There has been much speculation in recent years and months regarding ‘s future. Given the unfortunate issues with Globalstar, would Iridium’s satellites face the same fate? Will Iridium be able to attract enough investment to finance the NEXT constellation with the $2.7 Billion price tag?
In June announced it had reached an agreement with Coface, the French financing entity to secure $1.8 Billion of the funding required.
On Monday, announced that they have signed a definitive Coface Facility Agreement to finance Iridium NEXT. This is great news and will serve to squelch the naysayers. The facility is being made through nine banks, and will provide up to $1.8 billion in financing. The funding under the Facility is subject to customary closing conditions, which are expected to be met shortly.
According to an Iridium release:
“The credit facility consists of two pro rata tranches. One tranche of up to $1.537 billion will bear a fixed interest rate of 4.96% per annum. The second tranche of up to $.263 billion will bear a variable interest rated based on LIBOR¹ plus 1.95% per annum. Based on the current six-month LIBOR, the interest rate on this tranche would be 2.41% per annum. The repayment period of seven years begins following substantial completion of the Iridium NEXT launch program, which is expected to occur in 2017.”
This development is good news indeed, and while the full impact may not be felt in ’s share price immediately, as we progress towards the key milestones in satellite development, build and launch, we speculate that the stock will reflect the more optimistic reality; that Iridium NEXT will indeed fly.