JP Morgan and Bear Stearns are leading $375 million of loans for Hughes Network Systems (HNS). The debt consists of a $50 million revolver, a $275 million first lien and a $50 million second-lien tranche. Pricing is LIBOR plus 3% on the revolver and term loan "B" and LIBOR plus 6 3/4% on the second-lien. The facility replaces a proposed $50 million revolver and a $325 million senior notes offering, which was shelved due to choppiness in the high-yield market earlier this month.
SkyTerra Communications, which is 63% owned by private equity fund Apollo Management, is buying 50% of HNS. The facility will be used to finance the acquisition and complete the company's SPACEWAY 3 satellite.
Moody's Investors Service assigned B1 ratings to the first-lien debt and a B3 rating to the second lien. Moody's said the ratings reflect HNS' challenges from land-based competition, low margins and significant risk and spending associated with launching the SPACEWAY 3 satellite in late 2006.