Inmarsat’s $1.05 billion financing provides funds as company invests

By Devika Patel

Knoxville, Tenn., March 8 – Inmarsat plc refinanced its debt in 2016 to extend the maturities of its borrowings, repurchasing $390 million of the company’s outstanding 1.75% convertible bonds due 2017 and repaying its approximately $107 million European Investment Bank facility by issuing a total of $1.05 billion of new seven-year 3.875% convertibles and eight-year 6½% senior notes.

“Undoubtedly an operational highlight, we successfully raised over $1 billion in the debt market during the second half of the year, further lengthening the tenor of our debt,” chief executive officer and executive director Rupert Edward Pearce said on the company’s fourth quarter earnings conference call on Wednesday.

“I’m happy that an innovative convertible bond, augmented by more a traditional note issuance, contributed to strengthening our balance sheet and access to funding at a time when we continue to invest in future growth,” he said.

The business generated $275 million of free cash flow last year, a $142 million improvement from 2015.

Inmarsat reported a 2.4x net debt to EBITDA ratio at the end of 2016, compared to 2.7x at the end of 2015.

Convertibles

On Aug. 31, Inmarsat priced $650 million of seven-year convertible bonds at par to yield 3.875% with an initial conversion premium of 32.5%.

Initially the Regulation S deal was talked at a base deal of $550 million with a $50 million upsize option.

Pricing came towards the rich end of 3.625% to 4.125% coupon talk and at the midpoint of 30% to 35% premium talk.

The convertibles have an initial conversion price of $13.4093.

Joint bookrunners were Credit Suisse and J.P. Morgan Cazenove. BofA Merrill Lynch was a co-bookrunner.

The bonds are non-callable for five years and then provisionally callable if the stock price exceeds 140% of the conversion price for at least 20 out of 30 consecutive dealing days.

Conversions will be net share settled to minimize dilution.

Proceeds were used to repurchase about $390 million of the company’s outstanding 1.75% convertible bonds due 2017. Initially the company said about $287.7 million of the proceeds would be used for those repurchases. Remaining proceeds will be used to strengthen Inmarsat’s financial position and support continued investment strategies.

The deal settled on Sept. 9.

Notes

On Sept. 15, the company priced a $400 million issue of eight-year senior notes (Ba2/BB+) at par to yield 6½%.

The yield printed at the wide end of the 6¼% to 6½% yield talk.

BofA Merrill Lynch, Credit Suisse Securities (USA) LLC and J.P. Morgan Securities LLC were the lead bookrunners.

The London-based mobile satellite communications company planned to use the proceeds to repay its European Investment Bank facility for approximately $107 million and for general corporate purposes.

The issuing entity was Inmarsat Finance plc, a wholly owned subsidiary of Inmarsat.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.