Iridium talks $360 million five-year notes to yield 10¼%-10½%

By Paul A. Harris

Portland, Ore., March 15 – Iridium Communications Inc. talked its $360 million offering of five-year senior notes (Caa1/CCC) to yield 10¼% to 10½%, according to market sources.

Official talk comes on top of earlier guidance, a trader said.

The Rule 144A and Regulation S deal, being managed by Deutsche Bank Securities Inc., is expected to price on Friday.

The notes come with two years of call protection.

The McLean, Va.-based mobile voice and data satellite communications network plans to use the proceeds to make $59.9 million of deferred payment obligations by repaying all amounts outstanding under the company’s bills of exchange with Thales Alenia Space France (Thales), including interest and insurance.

Proceeds will also be used to make $44.4 million of milestone payments to Thales under the Full Scale System Development contract between Iridium Satellite LLC and Thales.

In addition, proceeds will be used to fund $87 million into the debt service reserve account under the company’s existing $1.8 billion credit facility. Any remaining proceeds will be used for general corporate purposes.

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