CASE STUDIES
ORBCOMM, Inc. (“ORBCOMM” or the “Company”) is a leading provider of global satellite data communications services for Machine-to-Machine (M2M) applications. ORBCOMM provides low cost, reliable, two-way data communications services around the world through a global network of 30 low-earth orbit (LEO) satellites and accompanying ground infrastructure. ORBCOMM's products are installed on trucks, trailers, railcars, containers, heavy equipment, fluid tanks, utility meters, pipelines, marine vessels, oil wells and other assets. The system can send and receive short messages, between six bytes and several kilobytes, in near real-time, allowing users to access critical information readily, often from areas beyond the geographic reach of terrestrial systems. Current customers and resellers include General Electric, Caterpillar, Volvo, Hitachi, Komatsu and WalMart.
Company's Situation - In the fall of 2005, Orbcomm required capital to fund the development and launch of its next generation satellite network as well as to finance working capital as its business expanded. Several prospective customers were reluctant to make a long-term commitment to ORBCOMM until the Company strengthened its balance sheet and developed a financing plan for expanding the capacity of the network. At the time, the Company believed it would be able to raise additional equity in the public markets within a year, however, ORBCOMM’s existing and potential customers sought more certainty.
PCG CP Solution - In December 2005, PCG CP led a $114 million convertible preferred stock financing. PCG CP committed $60 million, with $30 million funded at closing and $30 million to be funded in a second tranche if the Company was unable to complete an initial public offering. This gave the Company the option of accessing the public markets to further bolster their balance sheet, and the fully committed second tranche of capital would allow the Company to focus on its operational goals and give its customers confidence that ORBCOMM could finance its satellite network capital expenditures.
Performance Since PCG CP Investment – On November 8, 2006, ORBCOMM sold approximately 9.2 million shares in an initial public offering at $11.00 per share. The Company completed a follow-on offering in May 2007. The follow-on offering provided partial liquidity to investors, including PCG CP, further strengthened the Company’s balance sheet, and diversified the Company’s shareholder base. These financings have provided ORBCOMM with a strong balance sheet to fund its satellite deployments and support its rapid subscriber growth, which has increased by more than 120% since PCG CP's investment.
Company Website – www.orbcomm.com