— European aerospace giant EADS expects to sell rights to the future revenue
of its Paradigm military space services company to a financial institution in the coming weeks
for more than 500 million euros ($726
million) in cash, EADS officials said.
Paradigm Secure Communications of Britain, part of EADS’s fast-growing Astrium Services division, is under long-term contract with the British Defence Ministry to provide communications services for the next decade.
The centerpiece of the British defense contract is the provision of service from a new generation of military communications satellites, called Skynet 5. Skynet 5A was launched in March, and Skynet 5B at press time was scheduled to launch the week of Nov. 12 aboard a European Ariane 5 rocket. Skynet 5C is scheduled for launch in 2008.
Once Skynet 5B is in service, Paradigm will have secure in-orbit backup capacity
, removing a large potential liability from the financial accounts of both Paradigm and its parent, EADS. The contract with British defense authorities is based on the availability of in-orbit capacity, regardless of whether British defense forces actually make use of the capacity.
The launch also will
permit EADS to sell rights to future Paradigm revenue
In a Nov. 7 conference call, EADS Chief Financial Officer Hans-Peter Ring said the company expects to generate more than 1 billion euros in free cash flow in 2007, of which “a bit more than 500 million is related to Paradigm,” assuming the sell-down of Paradigm occurs as expected.
EADS spokesman Edmund Reitter said Nov. 8 that Ring was referring to the sale of Paradigm’s future revenue
to a financial institution.
EADS reported Nov. 7 that its Astrium space division posted revenue
of 2.19 billion euros for the first nine months of 2007, an 11.8 percent increase over the same period in 2006. The services business, whose principal component is Paradigm, accounted for 16 percent of that amount.
Astrium Services is one of the principal drivers of the increased pretax profit for Astrium, which totaled 71 million euros for the nine months ending Sept. 30, up 48 percent from a year earlier.
is in the middle of a broad internal reorganization that will end with Astrium Services taking charge of Earth observation and navigation in addition to its current focus on telecommunications services. EADS’sInfoterra and Spot Image Earth observation divisions are being brought into the Astrium Services division, alongside Paradigm and Milsat Services, a company that Astrium co-owns with of Luxembourg to provide military satellite telecommunications services to Germany.
EADS officials estimate that Astrium Services, which in 2003 had 166 employees and 65 million euros in revenue
, will have more than 1,600 employees by the end of this year, with revenue
of more than 600 million euros, following the reorganization.