Lockheed Martin’s major concerns over Rivada
August 19, 2024
Struggling satellite manufacturer Terran Orbital is being bought – some say rescued – by aerospace giant Lockheed Martin (L-M) in a deal worth around $450 million. L-M is paying $0.25 per share for Terran and will pay off Terran’s debts. The end result will be a new company that is 100 percent owned by L-M.
The tragedy for Terran is that barely four months ago L-M was offering $1 a share for Terran, which Terran firmly turned down. L-M was already a one-third shareholder in Terran.
L-M on August 16th, in a Securities & Exchange Commission regulatory filing, explained the detailed acquisition, which is subject to examination by the Department of Justice, Antitrust Division and/or the Federal Trade Commission. The agreement is expected to close by the end of this year.
The inevitable consequence of the decision to decline L-M’s $1 per share offer by Terran’s management is that there will almost certainly be a flurry of Class Actions arguing poor management decisions and it is tough to deny the grumbles.
But at the root of Terran’s problems is an order from Rivada Space Networks for 300 low Earth orbit satellites and worth in total $2.42 billion. However, Rivada has only paid – to date – $13.4 million to Terran for early stage work on its constellation and reportedly significantly less than the $180 million expected. Rivada is reported to have missed key stage payment obligations to Terran which were claimed to be essential to the project’s development.
Terran’s CEO has frequently said that he was happy with Rivada’s financials and that he had seen proof that a Mid-East sovereign wealth fund was ready to financially back Rivada.
But L-M, in its March offer to buy Terran, made its opinion abundantly clear that it did not believe Rivada’s financing was in place. L-M says now that it is Terran’s biggest customer, with no mention of Rivada and states bluntly that L-M accounts for 90 percent of Terran’s current funded backlog of contracts.
“We are carrying on with Terran as our supplier and we don’t expect the acquisition to affect our contract with them or our timelines,” a Rivada spokesperson said on August 16th.
No doubt the precise position will be clarified, but Rivada is on a very tight obligatory timetable. It has to have 288 of its fleet in orbit by mid-2026, and there are plenty of observers who suggest that the date is now in grave doubt.
Other posts by Chris Forrester:
- India stalls again on satellite licensing
- Bank raises AST SpaceMobile target
- AST SpaceMobile reaches $10bn market cap
- China uses Galactic Energy ship to launch satellites
- Battle royale for DTC over US
- Analyst ups AST SpaceMobile guidance
- Deutsche Bank stays negative on Eutelsat
- India would-be sat-operators increasingly upset
- Israel wants its own satellite constellation