PARIS — Mobile satellite services providerCommunications on Oct. 4 announced it had signed a $1.8 billion financial package with nine banks to fund the company’s next-generation satellite constellation, a loan that features key guarantees from the French export-credit agency, Coface.
McLean, Va.-based Iridium, whose Iridium Next constellation of satellites is being built byof France and Italy, said the Coface-guaranteed package includes a $1.537 billion tranche with a fixed annual interest rate of 4.96 percent. A second tranche of up to $263 million will carry an interest rate that will vary with the London Inter-Bank Offered Rate (LIBOR), plus 1.95 percent per year. Under the current low LIBOR rates, that would be 2.41 percent per year.
“The repayment period of seven years begins following substantial completion of the Iridium Next launch program, which is expected to occur in 2017,” Iridium said.
Iridium Chief Executive Matt Desch said design of the second-generation satellites, which has been financed by Iridium on its own while waiting for the Coface-backed package to clear, is on pace.
“Planning and design for the satellites and constellation are on schedule,” Desch said in a statement. “On the overall Iridium Next program, we expect to spend approximately $600 million by the end of 2011. Of this, approximately $400 million will be funded under the Facility.”
The bank syndicate for the $1.8 billion facility was led by Deutsche Bank AG, Banco Santander SA, Société Générale, Natixis and Mediobanca International SA.
The other syndicate members are BNP Paribas, Crédit Industriel et Commercial, Intesa Sanpaolo SpA and Unicredit Bank Austria AG.
Iridium said it expected the deal to close in a matter of days.
Coface, which has been the most active export-credit agency in the commercial satellite sector in recent years, is also a key guarantor of a financial package secured by Iridium competitor, whose second-generation satellites are scheduled for launch beginning this month.
Separately, Iridium announced on Oct. 1 that it had settled all claims from Iridium’s original founder, Motorola, which had sued Iridium in an Illinois Circuit Court demanding some $24.7 million in cash. Motorola had said Iridium’s purchase by GHL Acquisition and subsequent stock market listing constituted a change of control under the terms of a December 2000 agreement. Iridium said Motorola had threatened to withhold intellectual property rights essential to Iridium’s system unless the payment was made.
Iridium declined to disclose the terms of the settlement.