for the company to overcome current challenges and remain competitive in an evolving industry landscape.

A key concern raised by Appaloosa pertains to the existing shareholder structure at SES. Currently, the Luxembourg Government holds a separate class of shares (Class B) that grants disproportionate voting power compared to its economic stake. Specifically, the government controls 33.33% of the voting rights despite owning only 16.67% of the economic interest. Appaloosa argues that this imbalance undermines the interests of other shareholders and discourages investment. To address this issue, Appaloosa proposes converting Class B shares into Class A shares at a conversion rate of 0.4 to 1, ensuring a single share class where the government retains a 16.67% participation without special privileges. Additionally, Appaloosa suggests incorporating specific provisions in the company’s articles of association or through contractual agreements to protect the Luxembourg Government’s interests.

Appaloosa’s critique extends beyond the shareholder structure, focusing on SES’s poor track record in capital deployment and operational execution. The firm points out that SES shares trade at a significant discount to their book value, reflecting investors' concerns about the company’s ability to generate adequate returns. Despite recent speculation over potential spectrum sales, the overall performance remains subpar. Appaloosa warns that unless SES can restore market confidence in its capital management, the company’s long-term prospects will remain uncertain. While the Intelsat acquisition may provide some short-term relief, fundamental changes are essential for SES to regain its footing in the industry.

The SES Board has confirmed receipt of Appaloosa’s letter and intends to carefully review the proposals. The board will assess the suggested reforms and provide guidance to shareholders in due course. This evaluation process underscores the importance of addressing the governance and structural issues raised by Appaloosa. As SES prepares to navigate the complexities of the modern satellite industry, the board’s response will play a pivotal role in shaping the company’s future direction and ensuring it meets the expectations of all stakeholders.