ORBCOMM Inc. (Nasdaq: ORBC), a global satellite data communications company specializing in two-way Machine-to-Machine (M2M) communications, today announced that it completed a debt financing in the form of a five-year term loan through a Senior Secured Note Agreement in the principal amount of $45 million with AIG Asset Management (U.S.), LLC. The five-year term loan has no required principal amortization and a fixed interest rate of 9.5 percent, payable quarterly, for the life of the loan. Subject to the terms set forth in the Note Agreement, the company may prepay the Notes, in whole or in part, at any time prior to the maturity date.
The company intends to use the proceeds of the AIG financing to facilitate growth opportunities such as new services, product offerings, geographic distribution and potential acquisitions into key vertical markets. The proceeds will also provide a capital expenditure cushion.
“We are pleased to have additional financing available to pursue strategic growth opportunities while at the same time preparing for the launch of our next generation OG2 satellites,” said Marc Eisenberg, Chief Executive Officer. “We plan to use the proceeds of this transaction toward OG2-related growth opportunities, including enhanced products and services. In addition, we will look at further acquisitions within key vertical markets and geographies that will take advantage of the advanced capabilities of our OG2 satellites.”
ORBCOMM anticipates launching the OG2 satellites as the primary mission on two planned Falcon 9 launches, the first in mid-2013 and the second in 2014. The OG2 constellation is specifically designed for ORBCOMM’s customers in key vertical markets such as heavy equipment, transportation, maritime, agriculture, oil & gas, energy & utilities, and government. ORBCOMM’s customers will benefit from the faster communications speeds, improved coverage, increases in allowable message sizes, better power management, and other features that will increase the markets they can serve, while continuing to support the efficient, reliable mission-critical communications available today.
The company will use some of the proceeds to repay existing debt of $3.5 million incurred with the StarTrak acquisition. As part of the Agreement, the company will terminate the existing $20 million credit facility with its satellite vendor Sierra Nevada Corporation that was available under the OG2 satellite development program, and can obtain additional financing through a revolving working capital facility with other lenders for up to $15 million in the form of inventory and accounts receivable borrowing based loans.
Sagent Advisors, LLC advised ORBCOMM on the financing. Milbank, Tweed, Hadley & McCloy LLP acted as legal advisor to ORBCOMM.
