Iridium seeks $1.5 billion export agency-backed facility, might issue additional debt

By Angela McDaniels

Tacoma, Wash., Feb. 9 - Iridium Communications Inc. is seeking export credit agency backing for an up to $1.5 billion senior facility and is in discussions with two agencies, according to an investor presentation included in an 8-K filing with the Securities and Exchange Commission.

The proceeds of the facility will be applied toward upgrading and replacing the company's current fleet of satellites, which will cost an estimated $2.7 billion.

Up to 35% of this cost will be financed with external capital. Iridium plans to issue additional unsecured subordinated corporate debt to the extent that the export credit agency-backed facility is not sufficient.

The remaining 65% of the funding will come from internally generated operational cash flow, cash on hand and the proceeds of a sale of warrants. The company had a net cash position of $127 million as of Sept. 30.

Export credit agencies are private or quasi-governmental institutions that act as intermediaries between national governments and exporters to issue export financing, and export credit agency-backed financing is used extensively for large capital purchases in the aerospace industry, according to the presentation.

The facility will have a term of up to 10 years, and Iridium anticipates that repayment will begin in 2017.

Goldman Sachs, Societe Generale and Hawkpoint are advising Iridium in its discussions with the export credit agencies.

The company anticipates closing on the facility this summer in conjunction with the selection of the contractor for the fleet upgrade. Iridium said the level of export credit agency support will be an important component in the contractor selection process.

The two leading contractor candidates are Lockheed Martin Corp. and Thales Alenia Space.

Iridium is a mobile satellite service company based in Bethesda, Md.

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