Investor Presentation - Harris CapRock acq and Equity Raise
London, Nov 2, 2016 AEST (ABN Newswire) - Speedcast International Ltd (
ASX:SDA) is pleased to provide the company's Investor Presentation regarding Harris CapRock acquisition and equity raising.
Transaction highlights
Summary
Key highlights
- Highly strategic acquisition at an attractive valuation:
-- Creation of a global and diversified industry leader
-- Expansion of the maritime business with global leadership in maritime broadband services
-- A global leader in the energy sector, acquired at a low point in the market cycle and well positioned for future growth
-- Significant operational and economic benefits of scale
- Significant annual cost synergies:
-- Estimated USD 24M delivered progressively over the 24 month period post acquisition, with USD 15M expected to be achieved within the first year post acquisition
- Significant EPS accretion - on a pro-forma full year basis, the acquisition is expected to be:
-- Double digit EPS accretive in 2017 before synergies; and
-- In excess of 40% EPS accretive pro-forma for USD 15M of cost-synergies anticipated to be achieved in year 1
Agreement to acquire Harris CapRock, a subsidiary of Harris Corporation, for USD 425M
Key terms and financial impact
- Acquisition will be funded via a fully-underwritten equity capital raising and a fully-underwritten syndicated debt facility:
-- ~AUD 295M equity raising via a 2-for-3 Accelerated Renounceable Entitlement Offer ("Entitlement Offer")
-- Balance of proceeds under a refinanced USD 385M (~AUD 507M) fully-underwritten syndicated debt facility
--- USD 365M (~AUD 480M) 3-year term loan, fully drawn at completion
--- USD 20M (~AUD 26M) undrawn revolving multi-currency facility
- Anticipated pro-forma LTM net debt / EBITDA of 3.0x for Dec-16(1) (pro-forma for Harris CapRock contribution to EBITDA and anticipated year-1 cost synergies of USD 15M)
-- Strong deleveraging expected to result in actual reported net debt / EBITDA ratio as at Jun-17 of c.3.0x and as at Dec-17 of less than 2.5x, in each case pro-forma for the impact of historical acquisitions and reflective of anticipated realisation of actual Harris CapRock synergies
- The transaction is expected to complete in Q1 2017 subject to customary closing conditions, including anti-trust and regulatory approval
Strategic benefits of the acquisition
1 Creation of a global and diversified industry leader
- Expands global footprint and infrastructure with strong geographic complementarity - gives SpeedCast an immediate geographic presence that it currently lacks in North America, Brazil, Norway and parts of Africa
- Acquisition enhances diversification across end-markets and geographies
2 Expansion of the maritime business with global leadership in maritime broadband services
- Strengthens maritime offering, which is additive to the recent WINS acquisition and a key growth segment
- Leading provider globally to the fast growing and bandwidth hungry cruise segment
- Attractive scale of the combined group enables greater competitiveness
-- SpeedCast's maritime business will more than double in terms of revenue
3 A global leader in the energy sector, well positioned for future growth
- Market leader in Energy, with complementary geographical overlap with SpeedCast
- Strong service and technology offering, creating upsell opportunities to SpeedCast customers
- Acquisition at an attractive stage in the cycle
4 Significant operational and economic benefits of scale
- One of the largest commercial buyers of satellite capacity globally
- Increased operational leverage
- Significant R&D capabilities
- Significant synergies expected, resulting in a high margin combined business
Conclusion and outlook
Group
- SpeedCast's new global footprint, scale, global network and product offering will enable new revenue opportunities and revenue synergies
- Competition for satellite communication services is vibrant and customers have many choices; evolving technologies means increased competition from new and varied sources
- The combination of Harris CapRock capabilities and SpeedCast's customer focused culture will create a strong global and diversified industry leader
- Expands SpeedCast's channels and product offering to a more global customer base with improved quality and choice, increased R&D, and innovative new services
Maritime
- The combination of Harris CapRock and WINS cruise businesses creates a strong global leader in that fast growing segment
- This acquisition of a leading global energy satellite communications provider will strengthen our maritime offering, which is a key growth segment
- SpeedCast reaches a significant scale that will allow it to better compete in the market
- We expect our maritime business to continue to be a key growth engine for the Group in 2017
Energy
- The energy sector has stabilised and is expected to show improvement through 2017, with the Group very well positioned to benefit from this improvement
- SpeedCast will benefit from Harris CapRock capabilities in competing against regional players in the Asia-Pacific region which is expected to support growth in market share
EEM
- EEM will also benefit from Harris CapRock presence in countries that are new for SpeedCast
- The scale of the Group will enhance competitiveness against smaller players
- Government business in developed markets is likely to experience growth momentum in 2017 further supported by SpeedCast having announced several key partnerships
- Cellular backhaul should be a strong growth engine on the back of a good pipeline
- SpeedCast will further develop its media business
To view the presentation, please visit:
http://abnnewswire.net/lnk/FH888442
About Speedcast International Ltd
Speedcast International Ltd (ASX:SDA) is the world's most trusted communications and IT services provider, delivering critical communications solutions to the Maritime, Energy, Mining, Media, Telecom, Cruise, NGO, Government, and Enterprise sectors. With more satellite capacity than any other provider, Speedcast enables faster, seamless pole-to-pole coverage from a global hybrid satellite, fiber, cellular, microwave, MPLS, and IP transport network with direct access to public cloud platforms. The company also integrates differentiated technology offerings that provide smarter ways to communicate and distribute content, manage network and remote operations, protect and secure investments, and improve the crew and guest experience. With a passionate customer focus and a strong safety culture, Speedcast serves more than 3,200 customers in over 140 countries. Learn more at www.speedcast.com.
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