Creates leading global communications and information company
Investor conference call and webcast at 5:30 a.m. PDT/8:30 a.m. EDT on June 27, 2012
RICHMOND, BC, June 26, 2012 /CNW/ - MacDonald, Dettwiler and Associates Ltd. (TSX: MDA), a provider of essential information solutions, today announced that it has signed an agreement to acquire 100% of Space Systems/Loral, Inc. (SS/L) for US$875 million in a transaction that is immediately accretive. Headquartered in Palo Alto, California, SS/L is the global market leading provider of commercial communications satellites, serving a global customer base. The acquisition transforms MDA into a major player in commercial communications and provides the Company with critical mass in the U.S. market.
"This is a game changing transaction for our Company," said Daniel Friedmann, MDA's president and CEO. "With one move, we are bringing together two market leaders to create a unique global communications and information company with a strong commercial focus. Post-acquisition, more than two-thirds of MDA's total revenues will come from the commercial market."
The transaction meets MDA's long-term objective of gaining a stronger presence in the U.S. market. SS/L has a U.S.-based workforce of 3,200 highly skilled employees, and over one million square feet of state-of-the-art facilities. SS/L will continue to operate under its well-established brand and proven management team.
Following the acquisition, MDA will have combined annual revenues of $1.9 billion (calendar year 2011), and a combined backlog of $2.8 billion (March 31, 2012). The acquisition is also expected to provide global opportunities for future growth as MDA enters markets fuelled by some of today's most compelling consumer communications needs.
"Space Systems/Loral's business is fundamentally driven by the worldwide demand for television, digital audio, broadband Internet, mobile communications, and voice telephony," said Friedmann. "Billions of people around the world depend on these services and demand continues to increase. By acquiring one of the major companies that enable these essential communications services, MDA will move immediately to the forefront of this growing business."
SS/L has gained a strong market presence serving major commercial satellite operators and has been awarded more commercial satellite contracts worldwide than any other company since 2005 (Futron Satellite Orders Report). SS/L revenues for 2011 were US$1.1 billion, with pro-forma operating EBITDA of US$153 million. SS/L has a backlog of US$2 billion (March 31, 2012), providing good revenue visibility going forward.
"The combination of Space Systems/Loral's world-class commercial communications expertise with MDA's strengths in essential information solutions provides exciting opportunities for growth for the new company and continuous strong support to our current and future customers' business," said John Celli, president of Space Systems/Loral.
Transaction Details and Process
Loral Space & Communications Inc., the parent company of SS/L, and MDA have executed a definitive agreement. The boards of directors of MDA and Loral have each unanimously approved the terms of the agreement. The agreement is also subject to applicable regulatory approvals and certain closing conditions customary for this type of transaction. Subject to satisfying those approvals and closing conditions, the transaction is expected to be completed in a few months.
"This transaction is structured to provide MDA with a full tax step-up for the purchase price for U.S. tax purposes and the transaction is also immediately accretive to MDA's earnings per share," said Anil Wirasekara, MDA's executive vice-president and CFO. MDA will finance the transaction with cash on hand, a three-year note payable for US$101 million, and approximately US$500 million of borrowings under a new $1.1 billion fully committed and underwritten credit facility from RBC Capital Markets. The credit facility has an accordion feature to borrow an additional US$250 million. "Post transaction, MDA will maintain a prudent leverage ratio and will continue to have more than adequate capital to fund further growth opportunities," said Wirasekara.
BofA Merrill Lynch is acting as lead financial advisor to MDA in connection with the transaction. RBC Capital Markets also provided financial advice to MDA related to this transaction.
Investor Conference Call and Webcast
MDA will host a conference call and webcast on June 27, 2012 at 5:30
a.m. Pacific (8:30 a.m. Eastern), featuring remarks by Daniel
Friedmann, president and CEO, and Anil Wirasekara, executive
vice-president and CFO. A slide presentation will be available for
viewing during the conference call and webcast. To access this slide
presentation, please visit the following link:
Following the presentation, there will be an interactive question and answer session.
To participate in the question and answer session, please call the conference line approximately five minutes prior to the commencement of the call:
Canada or the United States: 1-888-231-8191
The slide presentation will be available at the following link, after
the conclusion of the conference call and webcast:
Telephone replay will be available from June 27, 2012 7:30 a.m. PDT (10:30 a.m. EDT) to July 4, 2012 8:59 p.m. PDT (11:59 p.m. EDT) at the following numbers:
Toll free: 1-855-859-2056
Pass Code: 94018297
MDA provides advanced information solutions that capture and process vast amounts of data, produce essential information, and improve the decision making and operational performance of business and government organizations worldwide.
Focused on markets and customers with strong repeat business potential, MDA delivers a broad spectrum of information solutions, ranging from complex operational systems, to tailored information services, to electronic information products.
The Company's common shares trade on the Toronto Stock Exchange under the symbol TSX:MDA.
Caution Regarding Forward Looking Information and Other Matters
This press release contains certain forward-looking statements and information which reflect the current view of MacDonald, Dettwiler and Associates Ltd. (the "Company" or "MDA") with respect to future events and financial performance. Forward-looking statements generally can be identified by the use of forward-looking terminology such as "may", "will", "would", "could", "should", "expect", "intend", "estimate", "anticipate", "plan", "foresee", "believe" or "continue", or the negatives of such terms or variations of them or similar terminology. The forward-looking statements in this press release are based on MDA's current expectations, estimates, projections and assumptions made in light of its experience and perception of historical trends. Forward-looking statements are subject to risks and uncertainties, many of which are beyond MDA's control and the effects of which can be difficult to predict. MDA's actual results of operations could differ materially from historical results or current expectations.
With regard to MDA's proposed acquisition of Space Systems/Loral, Inc. (SS/L), there can be no assurance that MDA will realize the anticipated benefits or results due to a variety of factors, including: inability to complete the acquisition in the timeframe anticipated or at all; inability to obtain governmental approvals of the transaction or satisfy other conditions to the transaction on the proposed terms and timeframe; the terms of the proposed transaction may need to be modified to obtain governmental approvals of the transaction or satisfy other conditions to the transaction; the ability to promptly and effectively integrate the businesses of MDA and SS/L; higher than anticipated integration costs; diversion of management time on acquisition-related issues; and failure to obtain the consent or other agreement of certain counterparties whose consent or agreement is required in order for MDA to acquire certain business relationships. The anticipated benefits from the proposed transaction, such as it being accretive to earnings, expanding the Company's presence and creating synergies and new opportunities for growth may not be realized in the time frame anticipated or at all as a result of several factors including changes in general economic and market conditions, laws and regulations and their enforcement, and the degree of competition in the geographic and business areas in which SS/L operates. Assumptions about current and expected capital requirements, SS/L revenues and expenses, the potential for earnings growth as well as costs associated with the transaction and expected synergies were material factors considered in estimating the internal rate of return to MDA and its estimate of the acquired business being accretive to MDA's earnings. Assumptions about our integration plan, the efficiency and duration of integration and the alignment of organizational responsibilities were material factors we considered in estimating transaction and integration costs.
Other risks that could cause actual results to differ from current expectations include: changes in government priorities, funding levels, contracts and regulations; failure of third parties and subcontractors to complete contracts for which the Company is the prime contractor; risks of performance on firm fixed-price construction contracts; changes in estimates of total revenues and costs on contracts; potential for product liability or the occurrence of defects in software and other products and resulting loss of revenue and loss of the Company's reputation; quality issues and failure of systems to meet performance requirements; failure of the Company to manage its acquisitions and breaches of contracts and indemnities and related risks on divestitures; satellite failure; dependence on electronic systems and data and system security threats; detrimental reliance on third parties for data; dependence on key employees, potential for work stoppages and lack of oversight over a U.S. proxy board and management; failure to anticipate changes in technology, technical standards and offerings or comply with the requisite standards; failure to maintain technological advances and market positions; significant competition; potential infringement of the intellectual property rights of others through licensed software or otherwise; inadequate protection of the Company's intellectual property rights; exposure to foreign currency fluctuations; changes in economic and political conditions; inability of suppliers or subcontractors to effect technology transfer; changes in customer security requirements and the resulting cancellation of contracts; failure to maintain business alliances; uncertainty in financing arrangements; failure of counterparties in financing arrangements and financial derivative contracts; wrongful call on letters of credit and performance bonds; and insufficient insurance against material claims or losses. We caution that the preceding list is not exhaustive of all possible risk factors and other factors could also adversely affect MDA's results.
You are referred to the risk factors described in MDA's most recent annual Management's Discussion and Analysis, Annual Information Form and other documents on file with the Canadian securities regulatory authorities, available on SEDAR, www.sedar.com or www.mdacorporation.com. All such factors should be considered carefully, as well as other uncertainties and potential events, and the inherent uncertainty of forward-looking statements, when making decisions with respect to MDA. The forward-looking statements and information contained in this press release represent MDA's views only as of today's date. All such statements are made pursuant to the "safe harbour" provisions of applicable Canadian and U.S. securities laws. MDA disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, other than as required by law, rule or regulation. You should not place undue reliance on forward-looking statements.
The Toronto Stock Exchange has neither approved nor disapproved the form or content of this release.
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