SatelliteFinance understands that syndication on MSS operator Iridium’s Coface-backed US$1.8bn credit facility is close to completion. The debt is integral to financing the construction of Iridium’s second generation satellite constellation NEXT, the…
SatelliteFinance understands that syndication on MSS operator Iridium’s Coface-backed US$1.8bn credit facility is close to completion. The debt is integral to financing the construction of Iridium’s second generation satellite constellation NEXT, the total cost of which is estimated to be US$2.9bn.
Sources familiar with the facility said that it is a senior secured term loan with a maturity of around ten years. Interest on the debt is expected to be close to that which Globalstar secured on its Coface-backed US$586.3m senior secured credit facility back in mid-2009. That facility beared an interest rate of between 207bp and 225bp over a floating LIBOR, which is capped at 4%. However, unlike the Globalstar loan, this latest facility is not conditional on Iridium completing a number of additional financing agreements.
Participating banks are understood to have been offered tickets of US$350m or US$250m with the banking group comprising a mix of European, Anglo-Saxon and Japanese banks.
The debt contains the usual financial covenants, such as an agreed debt to EBITDA leverage ratio, but also a number of terms more directly connected to the construction of Iridium NEXT. As one banker said: “The facility has been heavily engineered in order to make sure that Coface is comfortable.”
As with the Globalstar loan, French export credit insurance agency Coface has guaranteed up to 95% of the facility.
The prime contractor for both Globalstar and Iridium’s second generation constellations is the France headquartered Thales Alenia Space. Under the terms of Globalstar’s debt, the first tranche of US$563.3m was paid directly to Thales for the construction of the new constellation. A similar payment structure is expected under Iridium’s facility.
Societe Generale, Goldman Sachs and Hawkpoint are advising Iridium on the financing. The former was also a central player on the Globalstar facility alongside the other French banks BNP Paribas, Natixis, Caylon (now Crédit Agricole CIB) and Crédit Industriel et Commercial (CIC).
Iridium extends Boeing O&M agreement
Meanwhile, Iridium has announced that it has entered into two long-term agreements with Boeing regarding the maintenance, operations and support of Iridium’s satellite network.
The first agreement, relating to the operation and maintenance of Iridium’s current satellite constellation, replaces the agreement that Iridium and Boeing have had in place for the last ten years. Under the new deal, Boeing will continue operating Iridium’s current satellite constellation and will provide support for Iridium’s satellite control system (SCS). However, Iridium will now receive significant cost savings and benefit from the release of more than US$15m in restricted cash required under the prior agreement.
The second agreement is a new support services contract under which Boeing will become the exclusive operations and maintenance provider for Iridium’s next-generation constellation.
The term of the agreement runs concurrently with the useful life of the Iridium NEXT constellation, although Iridium is entitled to terminate the agreement for convenience and without cause in 2019.
