Maxar’s headquarters. Photo: DigitalGlobe

Maxar Technologies has agreed to sell MDA for $765 million to a consortium of financial sponsors led by Northern Private Capital, Maxar announced on Dec. 30. The company expects to use proceeds to reduce leverage and improve its capital structure to prioritize investments for growth in its core areas of Earth intelligence and space infrastructure.

MDA has been an independent business unit within Maxar. The transaction includes all of MDA’s Canadian businesses, encompassing ground stations, radar satellite products, robotics, defense, and satellite components, representing approximately 1,900 employees. These businesses are expected to generate approximately $370 million and $85 million in revenue and Adjusted EBITDA, respectively in 2019. This revenue includes approximately $78 million of intercompany sales to other Maxar entities. The company said that after the sale, the MDA team will operate as a stand-alone company within NPC’s portfolio, retaining its name and standing as a Canadian space and defense company. MDA expects to continue to supply Maxar with certain components and subsystems, and the companies expect to sell each other’s complementary satellite data.

“This transaction — when combined with the recently completed sale of real estate in Palo Alto — reduces Maxar’s overall debt by more than $1 billion and significantly reduces Maxar’s leverage ratio,” Maxar CFO Biggs Porter said. “Also, the loss of future cash flow from MDA will be significantly offset by interest savings from the reduction of debt. We expect the net effect of all these factors to only reduce our prior guidance for Adjusted EBITDA and free cash flow generation in the 2022 to 2023 time period by approximately $50 million.”