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Terran Orbital Reaches Deal With Shareholders

Satellite maker Terran Orbital Corp. (NYSE: LLAP), which has the bulk of its operations in Irvine, appears to have patched up its difference with a group of shareholders and former employees, after a fight in December that came after reports the company was considering selling itself.

That disagreement included calling for the ouster of Terran co-founder, Chief Executive and Chairman Marc Bell.

The two sides reached a peace accord announced on Feb. 5, where they agreed to “diversifying” the company’s pipeline, though no further details on that point were given.

The shareholders “are no longer looking for me to leave, the exact opposite, we are all on the same page,” Bell told the Business Journal on Feb. 21.

Terran, which has about 510 employees in Orange County, also agreed to explore “value creating initiatives” that may include cost reductions. The company said its ongoing strategic review is looking at operations, financial performance and corporate governance, among other areas.

Whether a sale of the company is still in the cards remains to be seen. Bell has characterized prior reports that the company is looking to sell itself as “wrong.”

Dropping Value

Terran Orbital has seen its market value drop from $458 million a year ago to about $194 million on Feb. 20, with the share price occasionally dipping below $1.00 each.

At press time, the shares traded around $1 and a $200 million market cap. It went public in March 2022 via a SPAC deal, with an initial valuation in the $1.8 billion range.

The company is known for making small satellites for the aerospace and defense industries.

It’s delivered more than 215 satellites to orbit to date and is building out its operations in Irvine to expand its manufacturing capabilities. Revenue has jumped more than fivefold in the past four years to an estimated $143 million in 2023.

Its ticker, LLAP, is an acronym for Star Trek’s famous saying, “live long and prosper.”

Its largest shareholder is Lockheed Martin, which owns 34% of the company, according to the company’s latest proxy statement.

Concerned Shareholders

Troubles for the company began when the New York Stock Exchange in October said Terran was in danger of being delisted due to its share price falling below the $1 minimum listing standard, even as satellites are in growing demand.

The following month, a so-called “Group of Concerned Co-founders and Investors in Terran Orbital,” including New York-based Sophis Investments LLC and at least three former employees, said the shares were undervalued and noted the estimated 2023 revenue was cut to $143 million from $250 million.

The group said it owned 8.4% of the outstanding shares as of December.

The dispute exploded in mid-December when the Wall Street Journal published an article that Terran was exploring a sale, “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,” the dissident group said in a Dec. 12 press release.

A Dec. 11 company filing with the SEC indicated that Terran was “conducting a formal review of strategic alternatives to maximize shareholder value,” and that the company had engaged Jefferies LLC to “provide transaction advisory services in connection with this process, which may include an investment, sale of the company, ‘take private’ transaction or an alternative strategic relationship.”

There have been no reports of a potential bidder in the company since then.

Beyond the sale questions, the shareholder group wanted a separation of the CEO and chairman roles held by Bell, and also a “new highly qualified CEO.”

It proposed hiring an unidentified CEO who “would attract and retain additional world-class talent.”

Early Investor

The group of protesting shareholders included Joseph Roos, who was an early investor and partner at Terran from 2015 until 2022, according to his LinkedIn page.

Other shareholders included Tyvak Nano-Satellite Systems’ co-founders and former employees Jordi Puig-Suari, Roland Coelho and Austin Williams. The latter was chief technology officer at Terran for 10 months in 2022.

Puig-Suari is credited with being co-inventor of the CubeSat Design that became a worldwide standard for small satellites; in 2022, he was inducted into the Space Foundation’s Space Technology Hall of Fame.

Terran’s website credits Puig-Suari’s invention as “the gold standard still followed today.”
In 2013, Terran acquired Tyvak.

Driving Value

As of now, it appears the dispute has been patched up, with a February announcement of an agreement that the company will work toward driving shareholder value.

The announcement made no mention of a potential sale, nor the investor’s group suggestion about hiring a new CEO.

“We are happy we reached an agreement and all our interests are aligned,” CEO Bell told the Business Journal.

Bell said he looks forward to “achieving our shared goal of driving shareholder value.”

The company’s board, in consultation with the Investor Group, has agreed to identify and appoint an independent director to fill its vacant seat caused by the death of Anthony Previte, who co-founded the firm along with Bell.

“I am confident in the direction of the company, which includes diversifying its pipeline, improving financial controls, exploring value enhancing measures, and working towards profitable growth,” Roos said in the statement.

While there were no further details regarding the pipeline, Terran Orbital already has been expanding its offerings since its founding 11 years ago.

“We are pleased that we have aligned with Terran Orbital’s management team and board and appreciate the company’s commitment to driving value enhancing initiatives in the best interest of all stockholders,” Tassos Recachinas, chief investment officer of Sophis Investments of New York, said in a statement after the agreement.

“We also appreciate the constructive relationship we have developed with the company and look forward to working with the board, including filling the currently vacant board seat, as the company moves forward on its strategic initiatives,” he said.

Terran Orbital is scheduled to release fourth-quarter and full-year 2023 earnings on March 26.

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