Item 1.01. Entry into a Material Definitive Agreement.
On November 4, 2019, Iridium Satellite LLC ("Satellite"), the Registrant's
principal operating subsidiary, entered into a Credit Agreement, as the
borrower, with Iridium Holdings LLC ("Holdings"), as parent and guarantor;
various lenders; and Deutsche Bank AG New York Branch, as Administrative Agent
and Collateral Agent; with Deutsche Bank Securities Inc., Barclays Bank PLC,
Credit Suisse Loan Funding LLC, Wells Fargo Securities, LLC and Société
Générale, as Joint Lead Arrangers and Bookrunners (the "Credit Agreement"). The
Registrant is also a party to the Credit Agreement for the limited purpose of
restricting its activities as a holding company of Holdings.
Pursuant to the Credit Agreement, Satellite borrowed $1.45 billion as a
seven-year term loan, which it used, along with cash from its debt service
reserve account and cash on hand, to repay in full the remaining indebtedness of
$1.55 billion outstanding under its previous credit facility by and between
Satellite, Société Générale, as BPIAE Agent, and other lenders (the "BPIAE
Facility"), as well as interest and breakage costs under the BPIAE Facility. The
Credit Agreement also provides for a $100 million, five-year revolving loan
Borrowings of term loans under the Credit Agreement bear interest at a per annum
rate of LIBOR plus an interest rate margin of 3.75%, with a 1.0% LIBOR floor,
and were issued at a discount of 0.5% to face value. Borrowings under the
revolving facility bear interest initially at the same per annum rate, with a
0.0% LIBOR floor, no original issue discount, and a commitment fee of 0.5% per
year on the undrawn amount.
The interest rate margin applicable to the revolving facility (but not the term
facility) will drop to 3.50% if the Registrant has a consolidated total net
leverage ratio (as defined in the Credit Agreement) of less than 3.5 to 1 but
greater than or equal to 3.0 to 1 and will drop to 3.25% if the Registrant has a
consolidated total net leverage ratio of less than 3.0 to 1. The commitment fee
rate applicable to the revolving facility will drop to 0.375% if the Registrant
has a consolidated total net leverage ratio of less than 3.5 to 1. The
Registrant expects that it will incur total costs in connection with the
execution of the Credit Agreement and repayment of the BPIAE Facility that will
increase its net leverage ratio (as calculated by the Registrant as a multiple
of Operational EBITDA) by approximately 0.25x.
The Credit Agreement restricts the ability of Satellite, Holdings and the
restricted subsidiaries of Holdings to incur liens, engage in mergers or asset
sales, pay dividends, repay subordinated indebtedness, incur indebtedness, make
investments and loans, and engage in other transactions as specified in the
Credit Agreement, but provides for exceptions, including payments with respect
to existing indebtedness, such as the Registrant's outstanding principal amount
of $360 million of 10.25% senior notes due 2023, baskets measured as a
percentage of trailing twelve months of earnings before interest, taxes,
depreciation and amortization ("EBITDA"), and unlimited exceptions in the case
of incurring indebtedness and liens and making investments, dividend payments,
and payments of subordinated indebtedness, based on achievement and maintenance
of specified leverage ratios. The Credit Agreement permits repayment,
prepayment, and repricing transactions, subject to a 1% penalty in the event the
facility is prepaid or repriced within the first six months.
The Credit Agreement contains no financial maintenance covenants with respect to
the term loan. With respect to the revolving loan, the Credit Agreement requires
the maintenance of a consolidated first lien net leverage ratio (as defined in
the Credit Agreement) of no greater than 6.25 to 1 if more than 35% of the
revolving loan has been drawn. The Credit Agreement also contains other
customary representations and warranties, affirmative and negative covenants,
and events of default.
In connection with the Credit Agreement, on November 4, 2019, Satellite,
Holdings, Iridium Carrier Holdings LLC, Iridium Carrier Services LLC, Iridium
Constellation LLC, and Iridium Government Services LLC, each of which is a
direct or indirect wholly owned subsidiary of Holdings, also entered into a
Security Agreement (the "Security Agreement") and a Guaranty Agreement (the
"Guaranty Agreement"), in each case with Deutsche Bank AG New York Branch as
Administrative Agent or Collateral Agent, to guarantee the debt of Satellite
under the Credit Agreement and provide the lenders under the Credit Agreement
with a security interest in substantially all of the assets (subject to
customary exceptions) of Satellite and the subsidiaries of Holdings that are
The foregoing descriptions of the material terms of the Credit Agreement, the
Security Agreement, and the Guaranty Agreement do not purport to be complete and
are qualified in their entirety by reference to the full text of such
agreements, which are filed as Exhibits 10.1 through 10.3 to this report and are
incorporated herein by reference.
Satellite intends to enter into a hedging agreement with respect to
approximately $1.0 billion of the amount borrowed under the Credit Agreement in
order to mitigate risks associated with the variable interest rate for this
portion of its borrowings. The Registrant expects this to be completed during
the month of November 2019.
Item 7.01. Regulation FD Disclosure.
On November 4, 2019, the Registrant issued a press release announcing the Credit
Agreement and repayment of the BPIAE Facility. The text of the press release is
included as Exhibit 99.1 to this Form 8-K. Pursuant to the rules and regulations
of the Securities and Exchange Commission, such exhibit and the information set
forth therein and herein are deemed to be furnished and shall not be deemed to
This Current Report on Form 8-K includes forward-looking statements as defined
in the Private Securities Litigation Reform Act of 1995. These forward-looking
statements involve a number of risks and uncertainties such as those, among
others, relating to the costs associated with the refinancing of indebtedness
and entering into hedging agreements. Forward-looking statements can be
identified by the words "anticipates," "may," "can," "believes," "expects,"
"projects," "intends," "likely," "will," "to be" and other expressions that are
predictions or indicate future events, trends or prospects. These
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
Iridium to differ materially from any future results, performance or
achievements expressed or implied by such forward-looking statements. These
risks and uncertainties include, but are not limited to, uncertainties regarding
general industry and economic conditions, and legal, governmental and
technological factors. Other factors that could cause actual results to differ
materially from those indicated by the forward-looking statements include those
factors listed under the caption "Risk Factors" in the Company's Form 10-K for
the year ended December 31, 2018, filed with the Securities and Exchange
Commission (the "SEC") on February 28, 2019, as well as other filings Iridium
makes with the SEC from time to time. There is no assurance that Iridium's
expectations will be realized. If one or more of these risks or uncertainties
materialize, or if Iridium's underlying assumptions prove incorrect, actual
results may vary materially from those expected, estimated or projected.
Iridium's forward-looking statements speak only as of the date of this report,
and Iridium undertakes no obligation to update forward-looking statements.
Item 9.01. Financial Statements and Exhibits.
10.1* Credit Agreement dated November 4, 2019 among Iridium Holdings LLC,
Iridium Communications Inc., Iridium Satellite LLC, Various Lenders,
and Deutsche Bank AG New York Branch, as Administrative Agent and
10.2 Security Agreement dated November 4, 2019 among Iridium Carrier
Holdings LLC, Iridium Carrier Services LLC, Iridium Constellation
LLC, Iridium Government Services LLC, Iridium Holdings LLC, Iridium
Satellite LLC, and Deutsche Bank AG New York Branch, as Collateral
10.3 Guaranty Agreement dated November 4, 2019 among Iridium Holdings
LLC, Iridium Satellite LLC, Iridium Carrier Holdings LLC, Iridium
Carrier Services LLC, Iridium Constellation LLC, Iridium Government
Services LLC, and Deutsche Bank AG New York Branch, as Administrative
99.1 Press Release Dated November 4, 2019.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
* Exhibits and schedules have been omitted pursuant to Item 601(a)(5) of
Regulation S-K and will be furnished on a supplemental basis to the
Securities and Exchange Commission upon request.
** Submitted electronically with this Report in accordance with the provisions
of Regulation S-T.
© Edgar Online, source Glimpses