Satellite broadband operator O3b Networks is in the process of securing fresh financing to fund the construction and launch of additional satellites for its MEO constellation. Responding to a question from SatelliteFinance at the Satellite 2015…
Satellite broadband operator O3b Networks is in the process of securing fresh financing to fund the construction and launch of additional satellites for its MEO constellation.
Responding to a question from SatelliteFinance at the Satellite 2015 conference in Washington DC, O3b CEO Steve Collar said that the company is looking at both debt and equity financing and hopes to complete the transaction in the next couple of months.
Collar said: “We are in the middle of that right now. We think we have a great plan so now we are in the process of financing that plan. It will certainly take the form of additional equity, most likely from our current investors, SES, Google, HSBC, Liberty and the like. And on the debt side it will be a decision to use either our existing pool of lenders, which were largely ECA driven, or whether to look outside that group. This is exactly the analysis that is ongoing at the moment.
“The good thing about the markets being strong is that you do have optionality. It has traditionally been the case that you know when markets are appalling because O3b are generally raising money! That’s not the case this time around I am glad to say but it certainly was back in 2009/10. We definitely have more options today than we had back then.
“It is very much watch this space but we will be done with this within the next two to three months.”
Collar, however, would not be drawn on how much O3b was looking to raise or how many additional satellites the company was planning to order.
The O3b constellation currently comprises 12 satellites with the third batch of four being successfully launched in December 2014. The system now has over 100 Gbps of capacity.
The operator is keen to keep expanding this capacity by adding more and more satellites, with the next order expected to be for a further four or eight spacecraft. Thales Alenia Space has been the prime contractor for the constellation so far.
The first eight satellites were funded under the original US$1.2bn debt and equity financing that O3b secured in late 2010. The company then raised a further US$137m in November 2011, to allow it to purchase four more. That funding was split between a new US$52m private funding round and an US$85m expansion to its existing US$510m Coface-backed senior debt facility.
O3b has also netted around US$320m from insurers over a total loss claim it made last year for its first four satellites. Soon after their launch by Arianespace in June 2013 it became clear that they were suffering an onboard anomaly, although the extent of the problem was unclear and they are still operational.
Portland Advisers and HSBC advised O3b on the debt side of the previous financings.
SES eyes full takeover in next two years
O3b’s largest shareholder, SES, has plans to take over the satellite broadband operator in 2016 or 2017.
The company said it will participate in the current equity financing but also expects O3b’s other shareholders to do so as well. There is believed to be an existing agreement between the investors to take part.
This means that its stake will remain around 47% following the latest financing. But SES told SatelliteFinance that it will probably look to take control of O3b in 2016 or 2017.
The company is very bullish on the long term prospects of O3b’s business and recently started working on the idea of offering services that combine the O3b MEO and SES GEO constellations.
