PARIS O3b Networks, which is building a constellation of 20 satellites in medium Earth orbit to provide broadband satellite links to telecommunications operators in Africa, Latin America and Asia, expects to complete its equity and debt financing this autumn, company chief executive Mark Rigolle said Sept. 9.

Rigolle said the delay of perhaps four months in closing the $1.1 billion package has been due to tough due-diligence procedures insisted on by equity shareholders.

“We’re a company that is still several years pre-revenue generation,” Rigolle said in an interview here during the World Satellite Business Week organized by Euroconsult. “But as we sit here today, I can tell you I have little doubt that we are about to complete the package.”

O3b has hired satellite manufacturer Thales Alenia Space of France and Italy to build an initial group of eight satellites, followed by 12 more, to form a constellation in an unusual medium Earth orbit covering an equatorial band between 45 degrees north and 45 degrees south latitude.

Resembling a trunking operation, the constellation beams Ka-band broadband signals to towers installed by O3b’s customers, mainly in the less-developed world. O3b, based in Britain’s Channel Islands, has secured a backlog of orders totaling about $600 million.

Its biggest shareholder, satellite fleet operator SES of Luxembourg, has a 30 percent stake in the company and ultimately may take full control of the venture, SES officials have said. Rigolle was SES’s chief financial officer before assuming his O3b post early this year.
O3b has raised about $200 million, including $75 million in cash from SES, to permit Thales Alenia Space to begin work on the satellites, and to secure two launches, each carrying four satellites, of European Soyuz rockets. Rigolle declined to fix a launch date, saying he would not announce one until the company was further along in the production cycle.

Of the remaining $900 million, $500 million is in bank financing that has been secured by France’s Coface export-credit agency. Another $100 million is bank debt that is outside the Coface-backed package. Subordinated debt accounts for another $100 million, with shareholder equity expected to total $200 million.

Rigolle said the $1.1 billion total would pay all O3b costs — satellites, launches, insurance and staff and other operating costs — for the full 20-satellite constellation. But the financing is being structured so that the creditors have the right to suspend payment after the first eight satellites are launched if the company does not meet certain milestones, he said.

Several of the major satellite fleet operators are eyeing O3b warily, at times dismissing the project as built on dubious technology and at times calculating how much of their current business O3b might snatch.

David McGlade, chief executive of satellite fleet operator Intelsat of Luxembourg and Washington, said here Sept. 7 that his company had perhaps $200 million a year in revenue that could theoretically be at risk if O3b delivers on its promise. McGlade made clear he continues to think O3b’s technology — fast-moving satellites handing off signals to ground antennas financed and installed by the local telecommunications operators in O3b’s operating regions — carries numerous risks.

Peter B. de Selding was the Paris bureau chief for SpaceNews.