Virgin Orbit Coming To The Rescue of a Sinking Space Company In Australia19th Nov 2020
Virgin Orbit, a space company founded by Richard Branson, is looking into investing in Sky and Space Global Company in Australia. It is speculated that they will acquire a 14.7 percent stake in the company.
Background Info on SAS Bankruptcy and How Virgin Orbit will Help
Sky and Space Global has been in operation since 2015 and on their business plan, they had quite a list of missions to accomplish. However, as of April 2020 SAS went into voluntary administration to declare protection to bankruptcy. The organization has been in a considerable amount of debt over the years, losing almost half of its revenue.
Their plan indicated sending off at least two hundred CubeSats to provide a communication constellation. But to date, they have only set into motion less than five satellites. Their goals suffered another delay after the COVID-19 pandemic hit hard and they had to derail their plans to launch eight satellites.
Before buying the stake, Virgin Origin had a standing contract with SAS and if the company failed, their investment would have sunk. Unfortunately, this can still happen if SAS fails to meet all its funding responsibilities. This has seen the cancellation of a launch and in its place, a launch and consulting agreement has been implemented.
Under this arrangement, SAS will pay Virgin Orbit $1 million annually for three years, totalling $3 million.
The Total Investment Estimate And The Profit
At the rate of 14 cents per share, Virgin Orbit will be purchasing 11 million worth of Sky and Space shares. Virgin Orbit has a chance of also purchasing an additional seven million shares at the rate of 28 cents per share. But that is only an option after SAS has gained some stability.
If the plans go as projected, Sir Branson’s space company might end up earning almost a quarter of SAS revenue, which is a significant gain. This will also double their investment within three years. To save what they have already invested in the business, they have to succeed with their plans.
SAS will also be advantageous as they will be back into operation to carry out their missions as scheduled, thanks to Virgin Orbit and in return, the company will gain a satellite launch customer in the future.