UrtheCast To Raise $100 Million and Acquire the Deimos Imaging Earth Observation Business from Elecnor, S.A.Tuesday, June 23, 2015
UrtheCast to acquire ownership and operation of the Deimos-1 and Deimos-2 satellites, satellite operations and their global archive.
Vancouver, BC, June 23, 2015--(T-Net)--UrtheCast announced today that its subsidiary has entered into a definitive agreement with Elecnor, S.A. ("Elecnor") to acquire Elecnor's Earth Observation business dba Deimos Imaging (the "Acquisition") for an aggregate price of €74.2 million, subject to customary working capital adjustments, with €69 million due at closing and €5.2 million to be paid over the next five years.
To carry out the Acquisition, UrtheCast's wholly-owned subsidiary, UrtheCast International Corp., has entered into a share purchase agreement with Elecnor and Deimos Space, S.L.U. to acquire the outstanding shares of Deimos Imaging, S.L.U. and DOT Imaging, S.L.U. (collectively, "DOT-Deimos").
DOT-Deimos owns and operates two satellites, Deimos-1 and Deimos-2. Subject to satisfaction of certain customary closing conditions, the Acquisition is expected to close on or before August 21, 2015, along with the execution of certain ancillary agreements.
Editor's Note: Concurrent with the acquisition announcement, Urthecast also announced today that it plans to raise $100 million in new capital to finance the acquisition. Details on the financing being raised are listed below the acquisition announcement details, at very bottom of page.
“This is an incredible acquisition that epitomizes technological and operational synergy,” explained Scott Larson, UrtheCast Co-founder and Chief Executive Officer. “UrtheCast is rapidly accelerating its mission to democratize Earth Observation imagery, and bring a unique dataset and distribution model to customers and users that up until now, haven't had this type of access.”
Fabrizio Pirondini, Deimos Co-founder and Chief Executive Officer, added: “This is a superb opportunity for all involved, and opens up a world of possibilities for our respective sales teams. The sale of EO data and value-added services is at the core of our operations, such that our synergies and objectives for this acquisition are perfectly aligned.”
The Deimos-1 satellite:
The Deimos-2 satellite:
The combination of UrtheCast and Deimos is expected to allow UrtheCast to accelerate its own strategy — achieved through the use of Deimos' imagery archive on UrtheCast's web platform, distributing fresh imagery through UrtheCast's established distribution channels, customers and web platform, leveraging each company's established relationships and building upon each other's infrastructure.
In addition, UrtheCast and Deimos Space have signed a Mutual Cooperation Agreement that will allow both companies to look for opportunities in the market for the benefit of both companies. Deimos Space will be the exclusive provider for receiving stations for the Deimos-1 and Deimos-2 satellites.
Also, under this agreement, the companies will work together on UrtheCast's recently announced optical and SAR satellite constellation in the areas of the headquarter mission control centre, direct tasking and receive ground stations, mission analysis and flight dynamics, and in the integration and testing of the SAR payloads.
Raymond James Ltd. has acted as financial advisor to UrtheCast in connection with the Acquisition and has provided a fairness opinion to the Board of Directors.
About UrtheCast Corp.
UrtheCast Corp. is a Vancouver-based technology company that is developing the world's first Ultra HD video feed of Earth, streamed from space in full color. Working with prominent aerospace partners from across the globe, UrtheCast has built, launched, installed, and will soon operate its Ultra HD video camera, Iris, on the ISS alongside its Medium Resolution Camera ("MRC") which reached Initial Operation Capability ("IOC") in 2014. Video and still image data captured by the cameras will be downlinked to ground stations across the planet and displayed on the UrtheCast web platform, or distributed directly to partners and customers. UrtheCast's cameras will provide Ultra HD video and still imagery of Earth that will allow for monitoring of the environment, humanitarian relief, social events, agricultural land, etc. Common shares of UrtheCast trade on the Toronto Stock Exchange as ticker 'UR'.
For more information visit UrtheCast's website at www.urthecast.com.
About UrtheCast's high-resolution camera Iris
UrtheCast's High-Resolution Camera, Iris, is a multispectral imager mounted on a bi-axial pointing platform that provides a pitch/roll pointing capability to image points between ±52 degrees latitude. This allows it to capture full-color video sequences that are approximately 1m GSD and approximately 60 seconds in length through a wide range of oblique-look angles. The image size for the Video is approximately 5.5 x 3.5 km.
About UrtheCast's medium-resolution camera Theia
UrtheCast's MRC, Theia, is a conventional linear Charge-Coupled Device (CCD) pushbroom camera. It produces strips of medium-resolution, 4-channel multispectral imagery with a GSD of approximately 5m and a swath width of approximately 50km. Theia's daily collection capability is approximately 29-million km².
Additional Details on Related Urthecast Financing Announcement - See Below
UrtheCast Corp. to Raise $100 Million of New Capital in Conjunction With Acquisition of the Earth Observation Business of Elecnor, S.A.
Vancouver, BC, June 23, 2015--(T-Net)--UrtheCast Corp. (TSX:UR) also announced today that it has entered into an agreement with a syndicate of underwriters led by Raymond James Ltd. (collectively, the "Underwriters"), pursuant to which the Underwriters have agreed to purchase 12,500,000 subscription receipts ("Subscription Receipts") at a price of $4.00 per Subscription Receipt (the "Offering Price") for aggregate gross proceeds of CAD$50 million (the "Offering").
UrtheCast also announced that it has received a binding commitment letter, subject to certain conditions, for a first priority secured term loan in the amount of €37.5 million (approximately CAD$52 million) (the "Debt Financing") from a division of a global alternative investment management organization based in New York (the "Lender").
The net proceeds from the Offering and the Debt Financing will be used by UrtheCast to fund, in part, the purchase price of the acquisition of Elecnor, S.A.'s Earth Observation ("EO") business (the "Acquisition"), which is expected to close on or before August 21, 2015.
In addition, the Company has granted the Underwriters an option (the "Over-Allotment Option") to purchase up to an additional 1,875,000 Subscription Receipts at the Offering Price exercisable in whole or in part at any time and from time to time up to 30 days following the Closing Date (as hereinafter defined), for market stabilization purposes and to cover over-allotments, if any. If the Over-Allotment Option is exercised in full, an additional CAD$7.5 million will be raised pursuant to the Offering and the aggregate gross proceeds of the Offering will be CAD$57.5 million.
Each Subscription Receipt will entitle the holder thereof to receive, without payment of additional consideration or further action, one common share of the Company (a "Common Share") in exchange for each Subscription Receipt.
The Subscription Receipts will be issued pursuant to a subscription receipt agreement (the "Subscription Receipt Agreement") to be dated as of the Closing Date, pursuant to which the gross proceeds of the Offering less the Underwriters' expenses and 50% of the Underwriters' commission payable in connection with the Offering (the "Escrowed Proceeds"), will be held in escrow in an interest bearing account pending the closing of the Acquisition. Upon satisfaction or waiver of the conditions to completion of the Acquisition in accordance with the terms of the definitive purchase agreement signed in respect thereof (the "Purchase Agreement"), without amendment or waiver materially adverse to the Company (except for payment of the purchase price and such other conditions that by their nature are to be satisfied at the closing of the Acquisition (the "Escrow Release Conditions"), the remaining 50% of the Underwriters' commission (plus accrued interest) will be released to the Underwriters, the Escrowed Proceeds remaining thereafter will be released to the Company and each Subscription Receipt will be exchanged for one Common Share.
If the Acquisition is not completed prior to 5:00 p.m. (Vancouver time) on the date that is 90 days following the Closing Date, the Purchase Agreement is terminated at an earlier time or UrtheCast advises the subscription receipt agent and Raymond James Ltd., or announces to the public, that it does not intend to proceed with the Acquisition, holders of the Subscription Receipts will receive an amount per Subscription Receipt equal to the Offering Price plus a pro rata share of the interest earned on the Escrowed Proceeds, net of any applicable withholding taxes. To the extent that the Escrowed Proceeds (plus accrued interest) are not sufficient to redeem all of the Subscription Receipts for cancelation at the Offering Price, the Company will contribute such amounts as are necessary to satisfy any shortfall.
The Offering is expected to close on or about July 7, 2015 (the "Closing Date") and is subject to certain conditions, including but not limited to the receipt of all necessary approvals including the approval of the Toronto Stock Exchange.
UrtheCast will file a prospectus supplement to its short form base shelf prospectus in the provinces ofSaskatchewan, Manitoba, New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland and Labrador and its amended and restated short form base shelf prospectus in the provinces of British Columbia, Alberta and Ontariodated May 15, 2015, as may be amended, qualifying the issuance of the Subscription Receipts and the underlying Common Shares issuable upon exchange thereof, including any Subscription Receipts or Common Shares issued pursuant to the exercise of the Over-Allotment Option. The Subscription Receipts may also be offered in the United States on a private placement basis pursuant to an exemption from the registration requirements of the U.S. Securities Act and certain other jurisdictions.
This press release does not constitute an offer of securities for sale in the United States. The Subscription Receipts and the Common Shares issuable upon exchange thereof have not been, and will not be, registered under the U.S. Securities Act and such securities may not be offered or sold within the United States absent U.S. registration or an applicable exemption from U.S. registration requirements.
The Debt Financing will have a five-year term and is secured by, among other things, a first priority security interest over all of the assets of UrtheCast. Subject to the satisfaction of certain conditions precedent customary for a financing of this type, funds will be available under the Debt Financing by way of a single draw at the closing of the Acquisition.
Funds borrowed under the Debt Financing will accrue interest at a rate equal to the greater of (i) one, three or six month EURIBOR or (ii) 1% plus 9.25%, except that, if UrtheCast elects to repay up to 3% of the interest rate through the addition of this amount to the principal, the rate shall increase to 1% plus 10.25% for the period during which such election applies.
Prepayments will be permitted at UrtheCast's option at any time, subject to payment of, in the case of repayment during (i) the first two years of the term of the Debt Financing, a make-whole payment equal to the sum of all interest payments due during those first two years (including any capitalized interest) plus 3% of the principal being repaid or (ii) the third or fourth years of the term of the Debt Financing, an early termination fee equal to the principal (including any capitalized interest) multiplied by 3% or 1%, respectively.
The commitment letter and related agreements in respect of the Debt Financing contain representations and warranties, affirmative and negative covenants (including requirements for UrtheCast to meet certain financial ratios on an ongoing basis) and events of default that are customary for lending facilities of this nature.
Forward Looking Information
This release contains certain information which, as presented, constitutes "forward-looking information" within the meaning of applicable Canadian securities laws. Forward-looking information involves statements that relate to future events and often addresses expected future business and financial performance, containing words such as "believe", "expect", and "intend", statements that an action or event "may", "might", "could", "should", or "will" be taken or occur, or other similar expressions and includes, but is not limited to, statements about the closing of the Acquisition and the satisfaction of closing conditions required therefor, the ability of UrtheCast to finance of the Acquisition, the expected benefits of completing the Acquisition, the expected lifetimes of the Deimos-1 and Deimos-2 satellites, UrtheCast's expectations with respect to the operations of UrtheCast and Deimos following closing of the Acquisition, commissioning of Iris, plans to operate camera components on, and stream video footage from, the ISS, proposed image and video product offerings, expectations regarding the growth of commercial operations and expected partners and customers to distribute such products. Forward-looking statements and information are subject to various known and unknown risks and uncertainties, many of which are beyond the ability of UrtheCast to control or predict, and which may cause UrtheCast's or Deimos' actual results, performance or achievements to be materially different from those expressed or implied thereby, including, but not limited to, UrtheCast, Elecnor or Deimos Space Imaging, S.L.U. being unable to satisfy the conditions to closing the Acquisition, UrtheCast not realizing the expected strategic benefits of the Acquisition, undisclosed liabilities of the acquired business of DOT-Deimos, risks related to integration of UrtheCast and the acquired business of Deimos, risks related to the increased indebtedness of UrtheCast following payment of the purchase price of the Acquisition, the inability of UrtheCast to finance the purchase price of the Acquisition, risks related to the potential for regulatory review and unwinding of the Acquisition, risks related to the provision of Elecnor or its affiliates of transition services following completion of the Acquisition or their termination of such services, damage which may have occurred to UrtheCast's cameras during launch or installation, delays in the Iris commissioning process, unexpected changes in Russian, Canadian or European government policies, as well as those factors discussed in the Company's annual information form dated March 20, 2015, (the "AIF") and the Company's amended and restated short form base shelf prospectus dated May 11, 2015 (the "Prospectus") which are available under UrtheCast's SEDAR profile at www.sedar.com. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, in the AIF and Prospectus, and as otherwise disclosed from time to time on UrtheCast's SEDAR profile. Forward-looking information is developed based on assumptions about such risks, uncertainties and other factors set out herein, in the AIF and Prospectus, and as otherwise disclosed from time to time on UrtheCast's SEDAR profile. UrtheCast undertakes no obligation to update forward-looking statements except as may be required by applicable Canadian securities laws. Readers are cautioned against attributing undue certainty to forward-looking statements.
For further information:
CEO and Co-founder
(778) 331-7823 Direct
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