MSS operator Iridium is seeking to adjust the terms of its Coface-backed credit facility so that it is not required to obtain insurance coverage for the full Iridium NEXT constellation in one go. The company is seeking a waiver from its ECA lenders so…
MSS operator Iridium is seeking to adjust the terms of its Coface-backed credit facility so that it is not required to obtain insurance coverage for the full Iridium NEXT constellation in one go.
The company is seeking a waiver from its ECA lenders so that it can secure coverage for certain launches rather than all of them.
In an SEC filing, Iridium stated: “We are required by the credit facility to obtain insurance covering the launch and first 12 months of operation of the Iridium NEXT satellites. We are in the process of placing this insurance. The amount of coverage we are seeking to place is large, the credit facility coverage requirements are complex, and the market for launch and in-orbit insurance is limited.
“We have placed only a portion of coverage for the full launch program to date, and we are currently in discussions with prospective insurers and with our lenders regarding the structure of our planned coverage.”
SatelliteFinance understands that Iridium’s broker, Marsh, has placed around 30% of the required cover but has struggled to secure the remainder. Sources have claimed that there have been months of deadlock between Iridium and insurers over what rate the operator should be paying, with underwriters holding firm despite the soft market conditions.
One insurer said of the placement: “Iridium’s coverage requirement is too large, the constellation too complicated, and they wanted it too cheap.”
Marsh is now believed to have tentatively returned to the market with a different placement, this time for the first three launches. This encompasses the two initial satellites due to be launched on a Dnepr rocket later this year and then the first two batches of 10 satellites that will be launched by SpaceX in early 2016.
The placement will only occur if Coface and its lenders agree to the waiver. If this does come to pass then Iridium could well get a better deal as the successful launch of the first spacecraft could push down the price for the remainder. Each SpaceX launch will be insured for around US$400m while the total coverage for the constellation is well over US$2.5bn.
However, given Iridium and SpaceX’s tight launch schedule of seven launches by late 2017, each additional placement would have to come very quickly after the previous launch.
