MDA Space has priced a $600-million private placement of senior unsecured notes to fund its acquisition of U.S. satellite manufacturer Blue Canyon Technologies (BCT), capping off a month of intensive capital raises for the company.
The notes, which carry a 6.50% interest rate and mature in 2033, were issued at par. The offering is expected to close on Aug. 5, managed by a syndicate led by RBC Capital Markets, BMO Capital Markets, and Scotiabank.
The deals and financing strategy
This debt offering is the second half of a dual-track financing strategy designed to fund two distinct acquisitions announced in mid-June and early July.
In June, MDA agreed to purchase Colorado-based BCT for US$620 million to expand its manufacturing footprint and secure deeper access to the U.S. defence and government market. Weeks later, on July 8, MDA announced it would acquire a 70 per cent stake in French Earth observation data firm Collecte Localisation Satellites (CLS) for approximately $920 million.
Rather than funding both moves from a single source, MDA split its financing strategy. To purchase CLS, the company upsized a bought deal offering of common shares in early July, generating roughly US$819 million in gross proceeds. That equity raise provided the cash needed to integrate CLS’s artificial intelligence and downstream analytics into MDA’s existing satellite network without taking on excessive debt.
Conversely, the company has opted for debt to fund the BCT purchase. Issuing $600 million in senior unsecured notes allows MDA to complete the acquisition without further diluting its existing shareholders’ equity.
The two transaction highlight a financial balancing act for the expanding company. S&P Global Ratings assigned a speculative-grade ‘B’ rating to the new notes, noting that while the debt load is substantial, MDA’s adjusted debt-to-EBITDA ratio is expected to stabilize around a manageable 3x by 2027. This outlook relies heavily on MDA’s existing multi-billion dollar backlog of government and commercial contracts, which provides predictable cash flow to service the new $39 million in annual interest payments.
The notes rank equally with the company’s existing unsecured debt, including $250 million in 7.00% notes due in 2030. They also include a standard safeguard for institutional investors: a special mandatory redemption clause. If the acquisition of BCT fails to close by the end of 2026 due to regulatory or other hurdles, MDA is required to redeem the notes at 100 per cent of the principal, plus accrued interest.
Together, the CLS and the BCT acquisitions are aggressive moves that highlight a balanced, end-to-end vertical integration strategy. CLS fits into the downstream revenue and product catalog, while BCT is the upstream move.