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Announcement:

Moody's affirms ViaSat's Ba3 CFR; upgrades liquidity rating to SGL-2

Global Credit Research - 28 Feb 2011

Outlook stable for $275 million of rated debt instruments

Toronto, February 28, 2011 -- Moody's Investors Service ("Moody's") affirmed the Ba3 corporate family and probability of default ratings for ViaSat, while at the same time, upgraded ViaSat's speculative grade liquidity (SGL) to a SGL-2, indicating a good liquidity, from SGL-3, indicating adequate liquidity. The rating outlook remains stable. The liquidity rating revision results from the company's recent upsize and extension of its revolving term loan facility. With a $45 million cash balance (December 31, 2010) and a newly upsized and extended $325 million revolving term loan (upsized from $275 million at January 11, 2011, with the maturity date extended to January, 2016 from July, 2012) that is substantially undrawn ($50 million outstanding at December 31, 2010), ViaSat has more than ample sources of funding with which to cover anticipated disbursements. Over the forward four quarter SGL horizon, we expect the company to be cash flow negative as satellite-related capital expenditures continue. Despite the cash drain, with the company's conservative leverage, we do not expect financial covenant compliance issues to constrain access to liquidity. The combination of ViaSat's liquidity attributes results in liquidity now being assessed as good.

The up-size of the revolving credit facility has a modest negative impact on the company's senior unsecured notes. This caused the loss given default assessment to be revised downwards (see ratings listing below).

Rating and Outlook Actions:

..Issuer: ViaSat, Inc.

....Corporate Family Rating, unchanged at Ba3

....Probability of Default Rating, unchanged at Ba3

....Speculative Grade Liquidity Rating, revised to SGL-2 from SGL-3

....Senior Unsecured Regular Bond/Debenture, unchanged at B1, with the loss given default assessment revised to LGD5, 76% from LGD5, 73%

RATINGS RATIONALE

ViaSat has a Ba3 corporate family rating (CFR), a Ba3 probability of default rating (PDR), an SGL-2 speculative grade liquidity rating, and a stable ratings outlook. ViaSat's core government services business provides a relatively stable cash flow. This is credit positive as is the relatively stable -- pre capital expenditure -- cash flow from its satellite broadband business. ViaSat is in the process of constructing and launching, later this year, a new satellite that will have industry-leading transfer speeds. While the related future growth potential is exciting, completion and execution risks (operational capabilities, market reception, and financial exploitability are unproven) are credit negative. Given operational risks, ViaSat has taken a prudent stance with its financial arrangements. Conservative leverage is credit-positive. Further, while the company has generally under-performed relative to expectations over the past year or so, the approximately $100 million of equity raised last March ensured that leverage remained at levels appropriate for the Ba3 ratings. The company's liquidity position is also well-managed and supports the ratings.

Rating Outlook

The ratings outlook is stable. Despite expectations that free cash flow will continue to be negative for the next several quarters, we anticipate continued business and cash flow expansion with leverage remaining in the 2.0-to-2.5x range.

What Could Change the Rating - Up

While positive ratings migration is not anticipated until subsequent to ViaSat-1 being launched, its capabilities proven, and its economic exploitation initiated, consideration for positive ratings actions could occur in the event Moody's expects Debt/EBITDA to be sustained comfortably below 2x, and the company has access to ample liquidity. However, as we expect ViaSat to construct and launch additional satellites, it is unlikely that the rating will progress beyond Ba3 for some time.

What Could Change the Rating - Down

Event risks involving significant delays/impairments in top-line growth from ViaSat-1, integration difficulties involving WildBlue, or sustained growth initiatives are the likely catalysts for adverse ratings actions. These would likely involve liquidity issues and Debt/EBITDA being expected to exceed 3.0x for a sustained period of time.

Please see ratings tab on the issuer/entity page on Moodys.com for last rating action and rating history.

The principal methodologies used in this rating were Global Telecommunications Industry published in December 2010, and Probability of Default Ratings and Loss Given Default Assessments published in June 2009.

Corporate Profile

Headquartered in Carlsbad, California, ViaSat, Inc. (ViaSat) is a leading producer of satellite and other wireless communications and networking systems to government and commercial customers.

Toronto
Bill Wolfe
VP - Senior Credit Officer
Corporate Finance Group
Moody's Canada Inc.
(416) 214-1635

New York
Andris G. Kalnins
Senior Vice President
Corporate Finance Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653

Moody's Canada Inc.
70 York Street
Suite 1400
Toronto, ON M5J 1S9
Canada
(416) 214-1635

Moody's affirms ViaSat's Ba3 CFR; upgrades liquidity rating to SGL-2
No Related Data.
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