Intelsat asks bankruptcy court to clear roadblock for Spaceflight launch business sale

WASHINGTON — Intelsat is asking its bankruptcy court for authorization to modify a $50 million loan to Spaceflight Industries’ Earth-observation business BlackSky that could become a snag in Spaceflight’s sale of its launch rideshare business. 

Intelsat signed the BlackSky loan Oct. 31, about two weeks before it was publicly announced, according to a bankruptcy document. That same day Mitsui & Co. loaned Spaceflight Industries a separate $26 million with an eye toward acquiring its launch rideshare business. In February Mitsui announced it was buying that business with Yamasa Co., Ltd., who will own it in a 50/50 joint venture.

Intelsat and Mitsui signed an intercreditor agreement where each company used part of Spaceflight Industries as collateral — Spaceflight’s launch and mission control business by Mitsui and Spaceflight’s BlackSky business by Intelsat. That agreement and others between the three companies made Mitsui’s acquisition of Spaceflight’s launch business contingent upon Intelsat relinquishing its liens on Mitsui’s collateral. 

Prior to Intelsat’s bankruptcy, Spaceflight said it expected the sale to close in the second quarter of 2020. The Mitsui transaction passed a review by the Committee on Foreign Investment in the United States (CFIUS) on April 22, clearing the deal of national security concerns from regulators. Intelsat’s bankruptcy court is not expected to hear the motion on Spaceflight’s loan until June 9, however.

Jodi Sorensen, vice president of marketing for Spaceflight Inc., the launch arm of Spaceflight Industries, said the company still expects the acquisition to close soon despite the bankruptcy tie-up. 

“The close of the acquisition of Spaceflight by Mitsui is progressing and we expect it’ll be finalized shortly,” she said by email May 28. 

Once Mitsui completes its purchase of Spaceflight Industries’ launch business acquisition, Spaceflight will use the sale proceeds to pay back the $26 million loan and use any additional proceeds to pay down an undisclosed amount of overdue payments to LeoStella, the joint venture between Spaceflight Industries and Thales Alenia Space tasked with building BlackSky’s constellation. 

BlackSky is planning a constellation of  60 Earth-observation satellites, of which four are in orbit and eight are expected to launch this year. 

Intelsat told its bankruptcy court that the Spaceflight Inc. acquisition is good for BlackSky, since proceeds from the sale “enhances liquidity available to BlackSky” and increases the value of Intelsat’s loan. 

Intelsat reiterated that it sees significant value from the “synergistic and strategic potential” of pairing BlackSky’s remote sensing business with its telecommunications business, a partnership that could result in joint services.