(BFM Stock Exchange) – The satellite operator announced this Thursday evening an important call to the market, with a total capital increase equal to its current market capitalization. The French state will in particular put in the pot and will become the first shareholder of the company.

Weakened financially and confronted with important investment needs, Eutelsat calls for the market to strengthen its financial structure.

The satellite operator announced this Thursday, June 19 after the end of the Paris Stock Exchange a capital increase of 1.35 billion euros, which corresponds to all of its market capitalization (the value of all of its shares).

This fundraising will be operated in two parts. The group will carry out a reserved capital increase of 716 million euros which will be subscribed by the French State via the Agency for State Participations (APE), BARTI SPACE LIMITED, a subsidiary of the Indian conglomerate BHARTI, the Maritime Transport Group CMA CGM (Owner of BFM and RMC) and the Strategic Participation Fund (FSP), which brings together major French insurers.

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The State will be the first shareholder

The reserved capital increase would be taken out by the French State via the APE for 526.4 million euros, Bharti Space Limited for 31.4 million euros, CMA CGM per 100.4 million euros and the FSP for 57.8 million euros.

This first operation must be carried out at a price of 4 euros per title, translating a bonus of 40% compared to the closing price of Thursday evening. By the way, the APE will buy the actions held by Bpifrance, or around 13.6% of the total.

Eutelsat will then launch a second capital increase larger by 634 million euros. The APE, Bharti, CMA CGM and the FSP will participate in the height of their respective participations which will result from the first capital increase.

“Following the two above -mentioned capital increases, and subject to the participation of other investors, the French state would hold a 29.99% participation in capital and voting rights, while Bharti Space Limited, CMA CGM and the FSP would hold 18.70%, 7.81% and 5.22% of the capital and voting rights respectively.” The satellite operator intends to finalize these two operations by the end of the year.

In addition to these two capital increases, Eutelsat will operate a refinancing plan for his debt. The purpose of all of these maneuvers remains to clean up your record and finance your investments.

Finance Starlink competition

Eutelsat must in particular deploy the capacities of its constellation of satellites in low terrestrial orbit (Leo) Oneweb, and above all develop its future Iris² constellations which must replace Oneweb.

Iris² is a European project should make it possible to position the old continent against Starlink, the company of Elon Musk, which has become one of the world’s main providers of satellite. Starlink dominates the Leo satellite segment, far ahead of the Eutelsat Oneweb constellation.

Oddo BHF quarlled in a note the investments necessary for this transition, at 4 billion euros over the period 2026-2031 to ensure the replacement of Oneweb by Iris². This while Eutelsat is currently burning cash due to oneweb losses.

Last January, Moody’s lowered the group’s credit note to “B2” against “BA3”. This decision made in particular “in account the reduced visibility on the capacity of Eutelsat to reconnect with the growth of profits, the continuous pressure on the free cash flow given the significant investment needs, and the significant refinancing needs in 2027 at a time when the funding cost increased significantly”, developed the agency.

A difficult stock market adventure

In other words, the recapitalization plan announced by the company was necessary so that Eutelsat could continue its activities calmly. Oddo BHF had also estimated in a published this Thursday morning that the group could achieve a capital increase between 800 million and 1.5 billion euros, and saw the French state, Bharti and CMA-CGM participate.

Eutelsat believes that his recapitalization will allow him to reach a net debt ratio relating to the gross operating surplus (EBITDA) of 2.5 at the end of the current exercise. At the end of last December, the net debt brought back to the adjusted Ebitda was 3.7.

For small minority shareholders, these operations will undoubtedly be synonymous with important dilutions while the course of the Eutelsat action has been divided by 3.7 since the announcement of its rapprochement with Oneweb, in July 2022. This operation was then finalized in September 2023.

“This merger, completed at the end of 2023, was a mixed blessing – bitter for minority shareholders but advantageous for the European block,” said AlphaValue, last year.

Before this transforming operation, Eutelsat presented an activity certainly in decline but coupled with a high generation of cash, allowing to offer dividends. From now on, Eutelsat’s cash is used to finance the deployment of the constellations of leo satellites from Oneweb and no longer paying coupons.