International law firm Milbank, Tweed, Hadley & McCloy LLP represented O3b Networks in their USD137 million financing for a series of four additional satellites to support super-fast broadband connections to Africa and other emerging markets. The project has been described by the BBC as “one of the most ambitious commercial space projects of the decade.”
In 2010, Milbank represented O3b Networks in its USD1.2 billion financing of the purchase from Thales Alenia Space of its first eight medium earth orbit satellites. This year’s financing of four additional satellites will serve to significantly boost both the throughput and redundancy of the O3b constellation, virtually doubling its capacity through a combination of additional beams and enhanced link efficiency. The O3b constellation will be placed in a Medium Earth Orbit (MEO) at an altitude of about 8,000km, providing coverage around the globe within a latitude of plus and minus 45 degrees.
O3b stands for the “other three billion,” a reference to nearly half of the world’s population that is not adequately served with broadband internet access due to the absence of a backbone of super-fast fibre-optic-cable connections in many regions. The project is designed specifically to provide “fibre in the sky” broadband internet access to this underserved populace.
The financing of this Project is unique in a number of respects. The Project has a multi-sourced financing structure which brings together one export credit agency, four commercial lenders, seven development finance institutions and nine equity investors. Although at first glance the sum raised for O3b is less dramatic than last year’s USD1.2 billion, this financing was a hugely efficient way of strengthening the company’s long term position in the market by allowing it to benefit from crucial economies of scale.
“One of the things that first attracted us to O3b Networks was the idea that the fleet is uniquely scalable,” says Larry Alder, Business Operations Director at Google, one of O3b’s earliest investors. “For relatively modest incremental investments, O3b can add meaningful quantities of high quality, low latency bandwidth and deliver it into the emerging world at sustainable and affordable prices.”
The Milbank team representing O3b Networks was based out of London, New York and Washington and included members of our Space Practice Group, our Global Project Finance Group and our Global Securities Group. John Dewar, lead partner for Milbank involved in the debt financing commented “this transaction was truly global and Milbank was uniquely positioned to provide O3b Networks with the support they needed to get the job done.” Peter Nesgos, head of the space business practice group, agrees: “Milbank’s role in this transaction involved an integrated team of legal professionals from three different practice groups across London, New York and Washington, all of which demonstrates our ability to serve our clients as a cohesive global team.”
