(AOF) – Eutelsat SA has announced its intention to issue fixed-rate senior bonds maturing in 2029 denominated in euros, subject to market conditions, and the launch of a repurchase offer relating to its existing bonds of 800 million euros (2%) maturing in 2025 admitted to trading on the Luxembourg Stock Exchange.
“A priority allocation mechanism for the new bonds could be applied at the sole and absolute discretion of the company in favor of qualified holders of existing bonds expressing their intention to contribute their securities to the repurchase offer and who wish to participate in the ‘offer’, specifies the satellite operator.
The Company plans to use the gross proceeds from the offering, and a portion of its cash, to repurchase existing notes under the Tender Offer and pay fees and expenses related to the transactions. Completion of the repurchase offer is subject to certain conditions, including the completion of the issuance of the new bonds.
The objective of these operations is, among other things, to proactively manage the company’s debt and optimize its bond maturities.
Eutelsat will enter into a contract for a new revolving credit line for an amount of 450 million euros (which may, in certain circumstances before September 30, 2024, be increased up to 500 million euros) upon completion of the offers and will cancel its existing revolving lines of credit. The company does not plan to draw down the new revolving credit line on the date of issuance of the new bonds.
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Key points
– Second world operator of telecoms satellites created in 1977, with a market share of 16%;
– Revenue of €1.51 billion generated by 36 satellites in operation, distributed between video for 61%, professional data and video for 14%, government services for 12%, mobile connectivity for 7% and fixed broadband for 6%;
– International diversity between Europe (26%), North Africa-Middle East (22%), the Americas (10%), sub-Saharan Africa (10%), Central Europe (9 %) ;
– Business model based on the generation of free self-financing via 10 to 15 year contracts -lifespan of a satellite- and the return to growth via video and connectivity;
– Capital held 19.8% by BPIFrance, 7.5% by the Strategic Investment Fund and 6.7% by China Investment Capital, Dominique d’Hinnin chairing the 11-member board of directors and Eva Berneke new director general;
– Financial situation under control with net debt of €2.8 billion (debt leverage of 3.27) with €1.9 billion in liquidity.
Challenges
– Strategy by 2025: acceleration of growth in video (ramping up broadband with ViaSat, and high definition) and in connectivity: launch of the Eutelsat Advance managed services solution / Comète project back to growth / entry into service of substantial capacities from financial year 2023-24 with significant firm commitments secured;
– Innovation strategy integrated into the business model;
– Structured environmental strategy between the management of the space fleet as part of the Net Zero Space initiative – avoiding congestion, managing space debris and reducing the end-of-life impact of satellites – and optimizing the impact land operations;
– Release, for the benefit of the American FCC, of C-band spectrum by early 2022, for a total amount of 507 MS;
– Execution of the IoT strategy with ELO and IoT First, a turnkey service operating on the geostationary fleet;
– Visibility of the activity with an order book of €4 billion: 4 satellite entry into service in 2023 (Eutelsat 10B, Eutelsat Hotbird 13G and 13F, Konnect VHTS) and 1 in 2024 (Eutelsat 36 D).
Challenges
– Exposure to Google/Qualcomm connected TV projects and competition from Tesla, SES, etc.;
– Impact of the Russian-Ukrainian conflict (6.3% of revenues due to Russian customers, rental of the capacity of 4 satellites from the Russian RSCC, for a net value of €322 million): 6 launches planned for Oneweb from Baikonur distributed to SpaceX and New Space India and suspension of broadcasts;
– Towards a merger by exchange of shares with the British OneWeb, already 22.9% owned and valued at 3.4 billion: payment by issuing 50% of new Eutelsat shares, at a unit price of €12 / complementarity of offers ( geostationary satellites or in low orbit) in connectivity / value creation potential estimated at €1.5 billion / 2022-2023 expectations: €1.2 billion in revenue and operating profit of €700 million;
– 2022-2023 objectives (excluding OneWeb), a turnover of €1.15 to €1.18 billion, free self-financing of €420 million and cost savings of €20 to €25 million, the return to revenue growth being reiterated for 2023-24, with the entry into service of Konnect VHTS and Eutelsat 10B, with investments maintained at €400 million until 2024.
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