MSS operator Iridium is raising nearly US$100m through a private offering of one million shares of preferred stock.
The shares, of 7% Series A cumulative perpetual convertible preferred stock, will have a liquidation preference of US$100 each.
The…
MSS operator Iridium is raising nearly US$100m through a private offering of one million shares of preferred stock.
The shares, of 7% Series A cumulative perpetual convertible preferred stock, will have a liquidation preference of US$100 each.
The operator said the dividend on the preferred stock, equivalent to an annual rate of US$7 per share, will be payable quarterly in arrears, commencing on 15 December 2012. Holders of the equity will have the option of converting it at an initial rate of 10.6022 shares of common stock per share of preferred stock. This is equivalent to a conversion price of approximately US$9.43 per share.
Raymond James & Associates is acting as initial purchaser of the shares, and has agreed to acquire them for US$96.85 each. This represents a total discount of US$3.15m, and around US$97m in net proceeds for Iridium. Raymond James & Associates will sell the stock to qualified buyers for US$100 per share.
On or after 3 October 2017, Iridium has the option of converting some or all of the preferred stock into common at the then prevailing conversion rate.
Last month, Iridium amended its US$1.8bn Coface credit facility to allow the group to raise the capital. The amendment was made in case it failed to net US$100m from the conversion of its outstanding US$7 per share warrants by their February 2013 deadline.
Following the preferred stock offering, the company plans to exchange these outstanding warrants for common stock. In an exchange offer that could commence as early as 1 October, one share of common stock will be offered for every six of the US$7 warrants tendered. This is equivalent to 0.1667 shares of common stock for every one of the warrants tendered.
Iridium CEO Matt Desch explained: “The preferred stock offering we announced today satisfies our capital raise obligation under our recent credit facility amendment and is part of our fully funded plan for the construction of our next generation satellite constellation, Iridium NEXT.
“With that obligation satisfied, the warrant proceeds are no longer required, and we can undertake the planned warrant exchange tender offer.”
On 24 September, Iridium agreed to an exchange under this offer with T2 Partners Management, the largest holder of its outstanding US$7 warrants. The operator issued 562,370 new common shares for 3,374,220 of the warrants, reflecting roughly 27% of those outstanding.
According to Iridium, following this transaction, the company has 8,979,434 of the warrants outstanding.
