Maxar Technologies, which makes satellites and related equipment, has launched a private offering of senior secured notes totaling $1.25 billion to refinance existing debt.
The 144A bond will have a tenor of four years and will be secured on several of the company’s subsidiaries.
Bank of America Merrill Lynch is the left lead on the offering. A conference call with prospective investors is scheduled for November 5.
Maxar will use the proceeds of the sale of the bonds to refinance debt incurred under its revolving credit facility and syndicated bank loans.
Maxar can borrow up to $1.15 billion under the revolving credit facility. At the end of June, it had drawn down $701 million. The company can borrow in U.S. or Canadian dollars under the revolver.
The syndicated bank loans, meanwhile, total $500 million and are divided into two equal-sized tranches, one of which matures after three years and the other after four.
Maxar pays a margin of between 120 and 350 basis points over Libor or CDOR, depending on its total leverage ratio, on its bank loan and revolving credit debt.
S&P Global Ratings and Moody’s Investors Service rate Maxar’s senior secured debt B and B1, respectively, placing it firmly in the sub-investment grade category.
S&P previously rated the loans BB- but downgraded them in March after announcing earnings for 2018 that were below the rating agency’s expectations. The company’s 2018 results were affected by a $1.1 billion inpairment charge as a result of its decision to retain and restructure its commercial geostationary orbit satellite manufacturing business, SSL, rather than selling it or closing it down.
With headquarters in Westminster, Colorado, Maxar is dual listed on the New York and Toronto stock exchanges.