ORBCOMM Refinances Debt and Loses S&P Rating

ORBCOMM has completed a significant restructuring of its capital structure, securing $460 million in new financing to replace its entire portfolio of publicly-traded debt. The refinancing arrangement, which includes a delayed draw term loan and a revolving credit facility, was provided by a consortium of private credit lenders comprising Carlyle, Bain Credit, and Morgan Stanley Private Credit.

The move to restructure the company's obligations has resulted in a formal withdrawal of its credit rating by S&P Global Ratings. Following the completion of the transaction, the ratings agency removed its B- classification and the associated negative outlook that had been in place for some time. ORBCOMM did not respond to requests for further comment regarding the rating withdrawal or the details of the new capital structure.

While S&P Global Ratings has exited its assessment of the firm, Moody's maintains its Caa1 rating for the company. The credit analyst firm notes that the debt-to-EBITDA ratio remains above 10x, a metric it has cited as a primary constraint on the business. This high leverage is attributed to the company's limited ability to convert order wins into service revenue alongside pressure from higher operating costs.

The current refinancing comes as revenue figures for the satellite communications provider have shown signs of contraction. Estimates suggest that revenue dropped below $300 million in 2024, down from approximately $310 million the previous year. Moody's analysis highlights that these financial pressures, combined with elevated costs, have weighed on EBITDA margins, reinforcing the concerns that have long plagued the firm's credit profile.

ORBCOMM was acquired by private equity firm GI Partners in 2021, transitioning the business from a publicly-traded entity to private ownership. The company has faced ongoing credit challenges since that acquisition, with S&P downgrading its rating to B- in July 2022 and placing it on CreditWatch negative in November of the same year. Although a capital infusion from GI Partners in late 2022 resolved a near-term cash shortfall, the negative outlook persisted until the recent refinancing event.

The new financing package is designed to provide committed capital and flexibility through the combination of undrawn term loan capacity and a revolving facility. In a prepared statement, the company described the transaction as reflecting strong support from leading institutional investors, though the statement also noted the refinancing of existing debt facilities without elaborating on future strategic plans beyond the immediate capital relief.