The next few weeks are likely to be highly significant for O3b Networks as it looks to close the financing deals vital for its future and become fully funded. The company, which has SES as one of its shareholders, is at a stage where it needs to get its financing issues sorted out so it can move to the next stage of its business plan. Mark Rigolle, CEO, O3b Networks discussed O3b’s funding plans.

Rigolle: I think the key thing we need to do which will enable us to continue to tackle issues on satellites, ground segment and launch vehicles is to get fully funded. That looks like it is going to be coming together in the next few months. The interesting thing about our funding is that there are four tranches, which makes it a complicated exercise that takes a lot of effort. The fact is, we are raising equity and issuing mezzanine debt and senior debt. A chunk of the debt is backed by Coface, the French export credit agency.  There are four different tranches, which means four different sets of investors, each with different interests. We have got to try and corral all of that ,which makes it a very stimulating exercise. We are almost there.

Rigolle: It is fair to say that when I joined in February, I would have wanted us to close this before the summer. Now, it is going to be after the summer, so there is some slippage. I think it was due to coordination of the various tranches and making sure you have something that works for everyone.

Rigolle: That is the second aspect that makes us different from other people. We are a project. We are still several years pre-revenue. It is probably easier if you have cashflow, even if there is only a trickle of cashflow, compared to what you are trying to raise. We have got nothing right now. That is a key difference. I can’t really blame the financial crisis or the banks’ problems for the time it is taking to get to where we are now. It just takes a lot of hard work. Apart from banks, we are also talking to development finance institutions. It takes time to get all these people comfortable and get through their internal processes. There is technical due diligence, legal due diligence, etc.

Rigolle: We are looking for $900 million in total financing. More than half of that ($500 million) is Coface backed, and the rest is equity, mezzanine and senior debt. Once that is in place, we will be in a much more solid place to map out our roadmap. You shouldn’t think we have only been talking to investors. At the same time, we have signed our ViaSat contract for the development of gateway terminal equipment, a key component of our network. That needed to be done. We also have launch contracts and satellite manufacturing contracts in place, but right now, we only have $175 million in equity, and we need to add $900 million in capital, and that is a big hurdle to get over.

Rigolle: We need to get all the funding sorted before Christmas. If we don’t meet that deadline, it becomes more difficult, and we have to start renegotiating contracts. We would have to start again, but I am 99.99 percent certain we will have the financing in place. We are very close.