The US Bankruptcy Court in Delaware has approved Sea Launch’s plan of reorganisation, enabling the launch provider to emerge from Chapter 11 bankruptcy protection after thirteen months, under a new owner, the Russian manufacturer RSC Energia. Kjell…
The US Bankruptcy Court in Delaware has approved Sea Launch’s plan of reorganisation, enabling the launch provider to emerge from Chapter 11 bankruptcy protection after thirteen months, under a new owner, the Russian manufacturer RSC Energia.
Kjell Karlsen, president and general manager of Sea Launch, told SatelliteFinance that at the hearing there had been one final objection to the plan from the US IRS and that this was discussed in court but the judge decided to rule in Sea Launch’s favour.
Karlsen had already been optimistic that the plan would be cleared prior to the hearing given the positive voting patterns of the class three and four creditors over weeks prior to the court date.
Under the terms of the plan, Energia will own 95% of Sea Launch with the remaining 5% held in a trust for previous owners Boeing (just over 3%) and the Norwegian engineering comapny Aker (almost 2%). Energia is also investing US$155m into Sea Launch, US$140m of which will be a direct investment into the company to help bring it back to operational readiness and US$15m to satisfy creditor requirements.
Following the court confirmation, Karlsen said the next step is for the deal to get regulatory approval. Sea Launch has already been working on this for the past couple of months and on June 21 the company filed an application with CFIUS (Committee on Foreign Investment in the United States). Karlsen said that there is a thirty day approval process for the first gatekeeper after which the filing is either approved or goes to Congress, which would then take another 45 days or so. Karlsen expected the Sea Launch – Energia transaction to be passed onto Congress.
During this period and afterwards, the company also needs to transfer a number licences from Boeing to the new owners. Karlsen said that the process continues to go smoothly and should be completed in the third quarter 2010. Once this is achieved, the company hopes to announce a number of new launch contracts. Karlsen said that the company was also targeting 2013 for new launch opportunities.
He added: “We are ramping up this fall and once we get the necessary approvals, the next step is to conduct maintenance on the Odyssey launch platform. We are still on course for a return launch in the third quarter of 2011.”
The primary reason as to why Sea Launch filed for bankruptcy protection was the collapse in the hardware supply chain necessary to keep to its schedule of Zenit flights. Being as Energia is the prime contractor for the Zenit 3SL, such issues are unlikely to be repeated when it takes over.
Karlsen added that the new owner will make a US$200m working capital facility available to its hardware purchasing subsidiary to enable it to acquire the necessary parts even if payments from its customer contracts have not been processed. He added that once Sea Launch emerges from Chapter 11, the company plans to operate on a debt free basis and will not look to generate capital through any asset backed financing.
Sea Launch will continue to operate from its Long Beach, California base although the company’s headquarters are planned to be moved to Switzerland.
Jefferies continues to advise Sea Launch, as do Alston & Bird LLP and Chris Picone of Buccino & Associates. Energia Overseas Limited is being advised by Salans LLP and the UK aerospace consultant Avicon.
Resolves AsiaSat claim with launch deal
Sea Launch has entered into an agreement with AsiaSat for the launch of a satellite, most likely AsiaSat 7, between 2012 and 2014. The contract marks the resolution of AsiaSat’s claims as an unsecured creditor of Sea Launch and represents the latter’s first launch contract since it first announced the reorganisation plan in May 2010.
Back in May 2006, the two companies signed a launch contract for the AsiaSat 5 satellite with the Asian satellite operator making initial payments of US$31.5m. However, following Sea Launch filing for bankruptcy protection in mid-2009, AsiaSat entered into a separate launch contract with ILS for the launch of AsiaSat 5 and subsequently filed a claim for a refund for the amount paid to Sea Launch thereby making it an unsecured creditor.
Under the terms of the new contract, the price of the launch will be between US$105m and US$114m depending on when the launch will be made. Sea Launch will provide AsiaSat with credit for US$16.15m which will be used to offset the applicable launch services price. The contract will be paid in stages, the earliest of which will be paid in April 2011 if the launch is made in January 2012.
Karlsen said that the agreement represented a happy medium and the two companies have been seeking to strike a deal for some time.
As to Sea Launch’s other unsecured creditors, while Intelsat and Eutelsat continue to hold their launch contracts with the company, Karlsen said that HNS, Sky Terra and Sirius XM did not have the same launch needs and so a different arrangement will need to be made.
Nets multi-launch EchoStar contract
Sea Launch also announced that it has signed an agreement with EchoStar Satellite Services giving the latter the ability to launch up to three satellites.
Sea Launch previously launched the EchoStar IX satellite in 2003, EchoStar X in 2006, and EchoStar XI in 2008.
“EchoStar is pleased to have completed successful launches with Sea Launch in the past, which give us confidence in Sea Launch’s ability to execute on future launches,” said Dean Olmstead, president of EchoStar Satellite Services. “The Sea Launch Zenit-3SL vehicle has been a reliable, flight-proven launch system and we look forward to continued success.”
