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Terran Orbital: Problems, and a new owner?

December 14, 2023

Satellite builder Terran Orbital, already under considerable pressure from the NYSE because of its low share price, issued a statement (on a Form 8-K) to the SEC on December 11th which formally notifies shareholders that it is conducting a “formal strategic review” of its business. Reports suggest that Terran is seeking a buyer or partner and wants bids in by the end of December.

“[We] have engaged investment bank Jefferies to provide transaction advisory services in connection with this process which may include an investment, sale of the company, a ‘take private’ transaction or an alternative strategic relationship,” says the company.

Terran’s shares fell 18.6 per cent to just 19 US cents on the news. Terran stated that there was no set timetable for these discussions. Terran’s position is not helped by some disgruntled shareholders who are again lobbying hard for a change at the top of the business, and at the very least the separation of the roles of CEO and Chaiman (currently Marc Bell occupies both positions).

Certain shareholders (“Concerned Investors”) in a detailed complaint issued on December 12th and say they want a new CEO. They allege: “As aligned long-term stockholders, experienced Aerospace & Defense investors, and former Company executives, we care deeply about Terran and its long-term prospects and wish to protect and maximize the material value we believe is embedded within Terran. However, the events over the past 24 hours have made it abundantly clear to us that Marc Bell is not fit to be CEO of Terran.”

Their complaint continued: “Over the past 24 hours, The Wall Street Journal published an article that Terran was exploring a sale of the Company, according to unnamed sources, which was seemingly confirmed by the Company in a filing with the Securities and Exchange Commission later that morning and in a series of Mr. Bell’s tweets. Later that day, in an all-employee meeting, Mr. Bell stated that the Company was not for sale. When the market closed on December 11th, Terran’s stock price had lost nearly 30 percent of its value from the day before.”

“Making matters worse, Mr. Bell has boasted about suing a dissenting shareholder and threatened to file additional lawsuits and referred to members of the Concerned Investor Group as “idiots” and used crude language and lamenting Terran’s languishing stock price in his recent Twitter posts,” the complaint added. “The Concerned Investor Group further believes that any strategic review should be evaluated solely by a newly formed committee of disinterested and independent directors that do not report to Mr. Bell. The Concerned Investor Group further reiterates that, as previously stated on multiple occasions, any strategic review should only be undertaken after the Company has been stabilized and leadership is reconstituted, or else it risks a tarnished process and suboptimal outcome for shareholders.”

Bell sent an email to all employees on December 11th, saying: “As for shareholder criticism the whole thing is a joke,” [Bell] says in the email. “Forget that the board and management has over 30 million shares (they have 16 million) but we have polled investors casually and over 100 million shares say they approve of the direction we are taking and fully support us. We also have 100 percent support of the board. The company recently sued one of the [investor] Sophis idiots and we will be suing them all in due course. They will eventually go away.”

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