The debt offering is the second half of a plan built to pay for two distinct deals announced in mid-June and early July. In June, MDA agreed to buy Colorado-based Blue Canyon for US$620 million to expand its manufacturing footprint and secure deeper access to the U.S. defence and government market. On July 8, MDA announced it would acquire a 70 per cent stake in French Earth observation data firm Collecte Localisation Satellites, or CLS, for roughly $920 million.
Rather than funding both moves from a single source, MDA split its approach. To purchase CLS, the company upsized a bought deal offering of common shares in early July, generating about US$819 million in gross proceeds. That equity raise provided cash to integrate CLS’s artificial intelligence and downstream analytics into MDA’s existing satellite network without taking on excessive debt. For Blue Canyon, the company chose debt, allowing it to complete the acquisition without further diluting existing shareholders.
The notes carry a 6.50 per cent interest rate, mature in 2033, and 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. 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. That outlook relies heavily on MDA’s 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 per cent notes due in 2030. They also include a special mandatory redemption clause. If the Blue Canyon acquisition 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 principal, plus accrued interest.
Together, the CLS and Blue Canyon acquisitions represent what the company describes as a balanced, end-to-end vertical integration strategy. CLS fits into the downstream revenue and product catalog, while Blue Canyon is the upstream move, adding satellite manufacturing capability. The two transactions highlight a financial balancing act for the expanding company, using equity for one deal and debt for the other to manage its leverage.
The next milestone is the expected Aug. 5 closing of the note offering. Beyond that, the Blue Canyon acquisition must close by the end of 2026 to avoid triggering the mandatory redemption of the notes.
