Eutelsat Shareholders Face Dilution as Deeply Discounted Capital Raise Begins

Friday marks a pivotal and painful moment for investors in Eutelsat. The satellite operator is urgently seeking fresh capital to fund its strategic ambitions, forcing existing shareholders to confront a significant dilution of their holdings. This drastic move, involving new shares issued at a steep discount, raises a critical question: is this a necessary rescue financing or the beginning of a prolonged erosion of shareholder value?

A Costly Capital Injection

The subscription period for the highly anticipated capital increase is now open, revealing challenging terms for the market. In an effort to raise approximately €670 million, the company is issuing new shares at a price of just €1.35 each. This represents a substantial discount compared to the recent trading price of around €2.16, explaining the intense selling pressure witnessed in recent sessions.

Shareholders who fail to act decisively face immediate financial loss. Through the mechanism of value transfer, investors who neither exercise nor sell their subscription rights will suffer a direct economic dilution of their existing stake.

A Tale of Two Share Prices

The situation appears even more striking when compared to a private placement concluded just last week. Anchor investors, including the French state and Bharti Space, participated in an exclusive capital round, paying a hefty €4.00 per share. The fact that the broader investor base is now being offered entry at a fraction of that price—essentially forced to participate to avoid dilution—highlights the company’s pressing need for cash.

Should investors sell immediately? Or is it worth buying Eutelsat?

Eutelsat requires every euro to reduce its substantial debt load and finance the expensive build-out of its OneWeb low-Earth orbit (LEO) satellite constellation. Investors are navigating turbulent waters, essentially placing a bet on the future of LEO technology, a wager paid for by a massive devaluation of pre-existing shares.

Operational Stability Amid Financial Turmoil

Amid these financial maneuvers, there is a glimmer of operational stability. The company has secured a contract extension with the Cinecolor Group for the Latin American market. This demonstrates that the traditional core business continues to generate revenue, even as the market’s focus remains fixed on the capital raise calendar.

The key details for shareholders to note are:

• Subscription Ratio: 8 new shares for every 11 existing shares held.
• Rights Trading: Subscription rights will be traded until December 5.
• Final Deadline: The subscription period concludes on December 9.

For investors, this is a time for careful calculation and decisive action. Elevated share price volatility is likely to persist until the market fully absorbs the new shares. The ultimate success of this strategy in meaningfully reducing the company’s debt burden will only become clear over the coming quarters. Until then, Eutelsat stock remains a highly speculative and volatile holding.