Source: Investing Published 02/10/2024, 00:37
Viasat Inc. (NASDAQ:VSAT), a global telecommunications company.
announced that it has entered into a major financial transaction.
as disclosed in its latest 8-K filing with the Securities and Exchange Commission. The company issued $1.975 billion of senior secured notes at a coupon rate of 9.000%, due September 15, 2029.
The notes were issued on September 25, 2024, by Connect Finco SARL and Connect U.S. Finco LLC, subsidiaries of Viasat. The issuance is subject to a trust deed that includes the terms of the notes and the obligations of the underwriters.
including Connect Bidco Limited. Viasat pays interest on the notes every six months, with the first payment due on March 15, 2025.
The notes rank equally with Viasat’s existing and future senior debt, secured by collateral held by the issuers or guarantors. They are also senior to any future subordinated and unsecured debt to the extent of the collateral.
Viasat has the option to redeem the notes, in whole or in part.
after September 15, 2026, at prices specified in the instrument. Prior to that date, the company may redeem the notes at a redemption price equal to 100% of the principal amount plus a “full redemption” premium.
The instrument contains covenants that restrict Viasat and its restricted subsidiaries from engaging in certain activities, such as incurring additional debt.
paying dividends, or selling assets without satisfying specified conditions.
On October 1, 2024, Viasat used the net proceeds from the offering and cash on hand to redeem all of its 6.750% senior secured notes due 2026. This redemption resulted in the satisfaction and discharge of the 2026 Notes.
the release of the guarantors’ obligations, and the release of all liens on the collateral related to the 2026 Notes.
In other recent news, Viasat was awarded a $33.6 million contract from the U.S. Air Force Research Laboratory to develop active electronically scanned array systems. Additionally, the company announced a $1.25 billion senior secured bond offering, intended to fund the redemption of a portion of its existing notes due in 2026. Viasat’s revenues tripled to $4.5 billion under the leadership of Sean Duffy, who will continue as chief accountant after stepping down as CFO.
In terms of strategic partnerships, Viasat has partnered with Airbus Defence and Space, and Azercosmos.
the national satellite operator of Azerbaijan. Notably, Deutsche Bank affirmed its “hold” rating on Viasat’s stock, and JPMorgan Chase & Co. downgraded Viasat from “a higher weight” to “neutral,” following United Airlines’ decision to transition from in-flight connectivity providers including Viasat to Starlink.
InvestingPro Insights
Viasat’s recent issuance of $1.975 billion in senior secured notes at a 9.000% coupon reflects the company’s strategic financial management, but it also highlights its significant debt load. According to InvestingPro data, Viasat’s market cap is $1.48 billion, significantly lower than the newly issued debt. This is consistent with InvestingPro’s advice that Viasat is “operating with a significant debt load.”
The company’s financial position is further illustrated by its price-to-book ratio of 0.29.
which suggests the stock may be undervalued relative to its assets. This reinforces another InvestingPro tip that states that Viasat is “trading at a low price/book multiple.” However, investors should note that the company has “not been profitable in the past 12 months,” which may explain the attractive valuation metrics.
Despite these challenges, analysts remain bullish on Viasat’s future. InvestingPro’s tip reveals that “analysts expect the company to be profitable this year.
” which could improve the company’s financial position and ability to manage its debt obligations.
For investors looking for a more comprehensive analysis, InvestingPro offers 12 additional Viasat tips.
providing a deeper understanding of the company’s financial position and market performance.
