Maxar has been unable to reduce its debt payments significantly and has found it hard to generate funds for the six satellites WorldView Legion imaging constellation that it is building in house. The first of these satellites is scheduled to launch in 2021 onboard a SpaceX Falcon 9 rocket.
Fremont, CA: Maxar Technologies is set to sell its Canadian outfit, MDA, to private equity firms, turning it into a standalone company and providing Maxar with much-needed debt relief. A consortium of firms led by Northern Private Capital has agreed to purchase MDA for a total of USD 765 million. The deal will be completed once the regulatory reviews in both the U.S. and Canada come through. The approval would result in MDA becoming a standalone company with ownership of all Canadian business assets of Maxar, including its notable work in synthetic aperture radar and space robotics technologies.
As per estimates, Maxar has a total of 1,900 employees, generating an estimated USD 370 million in revenues and USD 85 million in adjusted earnings before interest, taxes, debt, and amortization. “The sale of MDA furthers execution on the company’s near-term priority of reducing debt and leverage,” said Dan Jablonsky, chief executive of Maxar. "It also provides increased flexibility, range, and focus on taking advantage of substantial growth opportunities across Earth Intelligence and Space Infrastructure categories."
Maxar has been unable to reduce its debt payments significantly and has found it hard to generate funds for the six satellites WorldView Legion imaging constellation that it is building in house. The first of these satellites is scheduled to launch in 2021 onboard a SpaceX Falcon 9 rocket. Although the sale will significantly reduce the company's projected revenues and earnings in 2020 and years to come, Maxar believes it can use this reduction in interest payments to offset growth in other parts of the company.
“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, the chief financial officer of Maxar. "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."
The deal separates what was at the heart of Maxar Technologies. MDA was founded in 1969 as MacDonald, Dettwiler and Associates, and went on to become a leading Canadian space company, with expertise in space robotics and imaging radar systems. After the deal goes through, MDA will continue to have ties with Maxar Technologies as a supplier of components, which was valued at USD 78 million in 2019 by Maxar.