Satellite maker Terran Orbital Corp. once had big dreams about space, even naming its ticker as an acronym for a line in Star Trek: Live Long and Prosper (NYSE: LLAP).
After going public in 2022, it soared to a market cap reaching almost $2 billion before it gradually fell back to Earth amid a series of employee departures and squabbles with investors.
Shares declined to below $1, and it faced a delisting on the New York Stock Exchange. Its recent second quarter report said it was running out of cash, which fell in half in July alone.
Its largest investor, defense giant Lockheed Martin, last week tossed it a lifeline.
The defense giant on Aug. 15 offered 25 cents a share, a 38% discount to the day before; as expected, the shares plummeted 39% to 24.25 cents each and a $50 million market cap. In March, Lockheed had offered $1 a share.
Lockheed, which already owns about 28% of Terran Orbital, said the deal was worth $450 million, saying it’s agreed to retire its existing debt. Terran has accepted the deal.
“We’ve worked with Terran Orbital for more than seven years on a variety of successful missions,” said Robert Lightfoot, president of Lockheed Martin Space.
“Their capabilities, talent and business momentum align with Lockheed Martin Space’s strategic plans – and we’re looking forward to welcoming them to our team. Our customers require advanced technology and even faster product development, and that’s what we can achieve together.”
The deal ends a year of turbulence for Terran Orbital, which has its major operations in Irvine while the designated headquarters is in Boca Raton, Florida. Reports of strife among top executives and co-founders circulated.
A group of shareholders in December called for the ouster of co-founder and Chief Executive Marc Bell, who denied reports that the company was for sale.
The company in February reached an agreement with the shareholders, agreeing to explore “value creating initiatives.” In May, it hired a new chief financial officer and chief operating officer.
Bell last week said he was excited about the deal.
“This transaction combines our strengths and expertise,” Bell said in a statement. “This move will open new opportunities for growth and innovation, and we couldn’t be more excited about the future.
Access to Lockheed Martin’s incredible engineers and world class facilities will only accelerate our business plan to provide low-cost, high-value solutions to our ever-growing customer base.”
Cash Running Low
Terran Orbital, founded in 2013, specializes in small satellites for the aerospace and defense industries and has been branching out into larger spacecraft.
Its technology is based on the CubeSat design that was built by Jordi Puig-Suari, who became a Terran employee and shareholder.
The CubeSat became a worldwide standard for small satellites and Puig-Suari 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.”
Over the past decade, it supported more than 80 missions for government and commercial customers with complex mission requirements, from low earth orbit to the moon and beyond.
Terran Orbital went public in March 2022 via a SPAC deal, with an initial valuation in the $1.8 billion range.
The company has announced deals in the past two years that at first excited investors.
Terran Orbital signed a spacecraft production contract 18 months ago with satellite communications operator Rivada Space Networks, worth $2.4 billion for 300 low earth orbit satellites.
Industry website SpaceNews last week cited B. Riley analyst Mike Crawford as saying that Terran has received only $13.2 million under the contract as of the end of June.
Terran on Aug. 12 reported second-quarter revenue fell 5.6% to $30.4 million, missing the analyst consensus for about $35 million. About $21.1 million of the second-quarter revenue came from Lockheed, which is Terran’s biggest customer.
It also reported its loss widened to $35.4 million from $28.1 million in the same period last year.
Terran’s quarterly report showed it has total liabilities of $427.6 million, including $187.4 million in long-term debt. Most of its debt had interest rates ranging from 9.25% to 11.25%, according to the quarterly filing.
Worse, it was quickly running out of cash and equivalents, which fell by half in one month alone, from $30.6 million on June 30 to $14.6 million on July 31, according to its quarterly report.
“Without additional funding, (cash) will not be sufficient to meet its obligations within the next twelve months from the issuance of this quarterly report,” the company’s quarterly report said.
In addition to the share purchase and paying off its debt, Lockheed established a $30 million capital facility to keep the satellite company going while the deal closes, which is expected by the end of the year.
Satellite Commitment
The deal also helps Lockheed push deeper into Orange County’s growing aerospace and defense scene.
OC has several companies emerging in the satellite space, such as ICEYE US, the local subsidiary of a Finnish company. Turion in Irvine will be making satellites to help clean up space junk, while AstroForge in Huntington Beach is making the spacecraft to harvest valuable metals from asteroids (see Aug. 12 print edition).
The purchase adds a new dimension to the OC aerospace and defense scene, which already features such giants as Boeing (NYSE: BA) and RTX (NYSE: RTX; formerly Raytheon Technologies) and upstarts such as Anduril Industries.
Lockheed, based in suburban Washington, D.C., isn’t among Orange County’s 26 largest aerospace and defense contractors, according to the Business Journal’s annual list, which was printed in the Aug. 12 issue.
Terran ranked No. 13 on that list with 510 employees in Orange County; the company has built in Irvine a new 94,000-square-foot space vehicle assembly facility that recently received its certificate of occupancy.
Lockheed said the acquisition reinforces its “commitment to expanding advanced satellite manufacturing.
“Lockheed Martin uses Terran Orbital’s satellites for its work, most notably with the Space Development Agency’s Transport and Tracking Layer programs and in several of its self-funded technology demonstrations,” Lockheed said in the announcement.
