Satellite imagining operator DigitalGlobe is out with a US$1.2bn debt financing that will be used to fund its US$900m acquisition of rival GeoEye.
The debt is split between US$700m of new bank debt and US$500m of senior unsecured notes. Morgan Stanley…
Satellite imagining operator DigitalGlobe is out with a US$1.2bn debt financing that will be used to fund its US$900m acquisition of rival GeoEye.
The debt is split between US$700m of new bank debt and US$500m of senior unsecured notes. Morgan Stanley and Bank of Tokyo-Mitsubishi UFJ are understood to be lead arrangers on the deal.
The bank facility comprises a US$550m senior secured term loan due 2020 and a US$150m revolving credit facility due 2018. The bond offering takes the form of US$500m in senior unsecured notes due 2021.
Ratings agency Standard & Poor’s has given the bank debt a BBB- rating and the notes a BB rating, reasoning that while the proposed merger will significantly strengthen DigitalGlobe’s market position, particularly in relation to the National Geospatial-Intelligence Agency’s EnhancedView contract, the company still retains an ‘aggressive’ financial risk profile.
The ratings agency estimates that DigitalGlobe’s total debt to EBITDA, including an adjustment for operating leases, will rise above 4 times in 2013 and funds from operations to total debt will decline below 20% in 2013, due to the acquisition of GeoEye.
Having secured Department of Justice approval for the deal earlier this month, DigitalGlobe and GeoEye expect to complete their merger by 31 January.
The deal is now just awaiting approval from the Federal Communications Commission and the National Oceanic and Atmospheric Administration.
