The loan bears a fixed interest rate of 9.5 percent, payable quarterly over the life of the loan. The expanded capital will build on Orbcomm’s current $33 million unfunded capital expenditure commitment for its OG2 satellite constellation that the company is could cover with expected cash flows through 2014.  

   With the new term loan in place, Orbcomm terminated its $20 million vendor financing agreement with Sierra Nevada that was originally secured as part of Orbcomm’s $117 million satellite manufacturing contract with the company, due to expire in 2013.

   Raymond James Analyst Chris Quilty said that in addition to funding capital expenditures, the loan should enable Orbcomm to fund the development of new products and services, grow its distribution, expand geographically and pursue potential acquisitions.

   “While not exactly in T-bill territory, the interest rate nonetheless appears appropriate given Orbcomm’s operational risk profile with two high-profile launches on the horizon and the absence of meaningful covenants,” Quilty said in a research note.

   The loan agreement also enables Orbcomm to obtain additional financing through a revolving working capital facility with other lenders for up to $15 million in the form of inventory and accounts receivable borrowing based loans.

   “We applaud Orbcomm management’s effort to shore up the balance sheet and increase financial flexibility,” said Quilty. “Orbcomm’s borrowing costs should decline substantially over time, but the company should have plenty of opportunities to refinance its debt as the company becomes operationally and financially self-sustaining and levers up the balance sheet to an appropriate leverage ratio over time.”

   Separately, Orbcomm announced it had collected a $10 million payout from its insurance agent as compensation for the loss of the company’s OG2 prototype satellite on a failed October 2012 launch attempt by SpaceX – the same mission that sent the launcher’s Dragon capsule to the International Space Station. The insurance payout was expected, the company said.