Space Communication Hits 10-Year Low After SpaceX Explosionby
Amos-6 satellite loss may threaten sale to Chinese group
Facebook, Eutelsat deals cancelled after Florida blast: CEO
Israel-based satellite operator Space Communication Ltd. saw a third of its value evaporate after its communications satellite was destroyed in the SpaceX launcher fire.
Shares of the Ramat Gan, Israel-based satellite operator were down 33 percent at 26.29 shekels at the close in Tel Aviv, its lowest level since September 2006, erasing all the stock’s gains this year. The yield on the company’s 6.35 percent bonds due June 2023 soared 167 basis points to 7.47 percent, the highest since the debt was issued in October. The explosion has raised questions about the fate of the company’s planned sale to a Chinese investor.
The Amos-6 satellite was destroyed when the SpaceX Falcon 9 launcher blew up Sept. 1 during pre-launch tests at Cape Canaveral in Florida. Space Com said Sunday in a statement to the Tel Aviv Stock Exchange that it’s due $294 million in compensation for the loss. That includes $205 million from state-owned Israel Aerospace Industries Ltd., which built the satellite, within 60 days.
"As a result of the loss of Amos-6, our service agreements with Facebook Inc. and Eutelsat Communications were cancelled," Space Com Chief Executive Officer David Pollack said on a conference call Sunday. "We are actively seeking alternative options for satellite providers following the loss, including building a new satellite, which may take an estimated 24 months."
The company said it would use recovered funds to repay bondholders.
"We are confident that we will be able to meet financial commitments to all of our holders," Pollack added.
The explosion may imperil Space Com’s $285 million sale to a unit of Beijing Xinwei Group, because the successful launch of the satellite was a condition of the deal, said Meir Slater, head of research at Bank of Jerusalem.
“The price of the deal with Xinwei will be reduced, or it will be completely abandoned,” Slater said by phone Sunday.
Space Com’s Pollak said the company is talking to Xinwei, looking for ways to amend the sale accord to reflect the current situation. Phone calls seeking comment from Xinwei were not returned.
The Amos-6 was supposed to replace the Amos-2 satellite, which was launched more than a decade ago and is nearing the end of its lifespan. The new satellite was expected to be used by the Defense Ministry and most Israeli communications companies, including the country’s fixed-line leader, Bezeq Israeli Telecommunication Corp., and Yes Satellite Services.
"We are hoping to be able to preserve about 10 percent to 15 percent of the orders backlog for Amos-6, which amounts to about $340 million," Pollack said.
Science Minister Ofir Akunis scheduled an emergency meeting with leaders of the space industry to discuss how Israel can preserve its cutting-edge position in technology and its independence in satellite communications, his office said by text message.