Represents approximately 35% of
Government Systems segment revenue
CARLSBAD, Calif., Oct. 3,
2022 /PRNewswire/ -- Viasat Inc. (NASDAQ:
VSAT), a global leader in satellite communications, today announced
it has entered into a definitive agreement to sell its Link 16
Tactical Data Links (TDL) business to L3Harris Technologies for
$1.96 billion, subject to customary
transaction adjustments in accordance with the agreement. The sale
is expected to result in cash proceeds to Viasat of approximately
$1.8 billion net after estimated
taxes, fees, and other expenses.
Viasat's Link 16 Tactical Data Link business is part of its
Government Systems segment. Over the past 25 years, the business
has grown to be a leading provider of Link 16 TDL products and
solutions. The sale of the business includes the Multifunctional
Information Distribution System (MIDS) platforms and associated
next-generation Link 16 terminals and handheld radios, as well as
the Link 16 to space business.
"This transaction will transform our balance sheet, reduce cash
interest obligations, and sharpen strategic focus while enabling
continued growth opportunities for the Link 16 business and
assuring our customers of a competitive, innovative and reliable
source for their future needs. The Link 16 Tactical Data Links
business has been an important contributor to Viasat's growth and
earnings and the transaction recognizes the value created by our
outstanding team. L3Harris has been a long-time Link 16 strategic
partner and has a portfolio that will benefit significantly from
these capabilities. Looking ahead, the ViaSat-3 constellation and
the Inmarsat acquisition both create greater forward-looking
government systems growth opportunities in space-based businesses
with more R&D, capital and operational synergies," said
Mark Dankberg, CEO and Chairman of
the Board, Viasat.
"Acquiring Viasat's TDL product line will amplify our existing
capabilities as a leading provider of resilient networking
solutions," said Christopher E.
Kubasik, L3Harris CEO and Chair. "Global national security
requirements are increasing rapidly in this sector, and now we will
be able to advance JADC2 and broaden our multi-function,
multi-domain mission solutions through integration with Link
16."
The Link 16 TDL business had approximately $400 million of revenue and an estimated
$125 million of Adjusted EBITDA for
the 12 months ended June 30, 2022,
the latter being burdened by the estimated amount of allocable
overhead and corporate expenses expected approximately one year
after closing.
Viasat intends to use the proceeds of the Link 16 TDL sale to
reduce net leverage and increase liquidity. Pro forma for the Link
16 TDL sale, standalone net leverage as of June 30, 2022 would have decreased from 4.2x to
approximately 1.4x LTM Adjusted EBITDA. Further, the proceeds
from the sale are expected to reduce the combined Viasat and
Inmarsat net leverage following the closing of the Inmarsat
acquisition by approximately 0.7 of a turn by June 30, 2023. Viasat expects proceeds to
fully fund path to positive free cash flow, including the proposed
Inmarsat transaction, with lower leverage and less cash
interest.
After giving pro forma effect to the Link 16 TDL sale, Viasat's
Government Systems segment would have generated approximately
$700 million in annual revenue for
the 12 months ended June 30, 2022.
Moving forward, this segment will focus on three core areas:
broadband and narrowband Satcom services, networking and
technology; information assurance and cybersecurity; and an
emerging portfolio of space-based services, including LEO to GEO
relay and networks for a range of earth observation and sensor
systems, alternate position, navigation and timing (PNT) and space
situational awareness.
The Inmarsat transaction continues to proceed as expected. Both
of these transactions will better support Viasat's transition to
earning a greater proportion of revenues from recurring
services-based models. Pro forma for the Link 16 TDL sale and the
Inmarsat acquisition, Viasat expects recurring services revenue to
increase to approximately 77% of total combined revenues.
The Link 16 TDL sale is expected to close in the first half of
calendar year 2023 and is subject to regulatory approvals and
customary closing conditions. Viasat received approval for the Link
16 TDL sale from Inmarsat's equity sponsors.
J.P. Morgan Securities LLC is serving as lead financial advisor
and PJT Partners is serving as financial advisor to Viasat. Latham
& Watkins LLP is serving as legal advisor to Viasat.
Forward-Looking Statements
This press release
contains forward-looking statements regarding future events and our
future results that are subject to the safe harbors created under
the Securities Act of 1933 and the Securities Exchange Act of 1934.
Forward-looking statements include, among others, statements that
refer to the proposed divestiture of our Link 16 Tactical Data
Links business to L3Harris (referred to herein as the "Link 16 TDL
sale") and any statements regarding the expected timing, costs and
benefits thereof, and timing or satisfaction of regulatory and
other closing conditions; the pending acquisition of Inmarsat
(together with the Link 16 TDL sale, the "Transactions") and
anticipated operations, financial position, liquidity, performance,
prospects or growth opportunities following the closing of the
Transactions; the performance and anticipated benefits of our
ViaSat-3 class satellites and any future satellite we may construct
or acquire; the expected completion, capacity, service, coverage,
useful life and other features of our satellites, and the timing,
cost, economics and other benefits associated therewith;
projections of earnings, revenue, costs or other financial items in
FY2023 and beyond; anticipated growth and trends in our business or
key markets; future economic conditions and performance; the
development, customer acceptance and anticipated performance of
technologies, products or services; anticipated growth
opportunities within our business segments; construction and launch
of our ViaSat-3 constellation; plans, objectives and strategies for
future operations; and other characterizations of future events or
circumstances, are forward-looking statements. Readers are
cautioned that these forward-looking statements are only
predictions and are subject to risks, uncertainties and assumptions
that are difficult to predict. Factors that could cause actual
results to differ materially include: risks and uncertainties
related to the Transactions, including the failure to obtain, or
delays in obtaining, required regulatory approvals or clearances
for either Transaction; the risk that any such approval may result
in the imposition of conditions that could adversely affect us or
the expected benefits of the Transactions; the failure to satisfy
any of the closing conditions to the Transactions on a timely basis
or at all; the occurrence of any event, change or other
circumstances that could give rise to the termination of the
definitive agreement for either Transaction; the ability to realize
anticipated benefits of the Transactions; our ability to
successfully integrate Inmarsat operations, technologies and
employees; our ability to realize the anticipated benefits of the
ViaSat-3 class satellites and any future satellite we may construct
or acquire; unexpected expenses related to our satellite projects;
our ability to successfully implement a services-based business
model; capacity constraints in our business in the lead-up to the
launch of services on our ViaSat-3 satellites; risks associated
with the construction, launch and operation of satellites,
including the effect of any anomaly, operational failure or
degradation in satellite performance; the impact of the COVID-19
pandemic on our business, suppliers, consumers, customers, and
employees or the overall economy; our ability to successfully
develop, introduce and sell new technologies, products and
services; audits by the U.S. Government; changes in the global
business environment and economic conditions; delays in approving
U.S. Government budgets and cuts in government defense
expenditures; our reliance on U.S. Government contracts, and on a
small number of contracts which account for a significant
percentage of our revenues; reduced demand for products and
services as a result of continued constraints on capital spending
by customers; changes in relationships with, or the financial
condition of, key customers or suppliers; our reliance on a limited
number of third parties to manufacture and supply our products;
increased competition; introduction of new technologies and other
factors affecting the communications and defense industries
generally; the effect of adverse regulatory changes (including
changes affecting spectrum availability or permitted uses) on our
ability to sell or deploy our products and services; changes in the
way others use spectrum; our inability to access additional
spectrum, use spectrum for additional purposes, and/or operate
satellites at additional orbital locations; competing uses of the
same spectrum or orbital locations that we utilize or seek to
utilize; the effect of recent changes to U.S. tax laws; our level
of indebtedness and ability to comply with applicable debt
covenants; our involvement in litigation, including intellectual
property claims and litigation to protect our proprietary
technology; and our dependence on a limited number of key
employees. In addition, please refer to the risk factors contained
in our SEC filings available at www.sec.gov, including our most
recent Annual Report on Form 10-K and Quarterly Reports on Form
10-Q. Readers are cautioned not to place undue reliance on any
forward-looking statements, which speak only as of the date on
which they are made. We undertake no obligation to revise or update
any forward-looking statements for any reason.
This press release includes stand-alone financial information of
Viasat, as well as pro forma information that gives effect to the
Link 16 TDL sale for the periods indicated, and certain pro forma
combined financial information that both gives pro forma effect to
the Link 16 TDL sale and combines financial information of Inmarsat
for the periods indicated. Pro forma and pro forma combined
financial information has been prepared for illustrative purposes
only and is not necessarily indicative of what the actual financial
position or results of operations would have been had the
applicable Transaction(s) been completed on the first day of the
period presented and does not include all pro forma adjustments
that would be required for pro forma presentation under US
GAAP.
About Viasat
Viasat is a global
communications company that believes everyone and everything in the
world can be connected. For over 35
years, Viasat has helped shape how
consumers, businesses, governments and militaries around the world
communicate. Today, the Company is developing the ultimate global
communications network to power high-quality, secure, affordable,
fast connections to impact people's lives anywhere they are—on the
ground, in the air or at sea. To learn more
about Viasat,
visit: www.viasat.com, go
to Viasat's Corporate Blog, or follow the
Company on social media
at: Facebook, Instagram, LinkedIn, Twitter or YouTube.
Copyright © 2022 Viasat, Inc. All rights
reserved. Viasat, the Viasat logo and
the Viasat signal are registered trademarks
of Viasat, Inc. All other product or company names
mentioned are used for identification purposes only and may be
trademarks of their respective owners.
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SOURCE Viasat, Inc.