MSS operator Iridium Communications is to raise U$220m through a series of stock offerings.
The financing takes the form of three separate share sales: a direct offering to an investment fund worth US$50m, a common stock offering to raise US$45m and a…
MSS operator Iridium Communications is to raise U$220m through a series of stock offerings.
The financing takes the form of three separate share sales: a direct offering to an investment fund worth US$50m, a common stock offering to raise US$45m and a convertible preferred stock offering worth US$125m.
Iridium stated that it intends to use net proceeds from the offerings for general corporate purposes, which may include capital expenditures, including the development and deployment of the Iridium NEXT system.
The equity raise is the central requirement to Iridium securing an amendment to the terms of its Coface-guaranteed US$1.8bn credit facility.
Under its supplemental agreement with Société Générale, as Coface agent, Iridium agreed to raise at least US$217.5m through the sale of equity securities by 31 July 2014, with net proceeds of at least US$200m. Of that amount, Iridium can raise up to US$150m through convertible preferred equity.
In return, certain covenants on the credit facility are to be revised, including delaying to 2017 approximately US$76m of contributions that Iridium was scheduled to make to the debt service reserve account between 2014 and 2016.
The first fundraising saw Iridium enter into a private stock purchase agreement with the Baron Funds on 2 May.
Under the plan, Iridium agreed to sell 7.69 million shares at US$6.50 per share, raising gross proceeds of US$50m. The transaction took place on 5 May.
The MSS operator is now in the process of raising US$170m through the common stock and convertible preferred stock offerings.
For the former, Iridium plans to sell 7,377,050 shares of its common stock at US$6.10 per share to raise gross proceeds of US$45m. It has also agreed to grant a 30-day over-allotment option to the underwriters to purchase 1,106,558 additional shares.
Raymond James, Deutsche Bank and William Blair are joint bookrunning managers for the offering.
As for the convertible stock offering, Iridium intends to issue 500,000 shares of new series B cumulative perpetual convertible preferred stock to raise US$125m.
The non-voting stock has a liquidation preference of US$250 per share and will be convertible into shares of common stock.
Deutsche Bank and Raymond James are acting as joint book-running managers for the offering with Canaccord Genuity and Société Générale co-managers.
Both offerings are expected to close on or about 14 May 2014.
The securities are similar to the preferred stock that Iridium sold in a private offering back in September 2012.
That deal saw the company raise almost US$100m through the issuance of 7% series A cumulative perpetual convertible preferred stock. These shares had a liquidation preference of US$100, a quarterly dividend and conversion rate of 10.6 shares of common stock per share of preferred stock.
