Satellite industry giant Maxar plans to sell its Canadian space robotics arm – MacDonald, Dettwiler and Associates (MDA) – to a consortium led by Toronto-based investment firm Northern Private Capital (NPC). The CAD $1 billion ($765 million) deal is being proposed so that Maxar, a provider of advanced geospatial and space-based technology solutions, can meet its near-term priority of paying down debt and reducing leverage.
As of September 2019, Maxar’s long-term debt stood at $3.13 billion. MDA’s sale, combined with the recent earnings from real estate trades in Palo Alto, California, will help to take that hefty debt down by more than $1 billion.
“Also, the loss of future cash flow from MDA will be significantly offset by interest savings from the reduction of debt,” points out Biggs Porter, Maxar CFO. Porter also explains that while the sale of MDA will reduce the size of the overall company, Maxar could continue to expect significant growth over the next several years as the construction spends on WorldView Legion constellation complete and the satellites come online in 2021.
As part of the current deal, all of MDA’s Canadian assets – ground stations, radar satellite products, robotics, defense, and satellite components, and almost 1,900 employees – will be acquired by NPC. However, there are no plans to change the company name and the MDA team will continue to operate as a stand-alone company within NPC’s portfolio. Maxar also plans to retain MDA as its commercial partner by continuing to purchase certain components and subsystems from the latter.
“After the transaction is complete, Maxar will retain leading capabilities in geospatial data and analytics, satellites, space robotics, and space infrastructure, and we will continue to have strong alignment with our defense and intelligence customers, the evolving requirements of civil governments, and the pursuit of innovation seen in the commercial marketplace,” Maxar CEO Dan Jablonsky sums up.