July Cash Infusion Will Allow SkyTerra/MSV To Complete Satellite System

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  Space News Business

July Cash Infusion Will Allow SkyTerra/MSV To Complete Satellite System

By PETER B. de SELDING
Space News Staff Writer
posted: 18 November 2008
03:21 pm ET






PARIS — Mobile satellite services operator SkyTerra Communications Inc./Mobile Satellite Ventures (MSV) said its two large L-band satellites are on schedule and budget, and that the fresh cash infusion by hedge fund Harbinger Capital Partners provides MSV with more than enough cash to complete the project.

In a Nov. 10 conference call with investors, SkyTerra/MSV officials said the satellites – notably the 22-meter-diameter reflector antennas to be placed on each of them – are on track for deployment. MSV-1 is slated to launch in late 2009 or early 2010, with MSV-2 to follow in late 2010.

As is the case for most other mobile satellite companies, MSV’s task in the coming months will be to live within its means while it seeks partners to develop its mobile voice and data network for government agencies and other users in the
United States
and
Canada
.

To be effective, the system will require the installation of a network of ground-based signal boosters, called an Ancillary Terrestrial Component (ATC), to maintain communications links when users are in buildings or otherwise out of line-of-sight view of the satellites.

Financing the ATC network will await the arrival of new strategic investment. For now, the
, Va.-based company is being maintained by the continued support of Harbinger, an investor that also has taken a major stake in London-based Inmarsat.

Harbinger has announced plans that eventually may lead to the merger of MSV and Inmarsat, but a decision awaits regulatory approval in
London
and the
United States
that will take up to a year.

With cash running out at SkyTerra/MSV, Harbinger in July agreed to provide $500 million to the company, permitting program managers to focus on their business rather than appealing to unreceptive capital markets for support.

The company also has persuaded satellite builder Boeing Satellite Systems International of El Segundo, Calif., to accept a delay in some $61 million in payments for work integrating the two spacecraft.

The company’s third-quarter financial statement makes the situation clear: SkyTerra/MSV, a start-up company in many ways, reported a net loss of $76.7 million on revenue of $9.5 million.

Including the Boeing payment deferral, SkyTerra/MSV debt as of Sept. 30 totaled $807.3 million.

Scott Macleod, SkyTerra/MSV chief financial officer, said the company had $149.4 million in cash as of Sept. 30. The $500 million in Harbinger financing will be paid in five tranches beginning Jan. 6 and ending in January 2010, giving the company a total of $649.4 million in available funds.

The two-satellite L-band system costs, including the satellites’ construction, launch and insurance, plus development of gateway Earth stations, are expected to total $817 million through September 2010. SkyTerra already has paid $478.7 million of that, leaving $338.2 million to be paid in the next 24 months.

If those figures hold, SkyTerra/MSV will have $311.2 million in cash to use toward developing chipsets for its future hand-held communications devices and for other precommercial costs, Macleod said.