Space Communications, whose Amos 6 satellite was destroyed when the rocket due to carry it into orbit exploded, said on Sunday it had the financial resources to pay bondholders and was working to keep the sale of the company to China’s Beijing Xinwei Technology Group on track.
Spacecom, which is coping with the loss of two satellites in the past year after it lost communications with Amos 5, also said it was also working to move some of the customers who had signed up to use the Amos 6 to its older Amos 3. Amos 2 users may be offered service from other providers, it said.
“At the same time, the company is working to expedite the procurement process for an alternative to the Amos 6 satellite,” it added.
Among Amos 6’s customers was Facebook, which was planing to use it to expand Internet access in Africa. Bezeq, Israel’s largest telecoms provider, said its digital satellite television provider unit Yes could be impacted by the loss. It said it had been using the older Amos 2 and Amos 3 satellites and that should a replacement not be found, it may have to remove some providers.
An explosion destroyed a Falcon 9 rocket belonging to Elon Musk’s SpaceX as well as Amos 6 during preparations for a routine test firing at Cape Canaveral in Florida last Thursday – two days before it was due to be put into orbit.
News of the disaster occurred late in the trading day on the Tel Aviv Stock Exchange, leaving Spacecom’s shares down only 9% for the day. Trading was suspended on Sunday morning and when it resumed the shares fell another 32.5% by close to 26.40 shekels. Spacecom bonds were down as much as 8.3%.
Spacecom said holders of its Yud-Gimmel and Yud-Daled series bonds, which are backed by the Amos 6, were entitled to early redemption in the event of a “total loss” of the satellite. But the company said is expected to be compensated a total of $227 million and would get back another $5 million held by a trustee, which would cover all its $232 million in obligations to bondholders.
Spacecom said was entitled to a full refund for Amos 6 from Israel Aerospace Industries, the satellite’s manufacturer, as well as interest of Libor plus 4%, which is said would amount to $205 million. It said it would also receive $50 million in compensation from SpaceX, or a commitment from the company for a future launch at no extra cost.
Although its $330 million insurance policy for Amos 6 wasn’t in force yet because the satellite hadn’t been launched, Spacecom said it was entitled to get back $39 million in premium payments it had made. Against all the money it expects to collect, the company added, it would have to repay the Israeli government.
Xinwei last month agreed to buy Spacecom for $285 million, but conditioned the deal on the successful launch of Spacecom’s Amos 6 satellite. On Sunday, Spacecom said it had “updated the buyer [Xinwei] about the loss of the satellite and is examining, along with the buyer, the possibility to amend the agreement and adjust to the new situation.”
In a conference call, Spacecom’s general counsel, Gil Lotan, said it was still too early to provide any forecast regarding the prospect of the merger. “We hope to continue fruitful communications with the prospective buyer,” he said. With reporting from Reuters.
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