Canada’s MDA Expects Space Systems/Loral Purchase To Close this Fall

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PARIS — Canada’s MDA Corp., which expects its purchase U.S. satellite builder Space Systems/Loral to be completed by this fall, said July 26 it has booked “several 10s of millions of dollars” in orders from the U.S. Defense Advanced Research Projects Agency (DARPA) for robotic elements of a satellite-salvage program.

Several companies, including Space Systems/Loral (SS/L), have won contracts as part of DARPA’s Phoenix program, whose goal is to launch small “satlets” to attach to dead in-orbit satellites, remove usable components and reuse them in orbit.

Palo Alto, Calif.-based SS/L and MDA are not comparing notes on Phoenix or anything else while they await regulatory approval of MDA’s $875 million purchase.

In a July 26 conference call with investors, MDA Chief Executive Daniel E. Friedmann said MDA continues to see growth in the global satellite communications market on its own.

Richmond, British Columbia-based MDA recently booked a $90 million order with Israel Aerospace Industries to provide the payload for the Amos-6 telecommunications satellite, for which the Israeli customer will provide the platform. MDA also won a $35 million order from Avanti Communications of London to provide the Ka-band payload for Avanti’s Hylas 3 telecommunications satellite.

Neither of these orders figures in MDA’s financial results. The Israeli order is still limited to an authorization to proceed, with a final contract expected in the coming weeks. The Avanti contract was booked after the June 30 close of the second quarter.

MDA is more than 90 percent finished with its work on the AM-5 telecommunications satellite for the Russian Satellite Communications Co. of Moscow, and about 80 percent finished with the AM-6 satellite.

A telecommunications satellite for Ukraine, which was delayed while Ukrainian authorities sorted out orbital slot and broadcast frequency rights, is about one-third complete, Friedmann said.

MDA is eyeing a future order from Israel for an Amos-7 satellite that could be ordered in 2013, and from a Brazilian customer as that nation expands its satellite telecommunications business.

Friedmann said a $12 million order from the Canadian Space Agency for the Radarsat Constellation Mission (RCM) does not mean this on-again, off-again program is now back on track.

MDA, which is the presumptive prime contractor for the program, is still planning to shut down its work on the program in October absent a concrete decision on funding for the construction phase. “RCM goes to zero in October,” Friedmann said. “It’s about half of where it was a year ago. It’s winding down very quickly.”

MDA said it booked about $1.9 million in legal and other costs related to the SS/L purchase, meaning MDA’s successful bid apparently cost less than an aborted effort by Orbital Sciences of Dulles, Va.

Orbital has not confirmed that the $2.1 million in costs related to an unidentified, and subsequently withdrawn, acquisition attempt was related to SS/L, but industry officials said Orbital was in the hunt for SS/L before determining that it would not match the MDA bid.

For the six months ending June 30, MDA reported revenue of 336 million Canadian dollars ($328 million), down 16 percent from the same period a year ago.

MDA Chief Financial Officer Anil Wirasekara said the decrease was due in part to a lower level of pass-through revenue, meaning work performed by other companies but under an MDA contract. Pass-through revenue usually carries a lower profit margin than value-added work MDA does on its own, which helps explain why operating earnings before interest, taxes, depreciation and amortization, or EBITDA, at 95.8 million, was up from a year ago at 29 percent of revenue versus 24 percent.

Similarly, operating earnings, at 58.1 million Canadian dollars, was up about 4.5 percent from last year.

 

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