WASHINGTON — Maxar Technologies on June 25 said it will pay $140 million to take full ownership of Vricon, a move Maxar said won’t derail its effort to reduce its $2.9 billion debt load.
Vricon, a specialist in 3D geospatial products and analytics, will generate enough revenue to aid Maxar in deleveraging in 2021, Maxar said. The company expects the sale to close in July.
Maxar already owned 50% of Vricon, a joint venture formed by one of its predecessor companies, DigitalGlobe, and Swedish defense company Saab in 2015. Vricon generated $40 million in 2019 revenue, up 90% year over year, and $20 million in adjusted earnings before interest, taxes, depreciation and amortization.
Vricon uses satellite imagery from Maxar and intellectual property from Saab to make 3D mapping products. Maxar executives explained their motivation for buying Vricon in a June 24 conference call with analysts.
“We believe Vricon’s 3D technology and data sets are distinctive and particularly well suited for demanding defense and intelligence customer applications with customers that we know very well,” said Dan Jablonsky, Maxar’s chief executive. “There isn’t anything quite like it in the market.”
Biggs Porter, Maxar’s chief financial officer, said Vricon’s business model scales well, since it can create a product once and then sell copies of it several times. “This is an attractive profile for us,” he said.
Maxar is funding the Vricon by refinancing $150 million in debt. Maxar purchased back $150 million of senior secured notes that weren’t due until 2023 with a 9.75% interest rate, and sold a fresh $150 million in senior secured notes June 25 with a 7.54% interest rate that are not due until 2027.
Jablonsky said Vricon is expected to have $25 million in cash on hand at the time of purchase, which would then belong to Maxar, effectively lowering the purchase price to $115 million.
Maxar said it intends to appoint Gilman Louie, the chairman of Vricon’s board of directors, to its own board of directors once the transaction closes. Louie founded In-Q-Tel, a venture capital firm the U.S. government uses to make tech investments, and is a commissioner on the U.S. National Security Commission on artificial intelligence.
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June 26, 2020 at 03:01AM
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