DigitalGlobe $1.2 billion loan spread expected at Libor plus 500 bps

By Sara Rosenberg

New York, Aug. 30 - DigitalGlobe Inc. revealed that its proposed $1.05 billion seven-year term loan and $150 million five-year revolver are expected to be priced at Libor plus 500 basis points, according to an S-4 filed with the Securities and Exchange Commission on Thursday.

The term loan has a 1.25% Libor floor and 101 soft call protection for one year.

There is a $250 million accordion feature.

Amortization on the term loan is 1% per annum, with the remaining balance due at maturity.

Financial covenants are a maximum leverage ratio and a minimum interest coverage ratio.

Morgan Stanley Senior Funding Inc., Bank of Tokyo-Mitsubishi UFJ Ltd., J.P. Morgan Securities LLC and Citigroup Global Markets Inc. are the lead arrangers on the $1.2 billion senior secured credit facility.

Proceeds will be used to help fund the acquisition of GeoEye Inc. and refinance about $1 billion of existing debt.

Under the agreement, GeoEye shareowners will have the right to elect either 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash, 100% of the payment in cash ($20.27) or 100% of the payment in stock (1.425 shares of DigitalGlobe common stock) per share.

The amount of cash and stock is subject to proration depending upon the elections of GeoEye shareholders, such that aggregate consideration mix reflects the ratio of 1.137 shares of DigitalGlobe common stock and $4.10 per share in cash.

The total transaction value is around $900 million.

Pro forma 2012 revenue base for the combined company is expected to be more than $600 million.

Closing is expected in the fourth quarter or the first quarter of 2013, subject to receipt of regulatory approvals and approval from GeoEye shareowners.

Post closing, debt to EBITDA will be around three times.

DigitalGlobe is a Longmont, Colo.-based provider of commercial high-resolution earth imagery products and services. GeoEye is a Herndon, Va.-based source of geospatial information and insight for decision makers and analysts.

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