Iridium is in active discussions with and has made applications to both the French and US export credit agencies, Coface and the Export-Import Bank, to secure a financing package to partially fund its next generation constellation, Iridium NEXT.
The…
Iridium is in active discussions with and has made applications to both the French and US export credit agencies, Coface and the Export-Import Bank, to secure a financing package to partially fund its next generation constellation, Iridium NEXT.
The satellite operator has mandated Goldman Sachs, Societe Generale and Hawkpoint to advise it on securing ECA backing. Societe Generale has worked on the Coface-backed financing facilities for Globalstar, O3b Networks and SES.
Iridium revealed more details about its external financing plans in an investor presentation released in its SEC filings. The company outlined that it is seeking ECA support for a facility of up to US$1.5bn. The debt would have a term of up to ten years with repayment anticipated to begin in 2017. Iridium also stipulated that it would seek the same favourable financing terms that Globalstar achieved on its Coface backed debt facility.
The company added that if the final ECA backed financing is not sufficient for its requirements then the remainder would be secured thorough additional unsecured / subordinated corporate debt.
Iridium said that the ECA-backed debt financing ‘would likely be issued in conjunction with signing with a prime contractor to build Iridium NEXT constellation.’ Indeed, the ability to secure export credit support is a key factor in determining whether Lockheed Martin or Thales Alenia Space will be selected.
Iridium CEO Matt Desch previously told SatelliteFinance: “Both (Lockheed and Thales) understand that providing low cost and attractive financing might be what separates the winner from the loser, and Export Credit Agency financing is certainly the most attractive form of financing available right now.”
Iridium stated that it anticipates securing ECA financing by mid-2010 in conjunction with the selection of the Iridium NEXT prime contractor. The initial batch of satellites from the new constellation is then expected to be launched in 2014, which is also when the company anticipates its cap ex requirements for the new system will reach their peak.
Iridium has always maintained that it will fund a substantial portion of the expected US$2.7bn cap ex requirement for Iridium NEXT from internal sources and in the investor presentation it broke down the size of the estimated funding sources. Iridium stated that approximately 50% would be funded through internally generated operational cash flow, around 35% through external capital, 10% through warrant proceeds and 5% through cash on hand. As of September 30, 2009, Iridium’s net cash position was US$127m.
Meanwhile, Iridium has announced that it has selected Hughes Network Systems to develop an Access Network Controller (ANC) in its gateway ground radio control network. The ANC is part of a multi-year plan for Iridium to upgrade and evolve its gateway network in preparation for Iridium NEXT.
Under the development contract, Hughes will design and supply a fully tested, turnkey ANC system, which will be integrated with Iridium’s existing system, together with training and maintenance. Iridium expects the ANC to be complete and operational by the fourth quarter of 2011.
