PARIS — Satellite fleet operator SES, employing a practice usually associated with companies without access to commercial loans, on Dec. 21, 2009, announced it had secured a 12-year, $750 million loan guarantee from France’s Cofaceexport-credit agency to finance the construction of four direct-broadcast television satellites ordered in November.
Luxembourg-based SES declined to disclose the precise terms of the loan, which is based on Euriborinterbankrates. Maurizio Trantiof SES’s finance department said in an interview that SES had promised its bankers — BNP Paribas and SocieteGeneraleof France, and ING Belgium SA — not to disclose the spread until SES is obliged to do so when it publishes its year-end financial accounts.
SES will begin drawing on the loan package, valued at 522.89 million euros ($752 million at current exchange rates), in early 2010 when the first satellite construction milestone payments are due to Astrium Satellites.
SES on Nov. 30 announced that Astriumhad bested fellow European ThalesAleniaSpace for the contract to build four satellites — Astra2E, 2F, 2G and 5B — to be delivered between 2012 and 2014.
The Coface-guaranteed loan covers only the construction of the four satellites but may be extended to include insurance elements, Trantisaid.
SES, which has about 4 billion euros of debt, has a BBB credit rating from Standard & Poor’s and Fitch, and a Baa2 rating from Moody’s, which means the credit rating agency considers SES a “moderate credit risk.”
The company in recent months has proved that it has ready access to commercial debt and, unlike many other Cofaceapplicants, does not need export-credit agency backing to proceed with its satellite fleet renewal and expansion program.
But Trantisaid bringing Cofaceinto the equation resulted in a substantial reduction in interest rates compared with what SES could have secured on its own. Just as important, he said, is the fact that the Cofaceinvolvement allowed SES to spread out the payments until 2022 — something that would have been difficult with a purely commercial loan.
“It was not a must for us,” Trantisaid of SES’s effort to secure Cofacebanking, which began last summer. “But it does help us meet our objective of diversifying our investor pool, and showing that we can do these kinds of transactions. There is obviously a little more work involved” in dealing with an export-credit agency as compared with a commercial loan package. “But we don’t mind bending down to save 50 million euros when it’s in the interest of the company and its shareholders.”
In a Dec. 21 statement, SES Chief Financial Officer Mark Rigollesaid the Coface-backed loan “significantly extends our [debt] maturity profile based on the design lifetimes of these four satellites.”
Each of the four satellites is designed to operate for 15 years in geostationary orbit.