Satellite imaging provider GeoEye has announced it raised US$78m through the private placement of 80,000 preferred shares at a conversion price of US$29.76 per share to Cerberus Satellite, the investment vehicle of private equity firm Cerberus Capital…
Satellite imaging provider GeoEye has announced it raised US$78m through the private placement of 80,000 preferred shares at a conversion price of US$29.76 per share to Cerberus Satellite, the investment vehicle of private equity firm Cerberus Capital Management, giving the latter a stake of around 10%.
GeoEye said it will use the gross proceeds to develop and launch its GeoEye-2 next-generation imaging satellite.
The stock purchase comes approximately six months after Cerberus signed a financing agreement to support GeoEye in its bid for the US National Geospatial-Intelligence Agency (NGA) EnhancedView award.
The NGA had specified that all parties bidding for government support in the building of a satellite to supply EnhanceView imagery must provide a letter of credit proving they had the necessary collateral to back such a project.
The financing arrangement with Cerberus enabled GeoEye to commit to this letter of credit with the private equity group agreeing to purchase US$115m in GeoEye’s preferred stock, giving it a 15.4% stake. However, under the arrangement if GeoEye was awarded an EnhanceView contract without the letter of credit then Cerberus will only have the option to purchase 80,000 preferred shares for US$78m.
In August, GeoEye was awarded a US$3.8bn contract from the NGA with the agency agreeing to contribute US$336.9m towards the construction of Geo Eye-2. GeoEye stated that Cerberus’ commitment “was conditioned upon the final award to GeoEye of a satellite under the program.”
The financing agreement between the two companies also included an option for Cerberus to purchase US$100m of senior unsecured notes form GeoEye but no announcement has been made about this deal. The senior notes were to mature April 1, 2016 and pay an interest rate of 8% plus three month LIBOR, or a further 2%, depending on which is greater.
GeoEye was advised on the Cerberus deal by Convergence Advisors and Houlihan Lokey.
