Asia Broadcast Satellite and Satmex are both actively seeking support from the US Export Import Bank to help fund both the construction and launch of their recently ordered all-electric satellites.
Speaking to SatelliteFinance, ABS’ co-founder and CEO…
Asia Broadcast Satellite and Satmex are both actively seeking support from the US Export Import Bank to help fund both the construction and launch of their recently ordered all-electric satellites.
Speaking to SatelliteFinance, ABS’ co-founder and CEO Thomas Choi said that the company was applying to the US ECA for a loan guarantee for the two 702SP satellites that it has ordered from Boeing, the first of which is due to be launched by SpaceX in a dual-satellite payload between late 2014 and early 2015.
Choi added that the application has been made alongside ABS’ bid for ExIm Bank support for the ABS-2 satellite that is currently being constructed by Space Systems Loral.
However, the ABS chief executive did point out that the condosat deals it has signed with Asian telecoms operators Korea Telecom and Singtel have given the ABS around US$250m in cash that could be put towards the cost of the new satellites.
HSBC and ING are advising ABS on the ECA process. Both banks helped arrange ABS’ US$215m loan that it secured back in May 2011.
As for Satmex, the company noted in an SEC filing that the new satellite, called Satmex 7, would be funded through a combination of financing options including a tack-on offering of its 9.5% senior secure notes due 2017, cash flow from operations and a potential ExIm-supported loan. Well-place sources have told SatelliteFinance that Satmex has already applied for export credit financing.
Satmex also stated that the design, construction, launch and insurance costs of Satmex 7 are expected to be approximately US$165m. Given the nature of the joint procurement agreement, it is likely that ABS is paying around the same amount for ABS-3A. This would equate to less than half the total cost of ABS-2.
One of the reasons for the low price is that ABS and Satmex are the anchor customers for Boeing’s all-electric 702SP platform. Choi explained that Boeing had been looking to for a first customer for its 702SP programme but wanted a four satellite commitment, something ABS could not do. The joint-procurement contract with Satmex then came about through the work of ABS chairman Jim Frownfelter.
The former PanAmSat and Intelsat chief operating officer is on the board of Satmex and knowing they were in need of a satellite to replace Solidaridad 2 brought the two satellite companies together.
Under the joint procurement agreement, ABS committed for two satellites and Satmex one. Both companies have an option on the fourth satellite and have each paid 50% of the initial deposit. A decision on who will purchase the spacecraft is due to be made at a later date.
Under the contract, Boeing has also granted ABS and Satmex the right to purchase up to four additional satellites. The options expire between 13 April 2014 and 13 October 2015, unless the two satellite operators terminate the obligation to buy the fourth satellite of the first batch in which case the option will end.
Milbank provided legal advice to ABS on the joint procurement contracts.
