MDA files to go public

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WASHINGTON — Canadian space technology company MDA Ltd. filed paperwork March 22 for an initial public offering of stock, raising funding to pay down its debt and invest in new projects.

In a filing with Canadian securities regulators, MDA announced its intent to raise $500 million Canadian ($397 million U.S.) in an IPO, valuing the company at more than $2.2 billion. The company’s intent to file for an IPO was first reported last week by The Globe and Mail.

MDA became an independent company last April when its sale to a group of investors led by Canadian private equity firm Northern Private Capital, announced in December 2019, closed. That group paid $1 billion Canadian to Maxar to acquire its historically Canadian business units, best known for the Radarsat series of synthetic aperture radar (SAR) satellites and the Canadarm robotic arms used on the space shuttle and International Space Station.

In its preliminary prospectus, MDA said it would use $340 million of the proceeds to repay about 80% of its outstanding debt. The remainder would be used to invest in new projects, including a new SAR satellite the company announced Feb. 2 to replace the existing Radarsat-2 spacecraft. That satellite, called SARnext in the prospectus, will cost an estimated $350 million to build.

MDA projects that SARnext will generate $2 billion in revenues over 15 years, and is part of the company’s aggressive growth projections that foresee overall company revenue growing from $411 million in 2020 to $800–900 million in 2022 and more than $1.5 billion in 2025. The company’s geointelligence business unit, which includes Radarsat as well as maritime domain awareness projects, is projected to grow from $179 million in revenue in 2020 to $565 million in 2025.

The company expects several other programs to contribute to revenue growth in the next several years. MDA has an initial contract to build the Canadarm3 robotic arm, Canada’s contribution to the NASA-led lunar Gateway, and anticipates winning contracts for later phases of development this year. Canadarm3 will provide MDA with $1.4 billion in revenue for its development and operations over a 15-year period.

Other “flagship” programs MDA identified in the prospectus include supplying antenna systems for Lightspeed, Telesat’s low Earth orbit broadband constellation. That effort will generate $800 million in revenue over several years, with a “multibillion-dollar future opportunity” if Telesat exercises options to expand that constellation from its initial fleet of 300 satellites to 1,600. Separately, MDA is supplying electronic warfare suits for Canadian naval vessels, a contract worth up to $1.5 billion.

In the future, MDA says it sees opportunities in geointelligence from potential Canadian government program, by both the Department of National Defence and the Canadian Space Agency, for Earth observation and surveillance satellites. It also said it’s tracking opportunities for both its robotic and space operations business and its satellite systems business, such as opportunities from several satellite constellations, the details of which is did not disclose in the prospectus.