Eutelsat - comment

Following its announcement of a large framework agreement with the French armed forces, Eutelst went further yesterday afternoon in also announcing the much anticipated capital raising program of €1.35bn. While the program is slightly smaller than the €1.5bn that previously made the rounds, it is well timed with the contract and should be a success. The capital raise will be split almost equally into a reserved capital raise led by France, accounts near to the sovereign and the Indian Barthi group, and a general rights issue. While discussions are ongoing for the UK to join the reserved raise, the transactions as thus far announced would result in France taking a 30% stake and its immediate orbit holding another 13%. Bharti slip just under 20%.

The transactions, which are to take place from Q325 onwards should leave the company only 2.5x leveraged. Management aim to keep leverage around 3x in the future. 

We note that in terms of leverage, this is probably as good as it will get for Eutelsat.