Viasat Issues $1.975 Billion in Senior Secured Notes

Viasat Inc. (NASDAQ:VSAT), a global communications company, has entered into a significant financial transaction, as detailed in a recent 8-K filing with the Securities and Exchange Commission. The company has announced the issuance of $1.975 billion in senior secured notes with a 9.000% interest rate, maturing on September 15, 2029.

The notes were issued on September 25, 2024, by Connect Finco SARL and Connect U.S. Finco LLC, both affiliates of Viasat. The issuance is governed by an indenture, which includes the terms of the notes and the obligations of the guarantors, including Connect Bidco Limited. Interest on the notes is payable semi-annually, with the first payment due on March 15, 2025.

These notes rank equally with Viasat's existing and future senior indebtedness and are secured by the collateral owned by the issuers or the guarantors. They are also senior to any subordinated indebtedness and future unsecured debt to the extent of the collateral's value.

Viasat has the option to redeem the notes, in whole or in part, after September 15, 2026, at the prices specified in the indenture. Prior to this date, the company may redeem the notes at a redemption price equal to 100% of the principal amount plus a "make-whole" premium.

The indenture includes covenants that restrict Viasat's and its restricted subsidiaries' ability to engage in certain activities, such as incurring additional debt, paying dividends, or selling assets without meeting specific conditions.

On October 1, 2024, Viasat used the net proceeds from the offering and cash on hand to redeem all of its outstanding 6.750% Senior Secured Notes due 2026. This redemption resulted in the satisfaction and discharge of the 2026 Notes Indenture, the release of the guarantors from their obligations, and the release of all liens on collateral related to the 2026 Notes.

In other recent news, Viasat Inc. has secured a $33.6 million contract from the U.S. Air Force Research Laboratory for the development of Active Electronically Scanned Array systems. Furthermore, the company has announced a $1.25 billion Senior Secured Notes offering, aiming to fund the redemption of part of its existing notes due in 2026. Viasat's revenues have tripled to $4.5 billion under the stewardship of Shawn Duffy, who will continue as Chief Accounting Officer after stepping down as CFO.

In terms of strategic partnerships, Viasat has aligned with Airbus Defence and Space, and Azercosmos, the national satellite operator of Azerbaijan. Notably, Deutsche Bank reiterated its Hold rating on Viasat stock, and JPMorgan downgraded Viasat from Overweight to Neutral, following United Airlines' decision to transition its In-Flight Connectivity services from providers including Viasat to Starlink.

InvestingPro Insights

Viasat's recent issuance of $1.975 billion in senior secured notes at a 9.000% interest rate reflects the company's strategic financial management, but also highlights its significant debt burden. According to InvestingPro data, Viasat's market capitalization stands at $1.48 billion, which is notably less than the newly issued debt. This aligns with an InvestingPro Tip indicating that Viasat "operates with a significant debt burden."

The company's financial position is further illuminated by its price-to-book ratio of 0.29, suggesting the stock may be undervalued relative to its assets. This is reinforced by another InvestingPro Tip stating that Viasat is "trading at a low Price / Book multiple." However, investors should note that the company is "not profitable over the last twelve months," which may explain the attractive valuation metrics.

Despite these challenges, analysts remain optimistic about Viasat's future. An InvestingPro Tip reveals that "analysts predict the company will be profitable this year," which could potentially improve the company's financial health and ability to manage its debt obligations.

For investors seeking a more comprehensive analysis, InvestingPro offers 12 additional tips on Viasat, providing a deeper understanding of the company's financial position and market performance.

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