Terran, Rivada and mutual dependability
September 26, 2023
Last week Rivada revealed it is using Terran Orbital to build its 600 satellites. SpaceX will then launch the constellation into orbit beginning in 2025.
But one problem that’s not entirely solved is Rivada’s financing. While it has made some significant and key pre-payments to Terran, it is not yet clear where the initial cash of a total $2.4 billion (€2.2bn) to build the first batch of 300 satellites is coming from.
Terran’s CEO Marc Bell says he has been given access to Rivada’s financials and to be confident in its client’s ability to pay. Rivada has to fund $180 million by December 31st as part of its initial obligations to pay $460 million costs of Terran’s design and engineering phases.
Not helping matters is a near-collapse on Terran’s stock price. In February this year shares were trading at almost $3, helped by the massive order from Rivada. Today, they are down 57 per cent and bumping along at or about $1. The anxieties have set in as investors worried about Rivada’s ability to pay, and the need for Terran to raise its own working capital by issuing shares at ever-lower prices.
Perhaps helping Terran’s dilemma was confirmation on September 25th that it had successfully secured $32.5 million of fresh funding in a public offering. It sold 23.2 million shares at $1.40.
On September 30th there has to be a review of Terran’s debt obligations. On September 20th Terran raised just under $30 million in new stock and debt borrowings, but further diluting its share price.
Lenders and investors in Terran include Lockheed Martin and private equity outfit Francisco Partners.
Meanwhile, Rivada is a tad coy about where its cash is coming from. CEO Decland Ganley told delegates to the Euroconsult event in Paris that Rivada has “in excess” of $500 million raised so far with more to come. Rivada also has a potential loan from the US Export-Import Bank but insists that his other lenders stay anonymous. He also insists – as he did with us last week – that now is not the time to go public and that there’s plenty of capital in the private equity marketplace.
Terran needs its cash to fund its significant factory expansion to produce Rivada’s fleet, as well as other orders on its books, and meet some demanding delivery dates for Rivada. Rivada has just to pay its bills, and those of SpaceX. Time will tell.