On 27 September 2018, SpeedCast International Limited’s (ASX:SDA) share prices increased by 5.852% as the company announced pricing of $175 million Incremental Term Loan add on to its existing $425 million US Term Loan B facility. The incremental Term Loan and the Existing Term Loan both will be priced at LIBOR plus 2.75% p.a., which is a 0.25% p.a. increase on the current interest margin under the Existing Term Loan and both will have same terms. The incremental debt will be used to complete the acquisition of Globecomm Systems for approximately $135 million which is expected to occur in the last quarter of FY 2018 and it will improve company’s liquidity position. This incremental term loan will help in building strong relationships with institutional lenders in the US Term Loan B market. The proceeds from the loan will be used to pay fees, transaction expenses and to repay a portion of the loans outstanding under its Revolving Credit Facility.
The total facility size of the Term Loan is $600 million which is due in FY 2025. The total facility of the revolving Credit facility is $100 million which is due in FY 2023. The company has agreed upon an interest rate swap agreement in respect of 75 percent of the Existing Term Loan to fix the interest rate payable on the term loans for the duration of five years. To proactively manage its interest rate risk, the company is planning to enter into similar arrangements after completion of the Incremental Term Loan.
In the first half of FY2018, the total revenue of the company increased by 24% compared to last year to $305 million mainly due to increase in the VSAT activations and growth in wholesale voice commencement of National Broadband Network (NBN) contract. The growth in revenues was also driven by the favorable industry dynamics. Due to delay in the market recovery, the Energy segment underperformed in the first half of FY2018 and the Energy revenues were down by 17% in 1H 2018, however the company is well positioned to benefit from strong sector tailwinds and the Energy growth is expected to increase in FY2019 and FY2020. The underlying EBITDA of the company increased by 14% to $60 million in 1H2018 due to the operating leveraged achieved through increased sales and successful execution of cost synergy benefits. The NPATA of the company is increased by 37% due increased earnings and recent acquisitions.
SDA’s share traded at $4.160 with market capitalization of $940.95 million as on 27 September 2018 (AEST 2:20 PM).
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