Maxar plans to use the proceeds to pay down
debt and fund investments in its core areas of Earth Intelligence
and Space Infrastructure
Maxar will continue to be trusted,
end-to-end solutions provider to world’s most sophisticated
government and commercial entities
Maxar Technologies (NYSE:MAXR) (TSX:MAXR), a trusted partner and
innovator in Earth Intelligence and Space Infrastructure, today
announced it has entered into a definitive agreement to sell MDA to
a consortium of financial sponsors led by Northern Private Capital
(NPC), for CAD$1 billion (US$765 million), subject to customary
adjustments. The company expects to use proceeds to reduce leverage
and improve its capital structure to prioritize investments for
growth in its core areas of Earth Intelligence and Space
Infrastructure.
The transaction includes all of MDA’s Canadian businesses,
encompassing ground stations, radar satellite products, robotics,
defense, and satellite components, representing approximately 1,900
employees. These businesses are expected to generate approximately
US$370 million and US$85 million in revenue and Adjusted EBITDA,
respectively in 2019. This revenue is inclusive of approximately
US$78 million of intercompany sales to other Maxar entities.
Following the completion of the transaction, the MDA team will
operate as a stand-alone company within NPC’s portfolio, retaining
its name and standing as the leading space and defense company in
Canada. MDA expects to continue to supply Maxar with certain
components and subsystems, and the companies expect to sell each
other’s complementary satellite data. The revenue and Adjusted
EBITDA numbers for MDA highlighted above include approximately
US$52 million of revenue and US$29 million of Adjusted EBITDA for
certain radar related imagery sales which have historically been
included in Maxar’s imagery segment. This business activity has
been included in the sale of MDA.
“The sale of MDA furthers execution on the company’s near-term
priority of reducing debt and leverage,” said Dan Jablonsky, Maxar
CEO. “It also provides increased flexibility, range, and focus to
take advantage of substantial growth opportunities across Earth
Intelligence and Space Infrastructure categories. After the
transaction is complete, Maxar will retain leading capabilities in
geospatial data and analytics, satellites, space robotics, and
space infrastructure, and we will continue to have strong alignment
with our defense and intelligence customers, the evolving
requirements of civil governments, and the pursuit of innovation
seen in the commercial marketplace. We thank the talented employees
of MDA, who have built a world-class business with unique
capabilities, and we look forward to working with them as a
commercial partner and component supplier to Maxar going
forward.”
“This transaction — when combined with the recently completed
sale of real estate in Palo Alto — reduces Maxar’s overall debt by
more than $1 billion and significantly reduces Maxar’s leverage
ratio,” said Biggs Porter, Maxar CFO. “Also, the loss of future
cash flow from MDA will be significantly offset by interest savings
from the reduction of debt. We expect the net effect of all these
factors to only reduce our prior guidance for Adjusted EBITDA and
free cash flow generation in the 2022 to 2023 time period by
approximately $50 million.”
Porter continued, “While the sale of MDA will re-baseline the
size of the overall company, we continue to expect significant
Adjusted EBITDA and Free Cash Flow growth over the next several
years as the Legion constellation construction spend completes and
the constellation comes online, Services executes on its growing
backlog, and Space Infrastructure sees improved profit and cash
flow driven by recent re-engineering efforts and new program
wins.”
The completion of the transaction is conditioned on regulatory
approvals, including review by the Committee on Foreign Investment
in the United States, Hart-Scott-Rodino review by the U.S.
Department of Justice and the U.S. Federal Trade Commission, and
Canadian government reviews under the Radiocommunications Act and
the Competition Act.
PJT Partners, RBC Capital Markets, and Bank of America Merrill
Lynch are serving as financial advisors to Maxar. Wachtell, Lipton,
Rosen & Katz and Stikeman Elliott LLP are serving as the
company’s legal advisors for this transaction.
The amounts of revenue and Adjusted EBITDA given above in this
release represent the expected results of MDA as they flow into
Maxar’s Space Systems and Imagery segments and will vary from the
amounts ultimately classified as discontinued operations for MDA,
which will reflect interest, depreciation, amortization, taxes,
certain corporate expenses, and the effect of blending margins on
projects for which MDA is an intercompany subcontractor. The MDA
businesses are expected to have approximately US$10 million in
Depreciation and Amortization expense.
About Maxar Technologies
Maxar is a trusted partner and innovator in Earth Intelligence
and Space Infrastructure. We deliver disruptive value to government
and commercial customers to help them monitor, understand, and
navigate our changing planet; deliver global broadband
communications; and explore and advance the use space. Our unique
approach combines decades of deep mission understanding and a
proven commercial and defense foundation to deploy solutions and
deliver insights with unrivaled speed, scale, and cost
effectiveness. Maxar’s 5,900 team members in 30 global locations
are inspired to harness the potential of space to help our
customers create a better world. Maxar trades on the New York Stock
Exchange and Toronto Stock Exchange as MAXR. For more information,
visit www.maxar.com.
Forward-Looking Statements
Certain statements and other information included in this
release constitute "forward-looking information" or
"forward-looking statements" (collectively, "forward-looking
statements") under applicable securities laws. Statements including
words such as "may", "will", "could", "should", "would", "plan",
"potential", "intend", "anticipate", "believe", "estimate" or
"expect" and other words, terms and phrases of similar meaning are
often intended to identify forward-looking statements, although not
all forward-looking statements contain these identifying words.
Forward-looking statements involve estimates, expectations,
projections, goals, forecasts, assumptions, risks and
uncertainties, as well as other statements referring to or
including forward-looking information included in this
presentation.
Forward-looking statements are subject to various risks and
uncertainties which could cause actual results to differ materially
from the anticipated results or expectations expressed in this
presentation. As a result, although management of the Company
believes that the expectations and assumptions on which such
forward-looking statements are based are reasonable, undue reliance
should not be placed on the forward-looking statements because the
Company can give no assurance that they will prove to be correct.
The risks that could cause actual results to differ materially from
current expectations include, but are not limited to, the risk
factors and other disclosures about the Company and its business
included in the Company's continuous disclosure materials filed
from time to time with U.S. securities and Canadian regulatory
authorities, which are available online under the Company's EDGAR
profile at www.sec.gov, under the Company's SEDAR profile at
www.sedar.com, or on the Company's website at www.maxar.com.
The forward-looking statements contained in this release are
expressly qualified in their entirety by the foregoing cautionary
statements. All such forward-looking statements are based upon data
available as of the date of this presentation or other specified
date and speak only as of such date. The Company disclaims any
intention or obligation to update or revise any forward-looking
statements in this presentation as a result of new information or
future events, except as may be required under applicable
securities legislation.
Non-GAAP Financial Measures
See supplemental financial information found on the company’s
website www.maxar.com for reconciliation of the types of non-GAAP
financial metrics found in this release. No reconciliation of the
forward-looking non-GAAP metrics used in this release is available
as certain components of such a reconciliation are not reasonably
determinable. In addition to results reported in accordance with
U.S. GAAP, we use certain non-GAAP financial measures as
supplemental indicators of our financial and operating performance.
These non-GAAP financial measures include EBITDA and Adjusted
EBITDA.
We define EBITDA as earnings before interest, taxes,
depreciation and amortization, and Adjusted EBITDA as EBITDA
adjusted for certain items affecting comparability as specified in
the calculation. Management believes that exclusion of these items
assists in providing a more complete understanding of our
underlying results and trends, and management uses these measures
along with the corresponding U.S. GAAP financial measures to manage
our business, evaluate our performance compared to prior periods
and the marketplace, and to establish operational goals. Adjusted
EBITDA is a measure being used as a key element of our incentive
compensation plan. The Syndicated Credit Facility also uses
Adjusted EBITDA in the determination of our debt leverage covenant
ratio. The definition of Adjusted EBITDA in the Syndicated Credit
Facility includes a more comprehensive set of adjustments.
We believe that these non-GAAP measures, when read in
conjunction with our U.S. GAAP results, provide useful information
to investors by facilitating the comparability of our ongoing
operating results over the periods presented, the ability to
identify trends in our underlying business, and the comparison of
our operating results against analyst financial models and
operating results of other public companies.
EBITDA and Adjusted EBITDA are not recognized terms under U.S.
GAAP and may not be defined similarly by other companies. EBITDA
and Adjusted EBITDA should not be considered alternatives to net
income (loss) as indications of financial performance or as
alternate to cash flows from operations as measures of liquidity.
EBITDA and Adjusted EBITDA have limitations as an analytical tool
and should not be considered in isolation or as a substitute for
our results reported under U.S. GAAP.
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version on businesswire.com: https://www.businesswire.com/news/home/20191230005078/en/
Media Contact Turner Brinton Maxar Media Relations
1-303-684-4545 turner.brinton@maxar.com
Investor Relations Contact Jason Gursky Maxar VP Investor
Relations 1-303-684-2207 jason.gursky@maxar.com
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