Satellite imaging provider GeoEye has launched a US$125m senior secured bond offering. The notes priced at par to yield 8.625% and are due October 1, 2016.
Proceeds are to be used for general corporate purposes, including working capital, future…
Satellite imaging provider GeoEye has launched a US$125m senior secured bond offering. The notes priced at par to yield 8.625% and are due October 1, 2016.
Proceeds are to be used for general corporate purposes, including working capital, future production and services expansion, as well as contingent capex.
While senior, the notes, which will be secured by secondpriority liens on all of the company’s assets, are effectively subordinated to GeoEye’s existing 9.625% Senior Secured Notes due 2015.
Interest will be paid semi-annually, on 1 April and 1 October of each year, and will accrue from October 8, 2010, subject to the satisfaction or waiver of customary closing conditions.
JPMorgan, BofA Merrill Lynch, and Deutsche Bank are joint book-running managers for the offering, while Canaccord Genuity, Dougherty & Company, Merriman Capital and Raymond James are co-managers. The funding comes just a few weeks after GeoEye raised US$78m via an equity financing from Cerberus Satellite, the investment vehicle of private equity firm Cerberus Capital Management. The transaction consisted of a private placement of 80,000 preferred shares at a conversion price of US$29.76 per share giving Cerberus a stake of around 11%.
GeoEye said it would use the gross proceeds from the placement 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. The agreement also included an option for Cerberus to purchase US$100m of senior unsecured notes from GeoEye. The senior notes were to mature on April 1, 2016 and pay an interest rate of 8% plus three month Libor, or a further 2%, depending on which is greater.
However, in the case GeoEye was awarded an EnhanceView contract without the letter of credit, the two companies had agreed that Cerberus would 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 GeoEye-2. As part of its decision, the NGA decided to drop the requirement for the letter of credit meaning that Cerberus went ahead with the second option to acquire 80,000 preferred shares.
GeoEye was advised on the Cerberus deal by Convergence Advisors and Houlihan Lokey.
