Sunday, March 10, 2013

MacDonald Dettwiler to Issue $250M Stock Offering

High flying BC based MacDonald Dettwiler (MDA) has announced an agreement with a syndicate of underwriters led by RBC Capital Markets, BMO Capital Markets and TD Securities to issue $250 million in new MDA common shares. The proceeds from the sale will be used by MDA to reduce outstanding bank debt and "support future growth opportunities."

As outlined in the March 7th, 2013 MDA press release "MacDonald, Dettwiler and Associates Ltd. Announces $250 Million Offering of Common Shares," the firm has agreed to issue on a "bought deal" basis, 3,605,000 MDA common shares at $69.40 per share which will raise approximately $250 million CDN for the company.

MDA has won a number of contracts from the US for on-orbit satellite servicing.

MDA has also granted the underwriters something called an "over-allotment option" which will allow them to purchase up to an additional 540,750 common shares on the same terms and conditions, exercisable in whole or in part at any time following closing of the offering for a period of 30 days.

The shares will be offered by MDA under a short form prospectus to be filed in each of the provinces of Canada.

Oddly enough, the press release is listed as being "not for distribution to the US newswire services or dissemination to the United States." However, that's not to say that the Americans aren't aware of what's going on. For example, the March 7th, 2013 Bloomberg article, "MacDonald Dettwiler Launches to Orbit on Satellite Boom," states that the company stock has:
... surged 65 percent over the past 12 months, (and is) the best-performing stock among six peers in the S&P/TSX Information Technology index. It’s also the second-best performing stock in the benchmark S&P/TSX Composite Index (SPTSX) in 2013, rising 30 percent to an intraday record on March 6...
The Bloomberg article also considers the recent MDA purchase of Palo Alto, CA based Space Systems/ Loral (SS/L) to be the key to the firms continued growth:
“If you’re trying to sell into the U.S. government or NASA the key is having SS/L -- it’s a multi-billion dollar market,” (Thanos) Moschopoulos (an analyst with BMO Capital Markets) said. “Most of their business is commercial, so the government contracts are the growth opportunity.” 
The MDA order backlog was $2.9 billion in January 2013. This backlog included a $706 million contract from the Canadian government to help build the three satellites of the RADARSAT Constellation mission, which will be used to monitor Canadian territory for military and environmental purposes.

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