Iridium Communications Inc. (NASDAQ:IRDM) Q2 2020 Earnings Conference Call - Final Transcript
Jul 28, 2020 • 08:30 am ET
Thomas J. Fitzpatrick
consist of the undrawn portion of its existing $200 million credit facility and a standby investor bridge loan supported by its equity investors. Iridium has committed $11 million in support of this investor bridge, which will bear interest at 11%. Aireon does not expect to draw on this bridge in 2020, but may do sell in 2021 and 2022 depending on the level of air traffic volumes. Aireon had planned on refinancing its existing credit facility and raising sufficient capital to repay the balance of the hosting fees due to Iridium in early 2022. Given COIVD, Aireon now does not expect such refinancing to occur before mid-2022.
COVID impacts on Aireon are expected to have limited impact on Iridium unless air traffic volumes fail to recover from their current levels. All amounts Iridium recognized as revenue in 2020 and 2021 are expected to have been received as cash payments as part of Aireon's updated cash flow profile. Iridium, expect to be financially compensated for the delay in Aireon's refinancing and resulting payment of hosting fees. Unpaid hosting fees contractually accrue interest at LIBOR plus 350 basis points. We remain confident that Aireon will be a significant source of value to Iridium shareholders and are pleased with the company's recent developments with the FAA and other customers, which demonstrate that Aireon is becoming a critical part of the world's air traffic control infrastructure.
Clearly, the first half of the year has been anything, but routine. But Iridium is fortunate to maintain a strong, diverse base of customers and operate a wholesale business model, which generates more than 80% of revenue from recurring sources. We believe that we are positioned well to weather the global pandemic and we'll continue to generate meaningful free cash flow this year and into the future.
With that, I'll turn things back to the operator for the Q&A.