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Goldman advises Iridium on funding new sats
28 October 2009
Mobile satellite phone company Iridium has appointed the bank Goldman Sachs to advise it on funding its new fleet of satellites, to replace the ageing set of craft it inherited from the original Iridium venture
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[Iridium]
[Goldman Sachs]
[Motorola]
[Hawkpoint]
[satellites]
Comment: Iridium’s come a long way since the Mark I company, set up by Motorola, filed for bankruptcy owing $1.5 billion 10 years ago. It’s no longer seen as a service for vacationers on Caribbean beaches but now has a viable business serving niche markets — including the increasingly interesting machine-to-machine market.
Satellite operator Iridium Communications has engaged Goldman Sachs as its lead global advisor on the financing of Iridium Next, the company’s next generation satellite service.
The company, which was involved in a reverse takeover in September 2009, needs to replace its fleet of 66 satellites because it is running out of in-orbit spares.
Iridium has also retained Hawkpoint Partners as an additional advisor to focus on European sources of financing.
CEO Matt Desch said: “A substantial portion of the cost of our next generation of satellites will be funded from internally generated cash flow.”
In an interview with Global Telecoms Business in 2008, Desch said: “We’ve used up five spares in the last seven years and there are nine more left. The ninth spare will be used up around 2013 or 2014.”
At the time he expected that the budget for the new satellites — which will add significant new capacity to the 11-year-old Iridium service — would be $2.7 billion.
The company expects to fund a substantial portion of the cost from internally generated cash flow, as well as revenues derived from hosted payloads on its next generation constellation and from warrant proceeds.
Goldman Sachs will lead the initiative to secure the remainder of funding necessary to develop, build and launch the new constellation, which is expected to begin launching in 2014.
Iridium said that it expects to announce the selection of a prime contractor in the coming months. Lockheed Martin and Thales Alenia Space are competing to secure the prime contract for the development of Iridium Next.
“I am confident that we are in the optimal position to secure the best possible support for Iridium Next,” said Desch.
Hawkpoint has worked with Iridium in the past as it completed its transition from private to public company. GTB
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