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Iridium Communications Inc. Message Board

  • pcstel pcstel Oct 1, 2012 11:06 AM Flag

    More Debt, More Dillution

    Last year they were "fully funded" without the warrant proceeds. This year... well, More Debt, More Dilution. Iridium's total Debt will exceed Globalstar's by the end of the year. With another 1.5 Billion coming.

    PCSTEL

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    • Not that facts matter to you, but went back to the March, 2010 annual report, before they signed up a satellite supplier, got their great Coface debt package, etc. On page 10, they indicate their financial plan in the financial risks section:

      "Our business plan calls for the development of Iridium NEXT, the development of new product and service offerings, upgrades to our current services, hardware and software upgrades to maintain our ground infrastructure and upgrades to our business systems. We estimate the aggregate costs associated with the design, build and launch of Iridium NEXT and related infrastructure upgrades through 2016 to be approximately $2.7 billion, although we have not yet entered into definitive agreements for these activities and our actual costs could substantially exceed this estimate. We expect to fund a substantial portion of these costs from internally generated cash flows, including potential revenues from secondary payloads and warrant proceeds. We expect to finance the remaining cost by raising additional debt or equity financing. "

      OK, so it cost $3B instead of $2.7B, but they also raised more debt on better terms than anyone expected - $1.8B from Coface rather than "additional equity financing". Last week's convertible preferred offering replaced the warrant proceeds (they are tendering for those), so there is NO ADDITIONAL DILUTION.

      The latest financing deal is good news for investors - Iridium continues to be securely financed, very profitable and growing. It has a growing stable of products, and their distribution channels are happy.

      Now let's talk about GSAT. Not financed, not growing, and unprofitable. Oh, and now they need to raise about $300mm more and launch more satellites to get a full network, which will take what, 3 more years? And can't invest in any future products or gateway upgrades until they do? Looks like the market doesn't follow your optimism, PCSTEL.

      So bitter.

 
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