Moody’s rates Iridium B2, notes Caa1

Moody's Investors Service said it assigned a B2 corporate family rating, B2-PD probability of default rating and SGL-2 speculative grade liquidity rating to Iridium Communications Inc.

The agency also assigned a Caa1 (LGD6) rating to the company's proposed $360 million senior unsecured note offering.

The company intends to use the proceeds to fund capital investments, contribute additional funds to an existing debt service reserve account associated with a fully drawn $1.8 billion credit facility with BPI France Assurant Export SAS (BPIAE) issued at Iridium Satellite LLC (an operating subsidiary of Iridium), repay a vendor note with satellite manufacturer Thales Alenia Space, and for general corporate purposes.

The outlook is stable.

Moody’s said the B2 corporate family rating reflects the company’s small scale, high leverage and projected peak negative free cash flow for 2018 as the company nears completion of a multi-year capital investment in Iridium NEXT, a next-generation satellite constellation now partially deployed and expected to be fully operational by second half 2018.

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