Orbimage announced Wednesday that it has entered into definitive agreements with a group of investors for the private sale of 3.25 million units (each unit consisting of one share of common stock and one five year warrant to purchase a share of common stock at $10.00) for a price of $10.00 per unit.
The $32.5 million in proceeds from the sale of these units represents the first tranche of equity financing for the NextView satellite project recently awarded to Orbimage by the National Geospatial-Intelligence Agency.
In addition to the shares and warrants to be issued to the investor group as part of this sale, Orbimage has issued to the members of the investor group 1.0 million warrants to purchase a share of common stock at $10.00 per share for a period of five years in consideration for the investor groups commitment to purchase up to an additional 3.25 million units should the rights offering described below not be fully subscribed to by the Company’s shareholders.
The shares, warrants and shares issued upon the exercise of the warrants have not been registered under the Securities Act of 1933 although the Company has committed to file a registration statement for these securities promptly.
The Company is currently planning to conduct a rights offering to its shareholders that would commence in late 2004 or early 2005 to purchase an additional 3.25 million units (each unit to consist of one share of common stock and one five year warrant to purchase a share of common stock at $10.00) to the investor group for a price of $10.00 per unit.
Any rights offering by the Company would be conducted only pursuant to an offering registered under the Securities Act of 1933, and this notice of the proposed rights offering does not constitute an offer of any securities for sale.
The Company has not yet set a record date for the rights offering and will not announce such record date prior to its occurrence, but the Company expects that such record date will be set no earlier than early December 2004.
The shares issued in the placement announced today, along with any shares issued upon the exercise of the warrants issued to the investors participating in the placement will be eligible to participate in the rights offering.
As previously announced, the Company estimates that its total project cost (including financing and launch insurance costs) to bring the OrbView-5 satellite into service in the first quarter of 2007 will be approximately $502 million.
In order to perform its obligations under the NextView contract, Orbimage will fund its cost share for the project through a combination of an equity offering of $65 million (as noted above), an issuance of $155 million of senior subordinated indebtedness, and $45 million in cash flow from existing operations.
