Yahsat secures $1.2bn loan to finance satellites

Al Yah Satellite Communications Company (Yahsat), UAE-based satellite operator and subsidiary of Mubadala Development Company, has secured commitments for $1.2 billion (Dh4.4bn) to finance its hybrid satellite communications system.

The 14-year financing has been split into a $1.014bn term loan, $100 million of stand-by facilities and a $80m in debt service reserve letter of credit.

"Yahsat received commitments from leading international and regional banks in the excess of $1.6bn for the $1.2bn financing, which is a testament to the strength of our sponsorship acknowledging our business model," said Jassem Mohamed Al Zaabi, CEO of Yahsat.

Samer Khalife, CFO of Yahsat, said "the success of this transaction is an endorsement of Yahsat, given the challenging global financial environment. We are grateful to the participating banks for their support".

In May Yahsat announced it is approaching the financial market to raise PPP-style project finance funding for its satellites. The first satellite Yahsat 1A is currently being built and will be launched in the fourth quarter of 2010. The second satellite, Yahsat 1B, will follow a few months later in the first half of 2011.

"We are pleased with the positive response to the financing for our wholly owned subsidiary. The deal is not only oversubscribed but has very competitive pricing and set structuring benchmarks for the region," said Derek Rozycki, Executive Director, Project & Corporate Finance at Mubadala. In the final allocations, 14 banks are participating and the margin on the loan starts at 1.1 per cent and increases to 1.4 per cent in the later years.