ORBCOMM agrees US$45m term loan financing with AIG for growth capital

ORBCOMM_logo ORBCOMM completes new funding

Fort Lee, New Jersey (BUSINESS WIRE) — ORBCOMM Inc., a global satellite data communications company specialising in two-way M2M communications, has announced that it has completed a debt financing deal in the form of a five-year term loan through a Senior Secured Note Agreement for US$45 million with AIG Asset Management (U.S.), LLC.

The five-year term loan has no required principal amortisation and a fixed interest rate of 9.5%, payable quarterly, for the life of the loan. Subject to the terms set forth in the Note Agreement, the company may prepay the notes, in whole or in part, at any time prior to the maturity date.

The company reportedly intends to use the proceeds of the AIG financing to facilitate growth opportunities such as new services, product offerings, geographic distribution and potential acquisitions into key vertical markets. The proceeds will also provide a capital expenditure cushion.

“We are pleased to have additional financing available to pursue strategic growth opportunities, while at the same time preparing for the launch of our next generation OG2 satellites,” said Marc Eisenberg, chief executive officer. “We plan to use the proceeds of this transaction toward OG2-related growth opportunities, including enhanced products and services. In addition, we will look at further acquisitions within key vertical markets and geographies that will take advantage of the advanced capabilities of our OG2 satellites.”

ORBCOMM (Nasdaq: ORBC) anticipates launching the OG2 satellites as the primary mission on two planned Falcon 9 launches, the first in mid-2013 and the second in 2014. The OG2 constellation is designed for ORBCOMM’s machine-to-machine (M2M) customers in key vertical markets such as heavy equipment, transportation, maritime, agriculture, oil & gas, energy & utilities, and government. The company intends that its customers will benefit from faster communications speeds, improved coverage, increases in allowable message sizes, better power management, and other features that will increase the markets they can serve, while continuing to support the efficient, reliable mission-critical communications available today.

ORBCOMM will use some of the proceeds to repay existing debt of $3.5 million incurred with the StarTrak acquisition. As part of the agreement, the company will also terminate the existing $20 million credit facility with its satellite vendor Sierra Nevada Corporation that was available under the OG2 satellite development programme, and can obtain additional financing through a revolving working capital facility with other lenders for up to $15 million in the form of inventory and accounts receivable borrowing based loans.

Sagent Advisors, LLC advised ORBCOMM on the financing. Milbank, Tweed, Hadley & McCloy LLP acted as legal advisor to ORBCOMM.

ORBCOMM’s customers include Caterpillar Inc., Doosan Infracore America, Hitachi Construction Machinery, and Hyundai Heavy Industries, Asset Intelligence (a subsidiary of I.D. Systems, Inc.), Komatsu Ltd., Manitowoc Crane Companies, Inc., and Volvo Construction Equipment. By means of a global network of low-earth orbit (LEO) satellites and accompanying ground infrastructure, ORBCOMM’s two-way data communication services track, monitor and control mobile and fixed assets in the core markets of commercial transportation; heavy equipment; industrial fixed assets; marine and homeland security. ORBCOMM-based products are installed on trucks, containers, marine vessels, locomotives, backhoes, pipelines, oil wells, utility meters, storage tanks and other assets.

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