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ORBIMAGE releases statement regarding financing for the OrbView-5 satellite

ORBIMAGE has released a statement regarding financing for its planned OrbView-5 satellite after it was awarded a contract on September 30th, by the U.S. Government, through the National Geospatial-Intelligence Agency (“NGA”), for the development and launch of the satellite under NGA’s NextView Second Vendor Program.

The Company estimates that its total project cost (including financing and launch insurance costs) to bring the OrbView-5 satellite into service in the first quarter of 2007 will be approximately $502 million. In order to perform its obligations under the NextView contract, ORBIMAGE will fund its cost share for the project through a combination of an equity offering of $65 million as described below, an issuance of $155 million of senior subordinated indebtedness, and $45 million in cash flow from existing operations. NGA’s contract will also provide revenue commitments to commence following OrbView-5’s in-service date.

ORBIMAGE has received commitments from investors to purchase 6.5 million units at $10 per unit. Each unit consists of one share of common stock and one warrant with an exercise price of $10 per share and a 5-year maturity. The Company intends to call $32.5 million of this commitment by privately issuing to these investors 3.25 million units by late October 2004, together with 1.0 million warrants on the same terms. To raise the remaining $32.5 million of the equity portion of financing to cover its cost share of the NextView project, the Company is currently planning to conduct a rights offering to its shareholders that would commence in late 2004 or early 2005 to purchase an additional 3.25 million units on the same terms. Any rights offering by the Company would be conducted only pursuant to an offering registered under the Securities Act of 1933. The Company has not yet set a record date for the rights offering and will not announce such record date prior to its occurrence, but the Company expects that such record date will be set no earlier than late November 2004. The Company intends to seek approval from its shareholders for an increase in its authorized shares in order to conduct the offering. If the rights offering is undersubscribed by shareholders, the aforementioned investors have agreed to backstop the offering pursuant to their aforementioned commitment.

ORBIMAGE has received commitments from investors to fund the $155 million in aggregate principal amount of additional senior subordinated indebtedness. The additional senior subordinated indebtedness will rank pari passu with the Company’s existing Senior Subordinated Notes due 2008 (the “Senior Sub Notes”) and will not have any scheduled amortization or a maturity date prior to the scheduled maturity of the Senior Sub Notes. The parties who committed to the additional senior subordinated indebtedness will receive a commitment fee equal to 100 basis points in cash for the total aggregate principal to which their commitments relate plus a pro rata share of 155,000 shares. Additionally, if the commitments have not been refinanced by three months and six months from contract execution, the Company will pay such parties additional commitment fees in cash, equal to 50 basis points and 100 basis points, respectively.

At September 30, 2004 the Company had received consents from the holders of a majority of its Senior Sub Notes and from all of the holders of its Senior Notes due 2008 that would permit the Company to use up to $45 million of its cash flow from existing operations toward project costs for the OrbView-5 Satellite. The consenting holders who held notes on the record date of July 29, 2004, will receive a consent fee in additional notes equal to 200 basis points on the principal amount of the notes to which the holders’ consents relate. Pursuant to the consents received from the noteholders, the Senior Sub Notes and the Senior Notes will not be callable by the Company until January 1, 2007.

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