Thales selected for US$2.9bn Iridium NEXT, Coface backing in place

Iridium Communications has selected Thales Alenia Space to construct its second-generation satellite constellation, Iridium NEXT.
To partially fund the estimated US$2.9bn cost of constructing the constellation, Iridium has secured a Coface-backed…

Iridium Communications has selected Thales Alenia Space to construct its second-generation satellite constellation, Iridium NEXT.

To partially fund the estimated US$2.9bn cost of constructing the constellation, Iridium has secured a Coface-backed US$1.8bn debt facility that is expected to be completed this summer. As with its support for Globalstar’s second-generation constellation, the French export credit agency will guarantee 95% of the credit facility, which is predominantly being syndicated by French and international banks. However unlike the Globalstar deal, the Coface guarantee commitment is not conditioned on Iridium raising any further debt or equity financing.

Goldman Sachs, Societe Generale and Hawkpoint continue to advise Iridium on the financing.

Thales beat off competition from Lockheed Martin for the contract, with both vendors seeking to offer export credit agency backing to help Iridium secure a financing package to partially fund the project.

Under the terms of the fixed-price ‘Full Scale System Development Contract’, Thales will construct 66 operational satellites, six in-orbit spares and nine ground spares. The NEXT constellation will be designed to host secondary payloads with Iridium currently in discussions with a number of potential candidates.

The two companies have already entered into an Authorisation to Proceed (ATP), which allows Thales Alenia Space to commence work immediately on the development of satellites prior to completion of the financing, with the plan to commence the launch of the first satellites during the first quarter of 2015. Iridium has agreed to pay Thales US$18.8m plus E27.3m (US$33.6m) for the ATP through to August 1 2010 with the ATP renewable for an additional three month period.

Iridium anticipates that the total cost of Iridium NEXT including all costs associated with development, manufacture and launch of the constellation will be approximately US$2.9bn, slightly higher than its previous estimates of US$2.7bn. Iridium has yet to contract a launch provider or secure launch insurance for the new constellation.

Matt Desch, CEO of Iridium, said: “We are very pleased with the completion of our comprehensive vendor selection process. We have a great partner in Thales Alenia Space, a world leader in satellite systems, who has developed a sophisticated satellite constellation that will allow us to seamlessly transition to an even more powerful network in the future.

“In addition, the Coface guarantee enables Iridium to secure attractive and flexible low cost financing for the project. Based on the amount of this guarantee, we expect Iridium NEXT to be fully funded when the financing is finalised this summer. This is a critical step in maintaining our customers’ and partners’ confidence that Iridium will keep delivering innovative products and services globally through the coming decades.”