Sea Launch files for Chapter 11 protection

[hektor]

The title says it all

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSBNG17593820090623

[mr.columbus]

Cites liquidity concerns, recurring losses from operations

Seems to be the credit crunch pared with their last failure on pad in 2007 and the fact that they only do 3-4 launches maximum per year.

SpaceX beware, that's the sort of thing that can happen to you if the next 2-3 years work out the same as the last 2-3 years.

[Captain Scarlet]

The title says it all

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSBNG17593820090623

It does if you know what a Chapter 11 is??

[hektor]

http://en.wikipedia.org/wiki/Chapter_11,_Title_11,_United_States_Code

When a business is unable to service its debt or pay its creditors, the business or its creditors can file with a federal bankruptcy court for protection under either Chapter 7 or Chapter 11.

In Chapter 7 the business ceases operations, a trustee sells all of its assets, and then distributes the proceeds to its creditors. Any residual amount is returned to the owners of the company. In Chapter 11, in most instances the debtor remains in control of its business operations as a debtor in possession, and is subject to the oversight and jurisdiction of the court.

[Chris Bergin]

The title says it all

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSBNG17593820090623

It does if you know what a Chapter 11 is??

Into administration. Not good.

[HIPAR]

I's a neat idea to sail a rocket down to the equator .. that makes technical sense.  I always questioned the viability of the Sea Launch concept from a business viewpoint. There's just too much overhead operating those complex ships.  When all is said and done, What real advantage do they provide over, say, Arianespace?

---  CHAS

[Herb Schaltegger]

There's just too much overhead operating those complex ships.  When all is said and done, What real advantage do they provide over, say, Arianespace?

---  CHAS

There's less overhead operating two ships and supporting a couple dozen crew members than there is supporting a major launch facility in the middle of a jungle.  The problem is the flight rate - it's just not high enough to justify the investment, especially in light of the competition.  If Sea-Launch had the backlog to support two missions per sortie (I believe the launch platform can store two Zenit boosters) things would probably make more financial sense.

[NUAETIUS]

Are the operating costs of launch from the Sealaunch platform higher than launch from a typical launch complex? 

Considering Tesla is wanting to try to get an old GM plant cheap after their bankruptcy, I wonder if SpaceX will now try to get Sealaunch's launch platform (joke).

[mmeijeri]

It's sad news, but this is how plausible concepts that do not work out get scrapped. If this had been a federal project, politicians would have been all over it to 'preserve US leadership in space'.

[bobthemonkey]

The title says it all

http://www.reuters.com/article/rbssIndustryMaterialsUtilitiesNews/idUSBNG17593820090623

It does if you know what a Chapter 11 is??

Into administration. Not good.

It's somewhat better than administration in the UK in terms of preserving the company as a going concern. Ch.11 is more of a tool for business rescue than creditor protection, the balance is going the other way in the UK. 

Airlines were operating under Ch.11 protection for a long time after 9/11. This does not necessarily mean the end for Sea Launch.

[Bill White]

An interesting bit from the article:

The case In re Sea Launch Co LLC et al, U.S. Bankruptcy Court, District of Delaware. No. 09-12153. (Reporting by Ajay Kamalakaran in Bangalore; Editing by Saeed Azhar)

Even journalism is now being outsourced to the Sub-Continent!

[sammie]

Shame, hope they restructurise and get their act together. The rats (well, sats) have been jumping the ship lately, lost two contracts to ILS. And they got a major refurbishment of the launch platform coming up.

I think it´s just rather hard for non government backed launch provider to survive. Sea Launch will rarely get hand-out government launches. And having a government behind you is beneficial in other ways as well, O3B switched to Soyuz from Kourou so they could secure French loans, not because they were cheaper.

I don´t think they can actually launch multiple Zenits per sortie, due to instability and movement of the two platforms at sea, a sea transfer was deemed impossible for now.

[William Graham]

Will this affect the launch they currently have scheduled for October?

[Jim]

1.  Sea Launch will rarely get hand-out government launches.

2.  I don´t think they can actually launch multiple Zenits per sortie, due to instability and movement of the two platforms at sea, a sea transfer was deemed impossible for now.

1.  It will get none.  It isn't always

2.  Incorrect.   The system was designed for sea transfer.  The launch platform can carry one vehicle and the command ship can carry 3.

[sammie]

So far no sea transfer has taken place, all of them take place while docked in the harbour. I guess in the beginning because of shortages of Zenit launchers or not enough demand. But I also seem to remember that although the design called for Sea transfers, none have ever taken place because of practical problems as well. Maybe McDew, a former employee, can shed some more light into it.

[Blackstar]

Seems to be the credit crunch pared with their last failure on pad in 2007 and the fact that they only do 3-4 launches maximum per year.

SpaceX beware, that's the sort of thing that can happen to you if the next 2-3 years work out the same as the last 2-3 years.

There was a comsat conference a few months ago (might have been the Space 2009 conference that always takes place in Washington, DC) and someone there commented that they had helped another launch company stay afloat.  Cannot remember if it was a comsat company or another launch provider that gave the unnamed company a loan.  However, it was pretty clear that the company that received the money was SeaLaunch.

You touch on the bigger issue here: too many launch providers chasing too little market.  Overcapacity.

Now the US is currently in the process of adding several more launch vehicles: Taurus II, Falcon 9, and Ares I.  Ares I is not affected by market forces.  But what happens when Taurus II and Falcon 9 come online and are chasing tiny slices of a small pie?

[edkyle99]

... what happens when Taurus II and Falcon 9 come online and are chasing tiny slices of a small pie?

Taurus II and Falcon 9 aren't playing the same game.  Neither can haul the Zenit 3SL payload. 

The way I see it, no U.S. launch provider survives unless the Primary Customer (the U.S. Government) wants it to survive. 

 - Ed Kyle

[edkyle99]

I wonder how Land Launch fits into this picture.  The Reuters story says that Sea Launch "intends to explore the sale of one or more of its divisions".  It isn't entirely clear to me whether Sea Launch has an ownership stake in Land Launch, but surely it must. 

On the other hand, who is to say that Land Launch isn't more viable than Sea Launch?

The root cause of Sea Launch's troubles may be the collapse of the former Hughes Satellite business, which was the primary initial Sea Launch customer.  I hate to say it, but how many thriving businesses has Boeing turned to dust (including, based on today's headlines about 787, its own)?

 - Ed Kyle

[JimO]

[quote author=Herb Schaltegger
There's less overhead operating two ships and supporting a couple dozen crew members than there is supporting a major launch facility in the middle of a jungle.  The problem is the flight rate - it's just not high enough to justify the investment, especially in light of the competition.  If Sea-Launch had the backlog to support two missions per sortie (I believe the launch platform can store two Zenit boosters) things would probably make more financial sense.
[/quote]

Herb, my inside info is that the ships proved incapable of maintaining a  secure at-sea docking that allowed a safe ship-to-ship rocket transfer. They had to load the one vehicle on the platform in harbor and could not reload.

Anyone else hear anything like that?

[Jim]

The ships never dock while transferring the vehicle, the ship were to use DPS and the crane would handle the waves.

[Herb Schaltegger]

Herb, my inside info is that the ships proved incapable of maintaining a  secure at-sea docking that allowed a safe ship-to-ship rocket transfer. They had to load the one vehicle on the platform in harbor and could not reload.

Anyone else hear anything like that?

That seems to jibe with what sammie posted earlier up the thread.  Well, it wouldn't be the first time something that looked great on paper didn't quite pan out.

Of course, ultimately it doesn't much matter since the flight rate has never required it.  As it is, Sea-Launch has typically done no better than around one launch every 60 days or so, but I have to wonder if that's more due to the availability of payloads than to any inherent inability to sortie more quickly.

[sammie]

I guess at the beginning of Sea Launch the zenit wasn´t the most reliable launcher around, with a low launch rate to boost. It´s two stage version having a couple of failures, Globestar being the most famous. So I guess that at the beginning there wasn´t the market to warrant sea transfers.

Later when the market picked up Sea Launch itself had a big failure, and there was the problems with not enough RD-171s that sort of messed up the supply-chain of launchers, at a time where the market could have sustained a higher launch rate.

Ow, and the roughest day in a harbour is smooth sailing at sea, it would have been quite a feat if they did transfer a sat and launcher in the middle of the pacific

[hop]

A bit of sea launch history I came across this in North Korea’s Nuclear and Missile Programs Crisis Group Asia Report N°168, 18 June 2009

Ukraine inherited advanced space and missile programs from the Soviet Union, and officials initially refused to abandon the missile program to join the MTCR.175 In September 1993, Washington’s policy on MTCR membership and space launches was clarified to allow new members to retain their SLV capabilities as long as they abandoned their offensive ballistic missiles.176 The U.S. then began to offer incentives and guaranteed Ukraine a share of the space launch market based on a concrete percentage for its companies. Kiev retained its short-range Scud missiles after joining the MTCR, which the U.S. claimed did not interfere with its MTCR membership.177

My bold. The references make it clear that Sea Launch was part of this incentive. Probably old news for many here, but possibly relevant to it's long term viability.

[nooneofconsequence]

Another part of this story is the global financial climate, cash shortages, and increased launch insurance costs.

Its a difficult time. There are also certain players that can take advantage of a company's mistakes, as happened with SS/L.

[Danny Dot]

snip

Ow, and the roughest day in a harbour is smooth sailing at sea, it would have been quite a feat if they did transfer a sat and launcher in the middle of the pacific

This would have been really fun to have watched.  "All hands on deck.  All hands on deck!!"

Danny Deger

[vt_hokie]

Airlines were operating under Ch.11 protection for a long time after 9/11. This does not necessarily mean the end for Sea Launch.

Indeed.  Loral went through the Chapter 11 process when I worked for them.  They're still in business, obviously, though I believe the company still isn't profitable.  Seems like defense is where the money is - I learned the hard way about investing in commercial space!

[Zachstar]

In my view the whole situation for launchers is getting worse and worse.

There is already a great many communications birds up there. And they are more efficient and will last longer.

The technology to make the birds better and lighter is progressing.

etc...

Not to mention the rapid growth of ground nets. Whole nations are sprouting fiber optic nets that have the ability to deliver massive speed and HD video.

[vt_hokie]

We need to get people to give up their cell phones in favor of Iridium or Globalstar phones, to create some new launch demand!

[yinzer]

I poked around some.

The Sea Launch company is owned by a partnership including Boeing (integration), RSC Energyia (engines and upper stage), Yuzhnoe (lower stages), and Aker ASA (ships).  The company also owes money to the companies in the partnership and to other banks, in amounts that I couldn't find offhand but are probably in the Chapter 11 filing (or Boeing's annual reports).

Chapter 11 usually means that the people who loaned the company money (creditors) agree to reduce or restructure their loans and get ownership of the restructured company in exchange.

So if the old Sea Launch had $1B in debt at a 10% interest rate, they'd have to pay the creditors $100M a year.  Any profits beyond that would go to the owners.  But Sea Launch in only bringing in (say) $50M a year beyond operations, so they can't make the payments.  So the creditors will write down the debt to $400M at 10% and take ownership of the company; this way they'll get $50M a year instead of nothing, and maybe more if the launch market picks back up.  These numbers are all made up, but the general picture still stands.

The option is to sell off all the assets, but what use do they have outside of a space launch business?

It gets a bit interesting because there is overlap between the owners and the creditors.  If someone got their hands on a copy of the bankruptcy filing things would become clearer.

[nooneofconsequence]

Another way life gets difficult for an aeronautics company is where a customer attempts to jerk it around with contract, cash flow, or both.

They thus possess the ability to *damage* its financial operations, by how they exploit the contract as a weapon. This occurred after Loral screwed up with Globalstar, where a customer tried to force an acquisition of part of its operations so as to deny other customers by making an exclusive arrangement. Only recourse was a Chapter 11 filing to address the misuse of the contract. It was avoidable otherwise.

Happens a lot in aerospace.

[Space Lizard]

Ten years without making any profit according to Boeing 8K filings.

My business would not have survived that long with similar results.

[mr.columbus]

Ten years without making any profit according to Boeing 8K filings.

My business would not have survived that long with similar results.

SpaceX is around for 7 years and has made profit on paper only (government grants, customer downpayments etc.). No profit from operations in all these years (and hardly any revenue), and it's likely the next 3 years won't be that much different.

So, you can actually stay afloat easily for 10 years without making much money from the products or services you want to offer. The problem is, once it becomes clear that it will stay this way in the future, you are screwed.

[Nomadd]

 I know that Skyterra was more worried about schedule than price when they jumped ship to Proton. The old MSATs are low on fuel, have questionable solar arrays and failed transponders, and it would be a disaster for one to give out before the new bird is up since the gear won't work with any other satellite. I guess ILS was considered a better bet time wise.
 I always like the Sea Launch story, but with a hundred MSAT units that won't work on anything else, I'm glad they switched.

[McDew]

From the Chapter 11 documents filed with the court.

Sea Launch has $2.02B in debt (excluding claims from pending contract terminations for default) and a couple hundred million in assets. Doing some simple math based upon performing 30 launches to date results in losing approximate $60M per launch so far for the program.  Not a very good business model....

A few classic quotes :
"...cost structure is not in line with revenues they can generate and has resulted in operating losses."

"When the Debtors' (ie. Sea Launch) liquidity worsened, to enable the Debtors' to make required cash payments due and owing to unaffiliated creditors, the Debtors stopped paying the Investors (ie. Partners) for goods and services that the Investors provided to the Debtors in connection with the Debtors' launch services."

The BIG LIE gets exposed….. Sea Launch was blaming supply chain production problems and Federal preemption for lack of hardware with a year or more in launch delays for their customers.  The delays were actually caused by Sea Launch when they stopped making payments to the suppliers for the launch vehicle hardware. 

No surprise that customers started leaving when their payments were not being used to pay/order hardware for the launch services they had purchased.

[mr.columbus]

From the Chapter 11 documents filed with the court.

Sea Launch has $2.02B in debt (excluding claims from pending contract terminations for default) and a couple hundred million in assets. Doing some simple math based upon performing 30 launches to date results in losing approximate $60M per launch so far for the program.  Not a very good business model....

A few classic quotes :
"...cost structure is not in line with revenues they can generate and has resulted in operating losses."

"When the Debtors' (ie. Sea Launch) liquidity worsened, to enable the Debtors' to make required cash payments due and owing to unaffiliated creditors, the Debtors stopped paying the Investors (ie. Partners) for goods and services that the Investors provided to the Debtors in connection with the Debtors' launch services."

The BIG LIE gets exposed….. Sea Launch was blaming supply chain production problems and Federal preemption for lack of hardware with a year or more in launch delays for their customers.  The delays were actually caused by Sea Launch when they stopped making payments to the suppliers for the launch vehicle hardware. 

No surprise that customers started leaving when their payments were not being used to pay/order hardware for the launch services they had purchased.

Given the current economic climate, the outlook for orders of commsats in the next 2-3 years and the fact that Sea Launch even at 3-4 launches made operating losses in the last years, we can safely assume this means a conversion to Chapter 7 will follow and assets will be liquidated. It probably is easier to find buyers for the different parts of the company than for the company itself, and I really don't believe the current senior creditors of Sea Launch are willing to run that company...

[agman25]

If they go into Chapter 7 Orbital could pick up their launch platform for cheap.

[nooneofconsequence]

Don't assume a Chapter 7 exit.  Continuation here is a function of understanding if a break even business can be constituted out of the current parts (e.g. a plan of reorganization).

Look to see if the judge tends to accept this as plausible - that's the early indicator.

The assets are too specialized to be of use to others - they are only valuable to a "going forward" operation of exactly the same kind.

The issues I'd look at are if its important for Ukraine to have SeaLaunch / LandLaunch continue. If it is, it will. I'm betting it will.

And no, Orbital or others won't want the platform - too costly to convert. Everybody presumes this stuff is almost plug-and-play,
nothing could be further from the truth.

[edkyle99]

The option is to sell off all the assets, but what use do they have outside of a space launch business?

It could sell off whatever ownership is has in Land Launch, since Land Launch doesn't involve all of the Sea Launch partners (Boeing doesn't build the Land Launch fairings and the ship ownership isn't involved). 

Perhaps it could sell off its payload processing work?

Or, maybe, this really is the end of the "Sea Launch" side of the business, with Land Launch continuing.  That would end Boeing's participation, paralleling Lockheed's departure from International Launch Services a few years ago.

 - Ed Kyle

[bobthemonkey]

A few years ago the semi-sub platform might have been worth something on the open market, but in the current climate, there are less hacked about (from their original purpose) platforms available, and yards have dropped their prices for new builds. That is assuming anyone would want a new fleet at this time. Equally, the Commander isn't really that marketable an asset

[mr.columbus]

Don't assume a Chapter 7 exit.  Continuation here is a function of understanding if a break even business can be constituted out of the current parts (e.g. a plan of reorganization).
...

The assets are too specialized to be of use to others - they are only valuable to a "going forward" operation of exactly the same kind.

If they were operating on a constant loss on an operating basis (not even factoring in interest payments etc.), this business can't be continued. In any event, they would need either a dedicated investor who puts up a lot of its own money (very unlikely) or creditors willing to lend them money (again) while current senior creditors take over ownership of the company.

The times when these kind of things worked out are over. DIP lending is nearly impossible to get in the current climate (except if you have government backing...). And I just don't see a business plan for Sea Launch that will get them operating profitable. After all, you can't really change much in that company, costs for the launcher are nearly fixed (and increasing), costs for the launch platform are fixed and firing people to slim down overhead gets you nowhere except into the next launch failure.

I will be extremely surprised if Sea Launch (or any successor using the same assets and the same launcher) is going to continue operations.

[Jim]

 
Perhaps it could sell off its payload processing work?

There isn't any payload processing work.  Astrotech runs the facilities in Long Beach and the spacecraft customers process their own spacecraft (industry SOP).  Sealaunch didn't perform any hands on work on the spacecraft.

[vt_hokie]

Ten years without making any profit according to Boeing 8K filings.

My business would not have survived that long with similar results.

Loral hasn't made a profit in at least a decade.  I don't know how companies manage to survive that long without profitability, but they do.  I'm amazed that Sirius-XM is still in business, but it is!

[Patchouli]

If they go into Chapter 7 Orbital could pick up their launch platform for cheap.

I figure if anyone would want the launch platform and and command ship I figure it would be ULA or Spacex.

ULA might even want the Zenit 3SL for payloads too heavy for a Delta II but not worth using an Atlas or Delta IV.
Zenit is a very cheap LV it has the lowest cost per Kg until F9 flies.

Spacex they do plan on launching F9 from Omelek but I really don't see how they'll add the facilities easily.

Of course it's not plug and play but that doesn't mean it might not be worth while to convert.

Somewhat related I wonder what will happen to all that Ares I upper stage tooling and J2X when that booster gets canceled?

As for Tesla getting a GM plant I hope they do I really want a Tesla S.

[Jim]

I figure if anyone would want the launch platform and and command ship I figure it would be ULA or Spacex.

ULA might even want the Zenit 3SL for payloads too heavy for a Delta II but not worth using an Atlas or Delta IV.
Zenit is a very cheap LV it has the lowest cost per Kg until F9 flies.

Spacex they do plan on launching F9 from Omelek but I really don't see how they'll add the facilities easily.

Bad conclusions.  Neither would want it.

Zenit is not a cheaper LV when used on Sealaunch.  Also if used for Delta II class payloads, the cost per Kg would be high.  Atlas V would be cheaper than Zenit for Delta II class.

Zenit would bring nothing to ULA except debt.  There is no advantage to ULA, period.  The shutdown of Sealaunch would be more beneficial to ULA, since it removes a competitor.

Again, Spacex wouldn't want the platform since it has high overhead, which goes against their MO.  F9 from Omelek is high improbable, VAFB is more likely

[yinzer]

If Sea Launch was really running operating losses (cost them more to launch the rocket than people would pay them, before any sunk costs), then they should be liquidated, even if it's for pennies on the dollar.

If they were just unable to pay back their development costs and the cost of refurbishing their launch platform, then restructuring makes sense.

Note: this kind of thing shows why the launch market is so screwy.  When you bought a flight on Sea Launch, you paid $100M and Sea Launch's bankers paid $50M (although they didn't realize it at the time).

[Blackstar]

Assuming that they are possibly going extinct, it might be wise for someone to collect up relevant documents and photos on them.  Is it still possible to get hi-resolution (print quality) photos of their launches and operations?

Otherwise, they vanish and it gets harder for anybody to write about their history.  Typical problem for commercial history.

[kfsorensen]

Again, Spacex wouldn't want the platform since it has high overhead, which goes against their MO.  F9 from Omelek is high improbable, VAFB is more likely

SpaceX already has planned F9 launches from Omelek on their books.  They'll never use VAFB again after the way they were treated.

If I were SpaceX I'd offer Sea Launch a sweet deal to pick up the Commander and use it to transfer F9s to the loading dock at Omelek.  Transferring rockets right there in the lagoon of Kwajalein would not be difficult because of the relatively still water.  They could use the Commander, off the coast of Omelek, as the launch control center and the internals of the Commander as the vehicle processing facility.

[Jim]

SpaceX already has planned F9 launches from Omelek on their books.  They'll never use VAFB again after the way they were treated.

You haven't visited their website lately.  F9 is going from VAFB.  Logistics at Omelek are too costly.  Also any real polar customers are going to want VAFB.

[kfsorensen]

SpaceX already has planned F9 launches from Omelek on their books.  They'll never use VAFB again after the way they were treated.

You haven't visited their website lately.  F9 is going from VAFB.  Logistics at Omelek are too costly.  Also any real polar customers are going to want VAFB.

No it's not.  Trust me.

[Jim]

No it's not.  Trust me.

They are telling us it is.

[SIM city]

If Sea Launch was really running operating losses (cost them more to launch the rocket than people would pay them, before any sunk costs), then they should be liquidated, even if it's for pennies on the dollar.

If they were just unable to pay back their development costs and the cost of refurbishing their launch platform, then restructuring makes sense.

Note: this kind of thing shows why the launch market is so screwy.  When you bought a flight on Sea Launch, you paid $100M and Sea Launch's bankers paid $50M (although they didn't realize it at the time).

The rocket and upper stage were developed by the soviet union.  I doubt the development cost for the 3SL configuration were that high.  In all of this math, don't forget the $1 billion Boeing already wrote off on the venture.  That should have covered any development costs for the vehicle, facilities, et al.

[nooneofconsequence]

1. If Sea Launch was really running operating losses (cost them more to launch the rocket than people would pay them, before any sunk costs), then they should be liquidated, even if it's for pennies on the dollar.

2. If they were just unable to pay back their development costs and the cost of refurbishing their launch platform, then restructuring makes sense.

3. Note: this kind of thing shows why the launch market is so screwy.  When you bought a flight on Sea Launch, you paid $100M and Sea Launch's bankers paid $50M (although they didn't realize it at the time).

1. If this *was* to be a business, then it wasn't and shouldn't. They'd be lucky to get a fraction of a penny on the dollar if you look at this real closely - which is in part why investing in space ventures historically is stupid - the assets aren't liquidable. If you don't believe me talk to anyone who had stock in useless things like Kistler.

If it *wasn't* a business but an accommodation done in the form of a business, it doesn't matter. They'll find someway of getting the accommodation going again.

2. Don't forget the double depreciation loss incurred by needing to repair the platform from the explosion. And we have no idea what (if any) the insurance coverage/payoff was as well.

3. Simply the current working cost of capital in this market. How else do you think that insurance and financial stocks got to be so overvalued in the past 3 decades?

[McDew]

From a Boeing 8K filed with the SEC today:

"The Chapter 11 Filing constituted an event of default or otherwise accelerated approximately $448 million of outstanding indebtedness of Sea Launch for which Boeing and the other Sea Launch partner issued guarantees. As a result, these guarantees to certain creditors of Sea Launch became due and payable. It is Boeing’s intention to perform its obligations under its guarantees.

Among other options, Boeing has a right to reimbursement from Sea Launch as well as rights to reimbursement from all of the other Sea Launch partners, who are each obligated to reimburse Boeing so that Boeing contributes no more than its proportional ownership percentage (40%) in Sea Launch of the aggregate guarantee payment obligations. Boeing intends to pursue vigorously all of its rights and remedies against Sea Launch and the other Sea Launch partners.

Boeing’s expected pre-tax charge to earnings in the second quarter of 2009 related to Sea Launch’s Chapter 11 Filing is approximately $35 million. In the event Boeing is unable to secure reimbursement from Sea Launch or the other Sea Launch partners related to Boeing’s payment under the credit guarantees or previously made loans to Sea Launch, Boeing could incur additional pre-tax charges of up to $478 million."

Looks like Boeing finally plans to sink Sea Launch after keeping them afloat for the past 10 years.

[vt_hokie]

This occurred after Loral screwed up with Globalstar, where a customer tried to force an acquisition of part of its operations so as to deny other customers by making an exclusive arrangement. Only recourse was a Chapter 11 filing to address the misuse of the contract. It was avoidable otherwise.

Happens a lot in aerospace.

I don't know the entire story, but I was under the impression that Loral went Chapter 11 and simultaneously sold much of its profitable FSS business to Intelsat in order to make a dent in the unsustainable debt load that resulted almost entirely from the Globalstar debacle. 

Regarding Sea Launch, while they plan to continue operations and launch the existing backlog, can we safely assume that new customers are unlikely at this point?

[McDew]

Regarding Sea Launch, while they plan to continue operations and launch the existing backlog, can we safely assume that new customers are unlikely at this point?

Their quoted backlog is inflated with contracts in default/termination/options.  By my calculations Sea Launch only has a backlog of 3 missions (W7,XM5 and IS17). 

Kind of hard to continue operations when you stopped paying your suppliers for hardware.  The Zenit they shipped to Long Beach for a planned October launch of W7 is missing major components which were never ordered / paid.  I don't see that vehicle being ready for a long time unless they steal hardware from the Federal programs which is highly unlikely.  Lead time for new rockets is 24 months with cash on the table.  You never get to operations and launch without hardware in the production line.

[Seer]

It's convenient that Ariane 5 is upping its launch rate to eight a year.
That can absorb four satellites from Sea Launch, leaving one more to go to Proton or another launch company.
Is it possible that Ariane 5 might increase production further? Does anyone know how easily production capacity can be increased?

[madscientist197]

I think it's largely batch production. So the actual capacity is probably quite high.

[nooneofconsequence]

I wouldn't presume so much here.

The real issue is are Zenit 3SL's as marketed a desirable business to continue. If not, they won't. If so, then they will.

If you can only have 3 customers for the next 1-3 years, the answer is *no*.

As to Ariane expanding production to accommodate need, they aren't nearly as flexible as there are expectations of continued production rate with ramping - contractual issues dealing with the supply chain.

[veryrelaxed]

Aren't Ariane 5's launches expensive as well?  What are their debts/debt holders?  If not for the 'inside sat business'  (Alcatel?) or French gov and ESA subsidies it'd be hanging by a thread now as much as SL.  I don't see anything economical or competitive in the Arianne technically or business-wise.  Perhaps the 'double GSO sat launch' feature?

[Seer]

Aren't Ariane 5's launches expensive as well?  What are their debts/debt holders?  If not for the 'inside sat business'  (Alcatel?) or French gov and ESA subsidies it'd be hanging by a thread now as much as SL.  I don't see anything economical or competitive in the Arianne technically or business-wise.  Perhaps the 'double GSO sat launch' feature?

There the market leader by far and they're increasing production. Most of their orders come from outside France, and the launch subsidies are about $200 million. Far less than Atlas or Delta.

[Antares]

the launch subsidies are about $200 million. Far less than Atlas or Delta.

Wait, what?  You're saying the price of an Ariane launch is $200M?  Or that Atlas or Delta get more than $200M per launch in government subsidies?  If the former, I wonder what it would be without the EU subsidies.

[edkyle99]

There the market leader by far and they're increasing production. Most of their orders come from outside France, and the launch subsidies are about $200 million. Far less than Atlas or Delta.

More like $269 million U.S dollars per year at current exchange rates.  The original European Guaranteed Access to Space (EGAS) program was funded at 960 million Euros spread over five years.  The EELVs are "subsidized" in the same way (infrastructure costs) at more than $1.2 billion per year.  Ariane and EELV aren't competing against one another, not really.  Ariane is becoming more and more a government launcher for Europe, just as EELV is for the U.S.  Proton is currently winning much of the world's commercial satellite launch business.

 - Ed Kyle 

[JimmE]

Seer - You must be joking. First, Atlas and Delta do not use their government subsidies to compete foir commercial launches at way below cost. Second, these subsidies per launch are massive. Ariane doesn't pay for ANY development costs (probably north of $15 Billion for Ariane 5 family so far) or for any CSG operating costs. I suppose one could say thank you, European (mainly French) taxpayer for lowering prices for Maerican consumers of satellite services. Since thed vast majority of the content on comsats is English language, we can also thank the French taxpayer for subsidizing the worldwide retreat of the French language.

Ed Kyle - No way is Ariane becoming "primarily a government launcher". They have about 25 commercial payloads on their manifest, about the same as proton.

JimmE

[mr.columbus]

Seer - You must be joking. First, Atlas and Delta do not use their government subsidies to compete foir commercial launches at way below cost. Second, these subsidies per launch are massive. Ariane doesn't pay for ANY development costs (probably north of $15 Billion for Ariane 5 family so far) or for any CSG operating costs. I suppose one could say thank you, European (mainly French) taxpayer for lowering prices for Maerican consumers of satellite services. Since thed vast majority of the content on comsats is English language, we can also thank the French taxpayer for subsidizing the worldwide retreat of the French language.

Ed Kyle - No way is Ariane becoming "primarily a government launcher". They have about 25 commercial payloads on their manifest, about the same as proton.

JimmE

Ariane and Arianespace work differently. The big ESA memberstates, especially Europe, want a European launcher for orbiting military satellites and scientific spacecrafts. It's a political necessity.

What you could do is either just launch these few government paid for spacecraft on Ariane 5 OR you try to lower your costs per flight by also opening up the launcher for commercial launches. ESA with Arianespace opted for the second option. Arianespace is also a kind of large-scale subsidy for European aerospace companies (especially EADS) in that it is owned proportionally by the suppliers of Ariane 5 parts. While it doesn't really make any profits, the prices for the parts of Ariane 5 are that high that the shareholders (=suppliers) make quite some money by just continously manufacturing Ariane 5.

The US did something very similar with EELVs, however has opted for factoring commercial launch costs into commercial launch prices. As a consequence EELVs aren't competitive in the commercial launch market and nearly the total operating costs are born by the taxpayer through DoD and NASA launches only.

[Herb Schaltegger]

One other nugget to think about in terms of Sea-Launch and their desirability as a launch provider and their viability as a going concern:  despite a history of successful launches for Directv and the launch last year of Directv 11, the company chose not to exercise an option it holds for another launch for their Directv 12 vehicle.  Instead, Directv chose ILS and Proton again.  I'm sure there's a story there and I'd love to hear it, but I doubt anyone ever will.

As to Ariane V, I'm frankly surprised that their dual-payload mission profile and the inherent mission inflexibility hasn't hurt commercial launch services.  In other words, it would seem to me that trying to meet the expectations and desires of two separate customers for each launch campaign, and the scheduling issues involved in getting two payloads prepped, integrated and ready for launch simultaneously, would dissuade customers from signing on.  Obviously that hasn't happened, however.

[mr.columbus]

As to Ariane V, I'm frankly surprised that their dual-payload mission profile and the inherent mission inflexibility hasn't hurt commercial launch services.  In other words, it would seem to me that trying to meet the expectations and desires of two separate customers for each launch campaign, and the scheduling issues involved in getting two payloads prepped, integrated and ready for launch simultaneously, would dissuade customers from signing on.  Obviously that hasn't happened, however.

Companies are treated a if they were doing single-launch missions. There is no technical penalty for the customer from doing a double-launch mission. In general, for customers what counts is launch on schedule, with a very high success possibility and moderate costs. Currently there is no other launch company in the world that provides the same mix as Arianespace does. Russia and China are lacking in quality of payload integration and partly in the success probability + there are issues with technology restrictions when it comes to those countries which can be more easily overcome by using Arianespace.

[edkyle99]

Ed Kyle - No way is Ariane becoming "primarily a government launcher". They have about 25 commercial payloads on their manifest, about the same as proton.

JimmE

"Becoming" is the word.  I'm talking about the trend.  Gunter's Space Page shows a hint of it.  http://www.skyrocket.de/space/
It lists 12 launches having either been performed this year, or planned to fly.  Seven of those 12 missions carry government payloads.

Keep in mind too that many of the satellites attributed to the Arianespace backlog are going to fly on Soyuz, not Ariane 5.

 - Ed Kyle

[McDew]

Getting back to the Sea Launch Chapter 11 filing.   One of the items they blame for not having a viable business and being able to compete commercially is "government-financed competition".  I think we can all agree that in the current launch vehicle industry you need to have the government as an anchor customer or provide subsidies to maintain a viable launch vehicle business.  Sea Launch does not, so I don't expect their business prospects to improve or for them to survive bankruptcy.

[nooneofconsequence]

This was why I mentioned "accommodation" - all governments do it.

The only way SeaLaunch continues is if the Ukrainian government cares for it to, or can it get by with LandLaunch alone?

N.B. the situation globally is shifting. Subsidies are used as instruments by governments to "keep alive" commercial activities that would otherwise be (temporarily or permanently) unprofitable businesses, because there is a reason for the country to maintain a presence. Witness the car industry with GM and Chrysler now - same deal, but lots more $$$'s.

Some "repricing" will happen with subsidies, as the amount in governments to source them has dropped, the number of competitors and price point is changing, and some governments may change their collective minds as to if certain industries are strategic needs to maintain. For example, does the Ukraine need a launcher industry to keep refining launchers to maintain an industrial base (and potential military capability, given its neighbors)?

Think about it.

add: You have to understand that the countries strategy for the subsidies matters here. For example, Airbus and Boeing are both subsidized to economically dominant the airliner business.

For another example, Ariane subsidies could *decrease* because they might not want too much production, because then it occupies too large a market share in a cyclical market that may have a downside trend, and they'd prefer to use the capital to participate in a different industry that has a large upside trend, so they can bring an economy back.

[mr.columbus]

Getting back to the Sea Launch Chapter 11 filing.   One of the items they blame for not having a viable business and being able to compete commercially is "government-financed competition".  I think we can all agree that in the current launch vehicle industry you need to have the government as an anchor customer or provide subsidies to maintain a viable launch vehicle business.  Sea Launch does not, so I don't expect their business prospects to improve or for them to survive bankruptcy.

Government-financed competition won't go away. It's a global market, Arianespace, RSA, China and India will continue to provide launch services at a discount due to government financing. That's just how the launch comsat business works - it's a byproduct of national requirements of various countries to have their own launch capabilities. And it's not going to get any better in the future. More countries are developing rockets to launch their own payloads on and will try to get fixed costs spread over more launches by offering commercial services.

[marsavian]

http://www.space.com/news/090629-busmon-sealaunch-bankruptcy.html

Asked to comment specifically on the Sea Launch bankruptcy filing, satellite operators all said they assume Sea Launch will find a way to emerge from the process and continue operations.

“Having a robust pool of launch service providers is essential to the satellite industry,” Intelsat spokeswoman Dianne J. VanBeber said. “The launch sector should have broader participation — from the U.S., Japan and India to name a few. We have demonstrated our commitment to keeping the launch industry healthy, and to promoting a global pool of providers.”

Christopher McLaughlin, spokesman for London-based satellite operator Inmarsat, said the company relied on Sea Launch in late 2005 to launch the second Inmarsat 4 satellite after Inmarsat could not find suitable launch dates from ILS and Arianespace.

“We were very happy to have them there and available for us,” McLaughlin said.

Eutelsat spokeswoman Vanessa O’Connor said Eutelsat seeks to maintain the widest possible supplier base among launch service providers. “That has always been our policy,” she said.

SES spokesman Yves Feltes said SES has no Sea Launch missions on order but that “it is in our interest to have as many launch options available as possible. So the bankruptcy of Sea Launch is certainly not good news. At least the French now seem to be determined to keep Ariane 5 and 6 available for commercial launches.”

[McDew]

Sea Launch filed a motion with the bankruptcy court last week to break their office lease and abandon their headquarters at One World Trade Center in Long Beach at the end of the month.

[RSC ENERGIA]

Sea Launch prepares for massive firings of manpower and what Boeing calls reduction in force.  Severely More will come if no more 2009 launches and russia will regain ownership of profits its entitled to instead of subsidizing western launches.

[pippin]

For another example, Ariane subsidies could *decrease* because they might not want too much production, because then it occupies too large a market share in a cyclical market that may have a downside trend, and they'd prefer to use the capital to participate in a different industry that has a large upside trend, so they can bring an economy back.

As much as this would make sense I just don't see it.
Most subsidies by far go into declining rather than growing businesses for the simple reason that
a) declining businesses typically decline from a higher level so have a lot of lobbying plus a large workforce to be laid off
b) Gov. typically is not very good at identifying new trends, the ones that really take off often don't need subsidies, new ones that do get subsidized often only live due to the subsidies (e.g. most "green" technologies).

[mr.columbus]

For another example, Ariane subsidies could *decrease* because they might not want too much production, because then it occupies too large a market share in a cyclical market that may have a downside trend, and they'd prefer to use the capital to participate in a different industry that has a large upside trend, so they can bring an economy back.

As much as this would make sense I just don't see it.
Most subsidies by far go into declining rather than growing businesses for the simple reason that
a) declining businesses typically decline from a higher level so have a lot of lobbying plus a large workforce to be laid off
b) Gov. typically is not very good at identifying new trends, the ones that really take off often don't need subsidies, new ones that do get subsidized often only live due to the subsidies (e.g. most "green" technologies).

Also, Arianespace only receives its indirect subsidies through the money France and others pump into the launch complex in Kourou. Development costs for the current vehicle have been spent. Every launch from the commercial market spreads out fixed costs more for governmental launches. Plus, Ariane is a cash-cow for the consortium which builds it, every Ariane manufactured means profits for them and also means they can continue to employ people. Reducing the Ariane flight rate means those companies will have lower profits and may need to reduce their workforce, something which isn't desirable in Germany, France, Italy and Spain which are the main countries where Ariane parts are manufactured.

[mmeijeri]

I believe block-buys of Arianes by ESA also have the explicit, publicly announced goal of keeping Ariane competitive. This in effect is also a subsidy.

[pippin]

I believe block-buys of Arianes by ESA also have the explicit, publicly announced goal of keeping Ariane competitive. This in effect is also a subsidy.

No, it is not. This is a purchasing policy. A lot of companies do that and they don't need govs for that.

[kevin-rf]

I believe block-buys of Arianes by ESA also have the explicit, publicly announced goal of keeping Ariane competitive. This in effect is also a subsidy.

No, it is not. This is a purchasing policy. A lot of companies do that and they don't need govs for that.

There is a big difference between buying ten boxes of screws at $5 a box and Ariane buying 10 vehicles at X million euro a pop. The details are in the financing. If Ariane does not have to finance and service interest on the money being used for the buy, it is a subsidy.

(for those that are not in manufacturing, that is why "inventory" turns are so critical,  it is money you have tied up that you can not earn money with, and have to pay interest on if you borrowed the money to buy the inventory (another common practice) 12 is considered a good number, 26 or 52 (hard to do) is even better, though less than 1 turn a year is not uncommon for some companies) 

[mmeijeri]

Block buys by themselves are not necessarily a subsidy, but ESA is using them with the explicit goal of providing continuity to EADS. That is what makes it a subsidy.

[pippin]

OK, does this mean that ESA is guaranteeing the deal? THAT would be a subsidy, the block purchase itself would not.

[mmeijeri]

This is just the impression I have, but I believe the idea is that ESA buys a block of Arianes before they know what they will do with it.

[pippin]

This is just the impression I have, but I believe the idea is that ESA buys a block of Arianes before they know what they will do with it.

So who's buying them? ESA or Arianespace? That's the question. If Arianespace is doing the block deal, it's not a subsidy unless it's being guaranteed by some gov backed organization. If ESA is doing it, that's something else.

[mmeijeri]

Good question and I'm not sure. I believe Arianespace places block buys with EADS and I suspect it is backed somehow by ESA, or it couldn't be part of official policy. The ownership structure of EADS and Arianespace, the organisational structure of ESA, its relationships with the national space agencies and the contractual relationships between all these entities are very complicated and confusing.

[mr.columbus]

Good question and I'm not sure. I believe Arianespace places block buys with EADS and I suspect it is backed somehow by ESA, or it couldn't be part of official policy. The ownership structure of EADS and Arianespace, the organisational structure of ESA, its relationships with the national space agencies and the contractual relationships between all these entities are very complicated and confusing.

Actually, not that confusing.

Arianespace, not ESA, is buying Arianes from the manufacturers en block (and doesn't pay upfront). Arianespace is however owned by the manufacturers themselves (Astrium (both the German and the French part...), Thales Alenia, MT Aerospace etc. - in total 23) and CNES which has a 33% share because it operates the launch platforms.

Arianespace doesn't actually operate to make a lot of profits (they make low single digit million EUR profits per year with revenues of about a billion EUR). The profits for Arianespace's shareholders are in getting paid for the parts of Ariane they manufacture. The price paid by Arianespace is tailored in such a way that the company is nearly balanced out.

All that being said, Arianespace is backed by ESA from an organizational and political viewpoint, not so much from a financial direct point (except if things go wrong - 2002 Ariane 5 ECA failure etc. and it paid for the development costs). CNES is subsidizing Arianespace by providing the launch facilities at Kourou to them.

[mmeijeri]

Actually, not that confusing.

Lol, I think that's pretty confusing.

ESA buys Arianes from Arianespace, which buys them from EADS. Arianespace launches from CSG in Kourou which is managed by CNES, which is the French space agency, France being a member state of ESA. ESA also pays part of the costs of maintaining and operating CSG. CNES and EADS are also major shareholders of Arianespace. EADS indirectly (through SOGEADE) has the French state as a major shareholder.

[mr.columbus]

Actually, not that confusing.

Lol, I think that's pretty confusing.

ESA buys Arianes from Arianespace, which buys them from EADS. Arianespace launches from CSG in Kourou which is managed by CNES, which is the French space agency, France being a member state of ESA. ESA also pays part of the costs of maintaining and operating CSG. CNES and EADS are also major shareholders of Arianespace. EADS indirectly (through SOGEADE) has the French state as a major shareholder.

Well, ok, sort of confusing.

Some corrections:

1. Arianespace buys Arianes from its suppliers (which is a consortium of 23 companies) with EADS subsidiaries being in the lead.
2. Customers pay Arianespace for launches.
3. ESA is a customer like anyone else (ok, not like anyone else, they get priority for their payloads like Herschel and Plank...)
4. Arianespace launches from Kourou.
5. Kourou is managed by CNES (and partly paid for by CNES - 1/3rd).
6. CNES is the French space agency, France is a member of ESA, but CNES has its own national space budget which is larger than France's contribution to ESA - which by itself is the largest among all ESA memberstates.
7. Yes, ESA pays parts of the Kourou annual operational costs (2/3rds).
8. CNES is a shareholder of Arianespace, ESA is not a shareholder (here are the 24 shareholders: http://www.arianespace.com/about-us-corporate-information/shareholders.asp the big ones are EADS (through AStrium etc.) and CNES)
9. EADS N.V. has a 50% free float (publicly held),  and is otherwise held by Daimler, SEPI and SOGEADE. SOGEADE has a 22.5% share in EADS is 50% owned by the French state making the French state a 11% shareholder in EADS and thus indirectly a 11% shareholder in the biggest contractor and shareholder of Arianespace (EADS indirectly holds about 40% of Arianespace).

[pippin]

Actually, not that confusing.

Lol, I think that's pretty confusing.

ESA buys Arianes from Arianespace, which buys them from EADS. Arianespace launches from CSG in Kourou which is managed by CNES, which is the French space agency, France being a member state of ESA. ESA also pays part of the costs of maintaining and operating CSG. CNES and EADS are also major shareholders of Arianespace. EADS indirectly (through SOGEADE) has the French state as a major shareholder.

What's confusing about that?
NASA buys Atlas 5's (OK launch service, but that's the same for ESA) from ULA which buys them from LM. ULA launches from CCAFS, which is operated by the Air Force, which is a US Agency. The US Air Force also pays for the cost of maintaining and operating the launch infrastructure. OK, LM does not have Florida as a shareholder.
Sounds pretty similar, doesn't it?

[SIM city]

All that being said, Arianespace is backed by ESA from an organizational and political viewpoint, not so much from a financial direct point (except if things go wrong - 2002 Ariane 5 ECA failure etc. and it paid for the development costs). CNES is subsidizing Arianespace by providing the launch facilities at Kourou to them.

Au contraire!  Arianespace's "revenue" is made up mostly of ESA funding through development programs, straight subsidies (EGAS), etc.  The revenue from the commercial business makes up less than 500M euro per year.  The purchase of vehicles from EADS is partially subsidized by ESA directly. 

It's hard to separate Arianespace as a business from ESA. 

[mmeijeri]

What's confusing about that?

You are right that here are obvious similarities and I'd say the ULA construction is also a bit involved, though not as much as with Arianespace. EADS itself is a very complicated and highly political beast. In the US the individual states do not have their own space agencies. NASA does have the various Centers, but all the money comes from federal funds if I'm not mistaken. There is no Florida space agency sharing part of the costs of operating CCAFS with NASA (nor are they offering the Russians a launch site ). Looking at it from a distance it looks as if the American structures are a lot less Byzantine than the European ones.

[mr.columbus]

All that being said, Arianespace is backed by ESA from an organizational and political viewpoint, not so much from a financial direct point (except if things go wrong - 2002 Ariane 5 ECA failure etc. and it paid for the development costs). CNES is subsidizing Arianespace by providing the launch facilities at Kourou to them.

Au contraire!  Arianespace's "revenue" is made up mostly of ESA funding through development programs, straight subsidies (EGAS), etc.  The revenue from the commercial business makes up less than 500M euro per year.  The purchase of vehicles from EADS is partially subsidized by ESA directly. 

It's hard to separate Arianespace as a business from ESA. 

Do you have a link for this information?

As far as I know the ESA contribution to the Ariane 5 development is not going through Arianespace but directly to contractors. EGAS does cover some of the production costs for Ariane 5. EGAS has a limit of 960 million EUR for the 6-year period from 2004 to 2009 (good while old link for that is http://www.esa.int/esaCP/SEMHQYR1VED_index_0.html) which means 160 million per year - not all of which are going to Arianespace but money is going to cover fixed costs at the providers (which would mean an indirect subsidy).

"The purchase of vehicles from EADS is partially subsidized by ESA directly.  " - please elaborate, I have not heard of that, or do you mean EGAS again?

"The revenue from the commercial business makes up less than 500M euro per year." - Commercial prices for payloads riding on Ariane 5 (for dual payloads) are between 60 and 100 million USD depending on the payload and approximately 150 million USD for a dedicated single launch. Airanespace launched 11 payloads to GTO, 5 dual launches and one single launch in 2008. Total revenue for the year 2008 was nearly 1 billion EUR (about 1.3 billion USD).

[pippin]

Looking at it from a distance it looks as if the American structures are a lot less Byzantine than the European ones.

I don't know about the American structures but I completely agree that there is probably nothing more Byzantine than European institutional structures.
But that doesn't necessarily make it more subsidized.

[Chris Bergin]

No more Ariane discussion on this thread. This about Sea Launch, and we have some Sea Launch workers on here as friends of the site. Let's show a bit of respect for their uncertain future by not moving this thread into a debate about other launch vehicles.

[McDew]

Sea Launch filed a motion with the bankruptcy court last week to break their office lease and abandon their headquarters at One World Trade Center in Long Beach at the end of the month.

Next bankruptcy hearing scheduled for 18 July.

[Space Lizard]

Sea Launch filed a motion with the bankruptcy court last week to break their office lease and abandon their headquarters at One World Trade Center in Long Beach at the end of the month.

Next bankruptcy hearing scheduled for 18 July.

Any news?

[McDew]

Sea Launch filed a motion with the bankruptcy court last week to break their office lease and abandon their headquarters at One World Trade Center in Long Beach at the end of the month.

Next bankruptcy hearing scheduled for 18 July.

Any news?

oops...I meant to say 18 August.

On Wednesday Intelsat filed a Motion with the court to Compel Sea Launch to Assume or Reject their Launch Services Contracts. 

Essentially Intelsat plans to stop making any payments to Sea Launch until they know whether their contracts will be honored.  Also, as part of the motion, Intelsat wants to bypass Sea Launch on the Land Launch contract and make their payments directly to Space International Services for Measat, I-15 and I-18.

[kfsorensen]

It really looks like they are shutting down for good then.

[McDew]

Sea Launch filed a motion opposing Intelsat's request for a shortened timeline to consider Intelsat's motion to assume or reject their contracts. 

The Judge has scheduled a hearing on 11 August for the Motion filed by Intelsat.

[McDew]

Latest bankruptcy news....

XM Satellite Radio filed a Motion with the court to Compel Sea Launch to Assume or Reject their Launch Services Contract.

The Judge has scheduled a hearing on 17 August for the Motion filed by XM.

Sea Launch has filed a motion with the court to reject their contracts for helicopter services used for the platform and command ship.

[jacqmans]

08-08-2009 Sea Launch Bankruptsy is not the End for the Company- Roscosmos Head Anatoly Perminov

http://www.roscosmos.ru/NewsDoSele.asp?NEWSID=7025


Roscosmos Head Anatoly Perminov states that Sea Launch bankruptsy does not mean that the company will terminate its activities.
The company will continue its work after some restructurization and `cleaning`, Perminov says.

Sea Launch Company L.L.C. and Sea Launch Limited Partnership and subsidiaries (“Sea Launch” or “Company”), a leading provider of launch services to the commercial satellite industry, has filed voluntary petitions to reorganize under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware in Wilmington. Nevertheless, the company intends to continue to maintain all normal business operations after the filing for reorganization.

Sea Launch is a limited liability corporation with Headquarters and Home Port facilities in Long Beach, Calif. The company is owned by Boeing of Seattle, Wash. (40%); RSC-Energia of Moscow, Russia (25%); Aker ASA of Oslo, Norway (20%); and SDO Yuzhnoye/PO Yuzhmash of Dnepropetrovsk, Ukraine (15%). Financing for the venture is provided by these companies and through debt financing arranged by Chase Manhattan Bank in New York.
 

[SIM city]

Sea Launch filed a motion to reject their services contracts with Boeing and KBTM yesterday.  They stated that although they may use these services in the future, the contracts offer no material economic value and are not essential to the conduct of business.

[McDew]

The court hearings to compel SL to assume or reject the Launch Service Agreements has been postponed to 25 August.

SL has been fighting the motions to compel them to assume or reject the contracts.  Strangely, SL has been validating XM’s concerns while at the same time goading XM to terminate the launch service agreement and seek a launch from their competitors.

From the SL objections to the XM motion to compel:

“Every customer who comes to contract with the Debtors knows that there is never any absolute assurance that the parties will be able to perform by a specific date under a launch contract that is entered into years in advance of the contemplated launch.”

“If the Court compels the Debtors to act now, seven weeks into these bankruptcy cases, and the Debtors do in fact assume the Launch Agreements, there is no greater assurance given to XM that the launches will actually occur on time or at all.”

“Unlike other businesses and even unlike government subsidized commercial launch providers, progress payments made to the Debtors by one customer are used to fund the operations surrounding the launch of another customer’s satellite.”

Wow… and yes , Sea Launch is unlike the other launch providers.  No wonder SL is in deep dodo.  Once again, the obvious truth comes out that if the money never gets to the subcontractors to order the hardware, then the vehicles never get built on time or at all, even if Sea Launch publicly blames it on production problems.

Did Sea Launch just admit that they have been running a Ponzi Scheme? 

Also from the SL objections:

“If XM faces the imminent alleged “irreparable harm” it asserts in the Motion to Compel, and if XM feels that it must move immediately to arrange for alternate launch services because of this alleged harm, then one must question why XM does not immediately terminate the Launch Agreements for convenience and arrange for launch services with another provider.”

[kq6ea]

Yeah, I read those documents the day they showed up on the Epiq site, and it seemed strange to me, too.

[rsnellenberger]

Also from the SL objections:

“If XM faces the imminent alleged “irreparable harm” it asserts in the Motion to Compel, and if XM feels that it must move immediately to arrange for alternate launch services because of this alleged harm, then one must question why XM does not immediately terminate the Launch Agreements for convenience and arrange for launch services with another provider.”

Does this remind anyone else of the scene in "Blazing Saddles" where Cleavon Little kidnaps himself at gunpoint...

[edkyle99]

Did Sea Launch just admit that they have been running a Ponzi Scheme? 

If so, then every other manufacturer on Earth is doing the same. 

No, not a Ponzi scheme.  Rather, a very poorly worded legal document submitted on behalf of Sea Launch.

 - Ed Kyle

[anik]

http://www.space.com/spacenews/spacenews_summary.html#BM_1

"In a ruling published Aug. 25, the court said Intelsat could take the place of Sea Launch as the customer for three launches that Intelsat had contracted with Sea Launch but that rely on Moscow-based Space International Services (SIS)"

"Intelsat has three Land Launch contracts for which payment is still due. The first is a final payment for the June launch of the Measat 1R satellite, a launch that Intelsat had sold to Malaysia's Measat satellite operator.

The second contract is for the Intelsat IS-15 satellite, scheduled for launch late this year, with the third being for the IS-18 satellite to be orbited in late 2010 or early 2011"

[Marisum]

Aren't Ariane 5's launches expensive as well?  What are their debts/debt holders?  If not for the 'inside sat business'  (Alcatel?) or French gov and ESA subsidies it'd be hanging by a thread now as much as SL.  I don't see anything economical or competitive in the Arianne technically or business-wise.  Perhaps the 'double GSO sat launch' feature?

There the market leader by far and they're increasing production. Most of their orders come from outside France, and the launch subsidies are about $200 million. Far less than Atlas or Delta.

Part of the problem, if u take away the subsidies, Ariane/EELV etc. commercial become a lot more viable. It is hard to compete again government money.

[Marisum]

What's confusing about that?

You are right that here are obvious similarities and I'd say the ULA construction is also a bit involved, though not as much as with Arianespace. EADS itself is a very complicated and highly political beast. In the US the individual states do not have their own space agencies. NASA does have the various Centers, but all the money comes from federal funds if I'm not mistaken. There is no Florida space agency sharing part of the costs of operating CCAFS with NASA (nor are they offering the Russians a launch site ). Looking at it from a distance it looks as if the American structures are a lot less Byzantine than the European ones.

Actually, Florida does have its own space agency - which financed the EELV launch pads

[SIM city]

It appears the self-hosted Sea Launch website www.sea-launch.com is down.  The Boeing-hosted site remains.
http://www.boeing.com/special/sea-launch/

[edkyle99]

Boeing has filed "a demand for arbitration" ... "to force Sea Launch’s Russian and Ukrainian owners to repay $147 million in loan guarantees Boeing made to the struggling firm."

http://www.spacenews.com/launch/091030-boeing-losses-sea-launch-bankruptcy.html

In addition, Boeing loaned more than $500 million more to Sea Launch before it filed for bankruptcy.  The company is trying to reclaim some of its loss, but ...

The report also mentions another loss Boeing is taking - $386 million for four presumably Delta 4 launch underprice/overruns for which it provided guarantees to ULA.

Why does Elon Musk want to get into the business, again?

 - Ed Kyle

[yinzer]

Why does Elon Musk want to get into the business, again?

Because rockets are awesome, because he thinks that he's smarter than everyone else in the field and wants to prove it, and because he wants to fly himself to Mars.

[alexSA]

Why does Elon Musk want to get into the business, again?

Because rockets are awesome, because he thinks that he's smarter than everyone else in the field and wants to prove it, and because he wants to fly himself to Mars.

well, only one of those reasons makes any sense...

[Analyst]

Which one?

Analyst

[khallow]

Which one?

I agree with Analyst here. All three are valid reasons that "make sense". Keep in mind also that even bizarre reasons usually make sense to the holder of the reason even if an outsider can't figure it out.

[iamlucky13]

Why does Elon Musk want to get into the business, again?

Because he can.

With that much money, taking a huge financial risk to do something genuinely interesting and challenging is a compelling option. Sure beats spending it on drugs and hookers like most people seem inclined to do.


Does anyone know how many launches are on Sea Launch's current manifest? I only see Intel-Sat 15 via Land Launch on their website.

[mlorrey]

Boeing has filed "a demand for arbitration" ... "to force Sea Launch’s Russian and Ukrainian owners to repay $147 million in loan guarantees Boeing made to the struggling firm."

http://www.spacenews.com/launch/091030-boeing-losses-sea-launch-bankruptcy.html

In addition, Boeing loaned more than $500 million more to Sea Launch before it filed for bankruptcy.  The company is trying to reclaim some of its loss, but ...

The report also mentions another loss Boeing is taking - $386 million for four presumably Delta 4 launch underprice/overruns for which it provided guarantees to ULA.

Why does Elon Musk want to get into the business, again?

Hey now, Jim assured us that Boeing doesn't treat space launches as loss leaders for their satellite sales business, so how can this be?

[rsnellenberger]

Boeing has filed "a demand for arbitration" ... "to force Sea Launch’s Russian and Ukrainian owners to repay $147 million in loan guarantees Boeing made to the struggling firm."

http://www.spacenews.com/launch/091030-boeing-losses-sea-launch-bankruptcy.html

In addition, Boeing loaned more than $500 million more to Sea Launch before it filed for bankruptcy.  The company is trying to reclaim some of its loss, but ...

The report also mentions another loss Boeing is taking - $386 million for four presumably Delta 4 launch underprice/overruns for which it provided guarantees to ULA.

Why does Elon Musk want to get into the business, again?

 - Ed Kyle

Because he sees obvious ways to avoid making $1 billion worth of bad decisions -- particularly because he's playing with his own money and uninclined to follow these types of "lose money over here to make money over there" philosophies?

[yg1968]

Boeing has filed "a demand for arbitration" ... "to force Sea Launch’s Russian and Ukrainian owners to repay $147 million in loan guarantees Boeing made to the struggling firm."

http://www.spacenews.com/launch/091030-boeing-losses-sea-launch-bankruptcy.html

In addition, Boeing loaned more than $500 million more to Sea Launch before it filed for bankruptcy.  The company is trying to reclaim some of its loss, but ...

The report also mentions another loss Boeing is taking - $386 million for four presumably Delta 4 launch underprice/overruns for which it provided guarantees to ULA.

Why does Elon Musk want to get into the business, again?

Hey now, Jim assured us that Boeing doesn't treat space launches as loss leaders for their satellite sales business, so how can this be?

Jim says that these contracts predates ULA.

[Jim]

Hey now, Jim assured us that Boeing doesn't treat space launches as loss leaders for their satellite sales business, so how can this be?

The satellite business is separate from the space launch business.  They are contracted separately.  Most of the Boeing commercial spacecraft, the few that there are, do not fly on Boeing launch vehicles.

Due to mergers, Boeing and LM were forced to put up firewalls between their launch and spacecraft divisions

[McDew]

In addition, Boeing loaned more than $500 million more to Sea Launch before it filed for bankruptcy.  The company is trying to reclaim some of its loss, but ...

The report also mentions another loss Boeing is taking - $386 million for four presumably Delta 4 launch underprice/overruns for which it provided guarantees to ULA.

Boeing is continuing the slow roll on the financial write offs for all their old launch vehicle businesses.  More to come on Sea Launch, Delta IV and Delta II.  Boeing owns the inventory for all the unsold Delta II vehicles.

[kq6ea]

It appears the self-hosted Sea Launch website www.sea-launch.com is down.  The Boeing-hosted site remains.
http://www.boeing.com/special/sea-launch/

They were switching telcom providers, and the site had to be moved.
It's back up now.

[Cbased]

http://en.rian.ru/russia/20091110/156780654.html

BAIKONUR, November 10 (RIA Novosti) - RSC-Energia, a leading Russian spacecraft maker, is putting a strong effort to revive its bankrupt Sea Launch joint international project, the head of the company said on Tuesday.

The Sea Launch consortium, established in 1995, is owned by Boeing, RSC-Energia, Norway's Kvaerner ASA, Ukraine's Yuzhnoye design bureau and Yuzhmash production association. It is the only company that conducts launches from a sea-based platform near the Equator, which allows rockets to carry heavier payloads than from other latitudes.

"Boeing has paid off its Sea Launch debts and filed claims to other partners...We are taking steps to save the project so that Boeing receives dividends from it rather than putting claims against us," Vitaly Lopota said.

"We have solid prospects and have found investors," he added.

In June 2009, the provider of the Sea Launch service, California-based Sea Launch Co. LLC, filed for Chapter 11 bankruptcy protection in a U.S. court.

Sea Launch told the court that its assets were valued between $100 million and $500 million, but that its liabilities are between $500 million and $1 billion. The company hired Alston & Bird LLP to handle the restructuring.

While the company continues work on reorganization, preparations are underway for the launch of the Intelsat 15 communications satellite later this year, from its Land Launch site at the Baikonur Space Center in Kazakhstan.

Sea Launch has carried out 30 rocket launches from the Odyssey launch platform in the Pacific Ocean since 1999.

[Smoothie]

http://www.spacenews.com/launch/091111-bankrupt-sea-launch-gets-new-financing.html

Bankrupt Sea Launch Gets New Financing

PARIS — Unidentified investors operating under the name Space Launch Services LLC have agreed to provide initial financing to Sea Launch Co., the commercial launch provider that is in Chapter 11 bankruptcy proceedings, according to bankruptcy court records and Sea Launch President Kjell Karlsen.

Karlsen said in a Nov. 11 interview that the backers are strategic, not financial, and ultimately want to manage Sea Launch through bankruptcy and a return to commercial activity. He specifically said they were not private-equity investors but companies with a long-term interest in the space industry.

“These are people who are interested in access to space,” Karlsen said. “They believe Sea Launch will give them that. They are people who have worked in the past with one of our partners and whom we know.”

Karlsen said Space Launch Services has agreed to provide $5 million immediately and another $7.5 million in early December at a hearing scheduled by the Delaware Bankruptcy Court overseeing Long Beach, Calif.-based Sea Launch’s reorganization.

Karlsen said the $12.5 million should be enough to carry Sea Launch through February. He said he still expects Sea Launch to emerge from Chapter 11 bankruptcy in the spring.

The world’s three largest commercial satellite fleet operators — Intelsat of Bermuda and Washington; SES of Luxembourg; and Eutelsat of Paris — all submitted statements to the court on behalf of Sea Launch, Karlsen said. In addition to wanting access to a broader supply of commercial rockets, all three of these companies are among Sea Launch’s unsecured creditors because of launch contracts that are now at risk in the Chapter 11 proceeding.

Sea Launch lofts commercial telecommunications satellites from a converted Norwegian floating oil platform using the Russian- and Ukrainian-built Zenit 3 rocket. Sea Launch, whose founding investors include Chicago-based Boeing Co., entered bankruptcy in June.

Karlsen said Space Launch Services is one of three investor groups that had offered to provide what is known in bankruptcy proceedings as debtor-in-possession (DIP) financing. DIP finance providers generally position themselves to take an ownership stake in the bankrupt company, and Karlsen said that is the case for Sea Launch.

With the Nov. 10 approval of the bankruptcy court, Sea Launch accepted Space Launch Services’ offer above the other two because it carried far more favorable interest and payment terms, Karlsen said.

[edkyle99]

So Sea Launch is being restructured with money from new investors.  I wonder who will own what when it is all said and done.  Will Boeing, for example, own a substantially smaller share, or any share for that matter, of the new Sea Launch?

 - Ed Kyle

[McDew]

So Sea Launch is being restructured with money from new investors.

No, not yet

From the court motions; This DIP financing is an emergency 6 month loan pledging the Marine assets (ship and LP) as collateral otherwise they were out of money.  This keeps the lights on at Sea Launch until February at which time they will need to have a viable reorganization plan (with new investors) or likely get forced into Chapter 7.

The interesting twist is that SLS is mainly the same group of guys from Excalibur (not sure who is fronting the $12.5M in cash).  Their stated strategic interest is obtaining the use of the ship and LP as a launch platform for their other activities.  Remember all that old Almaz stuff!!!  They're back...

[kq6ea]

It will be very interesting to see how this all plays out.

[Danderman]

For what its worth, the Delaware Secretary of State's office reports that Space Launch Services LLC was formed last week.

[Antares]

Here's your answer, Ed.

Boeing expected to end stake in rocket firm Sea Launch
http://www.latimes.com/business/la-fi-sealaunch12-2009nov12,0,4439205.story

[sammie]

Well, I was sort of thinking ahead and wondering about how this all is going to play out. Sea Launch/Land Launch only got two more firm launches in their manifest, a SL for 2010 and a LL for 2011. There is another non SL Zenit slated for launch next year with a Fregat upper stage.

But I assume that production of the Zenit's first two stages in the Ukraine had pretty much proceeded as normal up until the bankruptcy. So there is going to be lot of half finished hardware around.

In an interview from on the other side SL states they can be profitable with 4 launches a year. Which is what they were doing in the first place, so I wonder where they are cutting costs as per previous operations.

Also both Arianespace and ILS say that they are booked up for 2010 and only one or two space for 2011. I wonder whether a restructured SL/LL could offer spaces in 2010 for the heavy class satellites, and how much time they would need to prepare hardware. 

ah well, hopefully we will see Zenit launch in one way or another for a long time...

[pippin]

ah well, hopefully we will see Zenit launch in one way or another for a long time...

Yes. It's one fine launcher.
Kind of where SpaceX eventually wants to be...

[McDew]

SL continues to have problems lining up a long term invester to back the program with a viable business plan.  SL filed a motion today with the bankruptcy court to extend the deadline for a reorganization plan by another 90 days.  New proposed deadline is now 17 June 2010.

[Smoothie]

SL continues to have problems lining up a long term invester to back the program with a viable business plan.  SL filed a motion today with the bankruptcy court to extend the deadline for a reorganization plan by another 90 days.  New proposed deadline is now 17 June 2010.

Where did you get this information?  A search turns up nothing.  Can you please post a link?

[McDew]

SL continues to have problems lining up a long term invester to back the program with a viable business plan.  SL filed a motion today with the bankruptcy court to extend the deadline for a reorganization plan by another 90 days.  New proposed deadline is now 17 June 2010.

Where did you get this information?  A search turns up nothing.  Can you please post a link?

https://ecf.deb.uscourts.gov/
This is the link to the U.S. Bankruptcy Court for the District of Delaware.  To use the link to access the document filing system you have to register for the PACER service and pay for any documents downloaded.

[clsspace]

I checked out the ExcaliburAlmaz website, I didn't know Bo Bejmuk was one of the consultants.  Very Interesting.
http://excaliburalmaz.com/SP1/company-leadership.php

So Sea Launch is being restructured with money from new investors.

No, not yet

From the court motions; This DIP financing is an emergency 6 month loan pledging the Marine assets (ship and LP) as collateral otherwise they were out of money.  This keeps the lights on at Sea Launch until February at which time they will need to have a viable reorganization plan (with new investors) or likely get forced into Chapter 7.

The interesting twist is that SLS is mainly the same group of guys from Excalibur (not sure who is fronting the $12.5M in cash).  Their stated strategic interest is obtaining the use of the ship and LP as a launch platform for their other activities.  Remember all that old Almaz stuff!!!  They're back...

[ddford]

Boeing wants who out of where? That doesn't make sense to me.

[clsspace]

http://www.kyivpost.com/news/business/bus_general/detail/60610/

http://www.satellitetoday.com/st/headlines/Sea-Launch-Receives-Second-Loan-from-Space-Launch-Services_33480.html

http://www.satnews.com/cgi-bin/story.cgi?number=286980293

[clsspace]

Interesting developments, possible move of launch site and payloads.

http://www.spacenews.com/launch/100312-sea-launch-preparing-bankruptcy-exit.html

[sammie]

I guess the man-rating of Zenit is being done for the Excalibur Almaz crowd. Would be interesting to see, but launching from the ocean would make an abort recovery of the manned capsule rather hard.

And I don't really see the advantage of a new launch site, there is just a very very small chance that just moving to territorial waters will make the Zenit-3SL, an Ukrainian/Russian combi, qualify as a U.S. launch system. Imagine the cry from Congress if the Zenit is chosen over Delta 4/Atlas 5 and Falcon 9. The statement also doesn't fly with earlier statements about profitability and a reduced launch rate. Sea Launch claimed they could turn a profit with 4 launches a year. In the past the long transit times may have been a bottle-neck for more launches per year. But so was the sluggish ramp up of production in the Ukraine and the fact thatr ocean transfer of Zenit rockets didn't work out as planned. But I doubt that a very launch rate can ever be sustained by the current market, 4 to 6 launches to the GTO market is the best they could hope for.

[sammie]

From Aviation Week

First part is about ILS bidding for a Galileo launch contract. Second part is about ILS with some information on how they want to operate without Boeing and Aker.

By June, he expects to finish all other recovery tasks necessary to resume flights: completing due diligence; finding a new investor to replace Boeing and Aker Solutions; transferring licenses from Boeing to the new owner; and making Energia the Sea Launch prime contractor, with responsibility for all suppliers. Karlsen says he has initialized—but not yet signed—a term sheet with a new investor. Candidates include Space Launch Services, which participated in the DIP financing, and an unnamed company.

[edkyle99]

'Gotta wonder how Boeing can lose $750 million on Sea Launch while the other original investors seem good to go.

Beware, Orbital.

 - Ed Kyle

[Jim]

'Gotta wonder how Boeing can lose $750 million on Sea Launch while the other original investors seem good to go.

Beware, Orbital.

There are no parallels between Boeing - Sealaunch and OSC - Taurus II

[edkyle99]

'Gotta wonder how Boeing can lose $750 million on Sea Launch while the other original investors seem good to go.

Beware, Orbital.

There are no parallels between Boeing - Sealaunch and OSC - Taurus II

The details differ, but there is one critical common player - Yuzhnoye/Yuzhmash.

 - Ed Kyle

[Jim]

'Gotta wonder how Boeing can lose $750 million on Sea Launch while the other original investors seem good to go.

Beware, Orbital.

There are no parallels between Boeing - Sealaunch and OSC - Taurus II

The details differ, but there is one critical common player - Yuzhnoye/Yuzhmash.

 - Ed Kyle

It is less of a common player compared to PWR with RL-10 for EELV's

Yuzhnoye/Yuzhmash is a minor partner in Sealaunch but nearly supplies a whole vehicle.

Yuzhnoye/Yuzhmash is a supplier for OSC and only supplies the first stage tanks.

Yuzhnoye/Yuzhmash has not been an issue for Sealaunch

[SIM city]

Yuzhnoye/Yuzhmash did not make it whole out of SL.  They are the third largest claimant with $140M in trade debt.  That doesn't include the loans they have taken out to cover cost overruns on their fixed price and below cost contracts with SL.

Energia is next on the list with $74M in trade debt but, that's a small fraction of their financial problems.

SL had many problems that you can point to and the supply chain was one of them.  Keep in mind all of the contracts that were cancelled over the last few years and all of the money paid to date on the remaining contracts.  Where is the hardware???

[edkyle99]

Yuzhnoye/Yuzhmash is a supplier for OSC and only supplies the first stage tanks.

It is more than "tanks" in my mind.  Orbital says that Yuzhnoye/Yuzhmash is designing and supplying "Stage 1 Core Structures and Fueling Systems".  They'll be shipping this stage to the launch site.

 - Ed Kyle

[Jim]

Yuzhnoye/Yuzhmash is a supplier for OSC and only supplies the first stage tanks.

It is more than "tanks" in my mind.  Orbital says that Yuzhnoye/Yuzhmash is designing and supplying "Stage 1 Core Structures and Fueling Systems".  They'll be shipping this stage to the launch site.

Tanks and stage structure are synonymous

Orbital will attach the engines and avionics at the launch site.

[edkyle99]

Yuzhnoye/Yuzhmash is a supplier for OSC and only supplies the first stage tanks.

It is more than "tanks" in my mind.  Orbital says that Yuzhnoye/Yuzhmash is designing and supplying "Stage 1 Core Structures and Fueling Systems".  They'll be shipping this stage to the launch site.

Tanks and stage structure are synonymous

Orbital will attach the engines and avionics at the launch site.

"Fueling systems" could cover a lot of ground.  Propellant lines, yes, but what about valves and regulators and sensors and propellant loading and monitoring control systems, etc.?  What about wiring harness and pressure control lines, etc.?  (For example, "U.S." car manufacturers rarely use "U.S." wiring harness, etc., any more.)

 - Ed Kyle

[McDew]

Latest status on the Sea Launch Bankrupcty from Court Motions last week.

1)  SL has requested a 60 day extension, until June 18, 2010 to file their reorganization plan.  Hearing on the motion is scheduled for May 12th, with any objections due on May 5th. SL has already filed and recieved two 90 days extensions previously.

2)  The Heinlein Trust has refused to provide Sea launch the next DIP funding Draw of $3M on the grounds that Sea Launch failed to satisfy one or more conditions in the DIP financing agreement.

3)  Motion filed to select Energia Overseas Ltd. (a Russian limited liability company) to replace SLS/Heinlein Trust for the DIP Financing.  Energia Overseas Ltd has provided a DIP financing commitment of $30M. 

$30M will be used as follows:
a) $18.5M to pay off SLS/Heinlein Trust DIP financing agreement,
b) $4M to replaced the $3M payment not provided by Heinlein Trust last week ,
c) $5.5M of additional liquidity and
d) $2M charged for loan origination fee. 

Loan terms not as favorable as provided by SLS deal, interest rate now at LIBOR plus 750 basis points.

[kq6ea]

I keep wondering how much longer this will go on.

[edkyle99]

I keep wondering how much longer this will go on.

It could last for years.  I'm familiar with bankruptcy cases that extended for nearly a decade.  I wouldn't be surprised to learn of some that lasted even longer.

No matter what happens, Sea Launch as we knew it seems to be history.

 - Ed Kyle

[Danderman]

Latest status on the Sea Launch Bankrupcty from Court Motions last week.

1)  SL has requested a 60 day extension, until June 18, 2010 to file their reorganization plan.  Hearing on the motion is scheduled for May 12th, with any objections due on May 5th. SL has already filed and recieved two 90 days extensions previously.

2)  The Heinlein Trust has refused to provide Sea launch the next DIP funding Draw of $3M on the grounds that Sea Launch failed to satisfy one or more conditions in the DIP financing agreement.

3)  Motion filed to select Energia Overseas Ltd. (a Russian limited liability company) to replace SLS/Heinlein Trust for the DIP Financing.  Energia Overseas Ltd has provided a DIP financing commitment of $30M. 

$30M will be used as follows:
a) $18.5M to pay off SLS/Heinlein Trust DIP financing agreement,
b) $4M to replaced the $3M payment not provided by Heinlein Trust last week ,
c) $5.5M of additional liquidity and
d) $2M charged for loan origination fee. 

Loan terms not as favorable as provided by SLS deal, interest rate now at LIBOR plus 750 basis points.

This is a very interesting development - it looks like Excalibur Almaz is completely out of the deal, and that RSC Energia has caused $30 million to materialize from somewhere to pay for more SeaLaunch bankruptcy action.

[kq6ea]

I keep wondering how much longer this will go on.

It could last for years.  I'm familiar with bankruptcy cases that extended for nearly a decade.  I wouldn't be surprised to learn of some that lasted even longer.

No matter what happens, Sea Launch as we knew it seems to be history.

 - Ed Kyle

Ahhhh...I didn't know they could keep on asking for extensions.
It sure was a wonderful place to work at.
I wish them well, but with hardly anyone left, it's going to take them quite a while to get things turned back on and operating properly.
Jim

[Danderman]

I have been thinking about this $30 million investment by Energia a little more, its certainly not the kind of money that would be thrown around without a lot of thought.  Lets look at what they might get out of it: the principal assets are the launch pad and the command ship.

Are is the Long Beach facility, much of which is owned by Astrotech, really necessary for an Energia owned SeaLaunch? What if Energia simply moved the launch pad and boat to some other region, say, Venezuela, and ran the operation without any US support? If not Venezuela, some other area reasonably close to both the equator with an international air strip near a large dock. The satellites could be flown in, transferred to the command ship, and integrated with the Zenit inside the command ship by Russian personnel, or whoever does it for Proton launches.

The Boeing hardware could be stripped out of the payload adapter, which would give a little additional payload mass; I am presuming that the adapter that Proton uses for Block DM could be used on Zenit, as well, or whatever LandLaunch uses.

Perhaps an entity similar to ILS could be setup for marketing.

[Jim]

1.  Are is the Long Beach facility, much of which is owned by Astrotech, really necessary for an Energia owned SeaLaunch? What if Energia simply moved the launch pad and boat to some other region, say, Venezuela, and ran the operation without any US support? If not Venezuela, some other area reasonably close to both the equator with an international air strip near a large dock. The satellites could be flown in, transferred to the command ship, and integrated with the Zenit inside the command ship by Russian personnel, or whoever does it for Proton launches.

2.  The Boeing hardware could be stripped out of the payload adapter, which would give a little additional payload mass; I am presuming that the adapter that Proton uses for Block DM could be used on Zenit, as well, or whatever LandLaunch uses.

1.  It would need a facility like Astrotech no matter where it goes.  The spacecraft are tested, prop loaded and encapsulated in the facility.  So 100k clean room, SCAPE rated facility and room for vertical encapsulation. 

2.  Boeing does more than the adapter, the whole nose fairing.

You are forgetting ITAR.   It can't be just any country.

[edkyle99]

1.  Are is the Long Beach facility, much of which is owned by Astrotech, really necessary for an Energia owned SeaLaunch? What if Energia simply moved the launch pad and boat to some other region, say, Venezuela, and ran the operation without any US support? If not Venezuela, some other area reasonably close to both the equator with an international air strip near a large dock. The satellites could be flown in, transferred to the command ship, and integrated with the Zenit inside the command ship by Russian personnel, or whoever does it for Proton launches.

2.  The Boeing hardware could be stripped out of the payload adapter, which would give a little additional payload mass; I am presuming that the adapter that Proton uses for Block DM could be used on Zenit, as well, or whatever LandLaunch uses.

1.  It would need a facility like Astrotech no matter where it goes.  The spacecraft are tested, prop loaded and encapsulated in the facility.  So 100k clean room, SCAPE rated facility and room for vertical encapsulation. 

2.  Boeing does more than the adapter, the whole nose fairing.

You are forgetting ITAR.   It can't be just any country.

If Energia ends up with a bigger share of the company, it seems likely to me that Sea Launch, if it continues to fly, could end up shedding the Boeing hardware in favor of Russian payload fairings, like those used by the Land Launch Zenit.  Where it will be based, beyond the obvious fact that it would need reasonable access to the equator - probably in the Pacific, is anyone's guess.  Sea Launch was said to be considering a move to Hawaii, for example.

 - Ed Kyle

[kq6ea]

Astrotech doesn't "own" any of the Sea Launch facilities, at least AFAIK. They're a contractor, and always have been. The Port of Long Beach owns the land, and Sea Launch LLC, or one of it's units, owns the buildings.

[Danderman]

1.  It would need a facility like Astrotech no matter where it goes.  The spacecraft are tested, prop loaded and encapsulated in the facility.  So 100k clean room, SCAPE rated facility and room for vertical encapsulation. 

2.  Boeing does more than the adapter, the whole nose fairing.

You are forgetting ITAR.   It can't be just any country.

1) OK, they need an airstrip, a port and a clean room.  I would imagine that RSC Energia could come up with a clean room, I suspect that they have some experience in that area. The only reason that Boeing has Astrotech doing the processing for ITAR purposes. The Russians can't even go inside the Astrotech facility, AFAIK.

2) LandLaunch seems to have a comparable fairing with no Boeing content.

Was ITAR a major factor for LandLaunch? Once the Boeing content is removed, what are the barriers to moving SeaLaunch to, say, Brazil or Indonesia?

[Jim]

1) OK, they need an airstrip, a port and a clean room.  I would imagine that RSC Energia could come up with a clean room, I suspect that they have some experience in that area. The only reason that Boeing has Astrotech doing the processing for ITAR purposes. The Russians can't even go inside the Astrotech facility, AFAIK.

2) LandLaunch seems to have a comparable fairing with no Boeing content.

Was ITAR a major factor for LandLaunch? Once the Boeing content is removed, what are the barriers to moving SeaLaunch to, say, Brazil or Indonesia?

I was referring to ITAR issues with the host country.
More than a clean room is required, prop loading facilities are needed.
Astrotech doesn't do processing, they only provide facilities for spacecraft contractors to work on their own hardware.
Boeing was the one who did the encapsulation work (it was their hardware)

[Danderman]

1) OK, they need an airstrip, a port and a clean room.  I would imagine that RSC Energia could come up with a clean room, I suspect that they have some experience in that area. The only reason that Boeing has Astrotech doing the processing for ITAR purposes. The Russians can't even go inside the Astrotech facility, AFAIK.

2) LandLaunch seems to have a comparable fairing with no Boeing content.

Was ITAR a major factor for LandLaunch? Once the Boeing content is removed, what are the barriers to moving SeaLaunch to, say, Brazil or Indonesia?

I was referring to ITAR issues with the host country.
More than a clean room is required, prop loading facilities are needed.
Astrotech doesn't do processing, they only provide facilities for spacecraft contractors to work on their own hardware.
Boeing was the one who did the encapsulation work (it was their hardware)

Again, a potential model for a revamped SeaLaunch would be LandLaunch, which has, AFAIK, zero Boeing content.

As far as what Astrotech actually did in Long Beach, someone above says that they don't own the facility, Jim claims they don't do the satellite processing, they just let the satellite people use their facilities. I don't understand, then, what it is that Astrotech did at Long Beach.

[Jim]

1.  Again, a potential model for a revamped SeaLaunch would be LandLaunch, which has, AFAIK, zero Boeing content.

2.  As far as what Astrotech actually did in Long Beach, someone above says that they don't own the facility, Jim claims they don't do the satellite processing, they just let the satellite people use their facilities. I don't understand, then, what it is that Astrotech did at Long Beach.

1.  There are other treaties and agreements that would limit Sealaunch basing at certain countries. 

2.  What Astrotech does everywhere, it operates the facilities.  Cleanrooms have to be cleaned, cranes, HVAC, doors have to be maintained,  propellant and fluid systems have to passivated after use, commodities have to be order and stored, forklifts and manlifts have to driven, comm lines and networks have be setup, etc.

[anik]

Energia Overseas Limited Assumes DIP Financing for Sea Launch
http://www.sea-launch.com/news_releases/2010/nr_100504.html

LONG BEACH, Calif., May 4, 2010 – Sea Launch has accepted the terms of agreement for debtor-in-possession (DIP) financing from Energia Overseas Limited (“EOL”). As a result of the court-approved agreement, EOL will replace Sea Launch’s existing DIP lender, Space Launch Services (SLS).

The new DIP financing agreement with EOL, which received interim approval from the U.S. Bankruptcy Court in Delaware on April 27, provides additional funding to Sea Launch, totaling $30 million. Part of the proceeds of this facility will be used to repay all outstanding SLS DIP loans to date, amounting to approximately $19 million. The remaining balance of this facility will be used to fund ongoing operations at Sea Launch through confirmation of its Plan of Reorganization.

The new arrangement is also expected to position Sea Launch for exit financing, as the company prepares for its successful emergence from the Chapter 11 bankruptcy proceedings. The DIP financing transaction closed on April 30. Sea Launch was assisted in the transaction by Jefferies & Company, Alston & Bird LLP and Chris Picone of Buccino & Associates, Inc. EOL was advised by Salans LLP and Avicon (UK).

[Salo]

http://www.spacenews.com/launch/100512-sealaunch-energia-finance-bankruptcy-exit.html

[sdsds]

http://www.spacenews.com/launch/100512-sealaunch-energia-finance-bankruptcy-exit.html

"The Delaware Bankruptcy Court overseeing Sea Launch’s case has scheduled a June 14 hearing to begin to finalize the details of Sea Launch’s Chapter 11 exit"

How long after that date could they conceivably launch a payload?

[kq6ea]

Having been involved with turning everything off, I'd guess it would take several months *minimum* to get the equipment on both ships up and running again.
One problem I see is that everybody who knew the systems is gone. Contracts were canceled, people were let go, assets were removed, etc.
I really wish them well. I'd go back in a heartbeat if I were offered a job there.

[Danderman]

Having been involved with turning everything off, I'd guess it would take several months *minimum* to get the equipment on both ships up and running again.
One problem I see is that everybody who knew the systems is gone. Contracts were canceled, people were let go, assets were removed, etc.
I really wish them well. I'd go back in a heartbeat if I were offered a job there.

The Energia and Yuzhnoye people may be gone from Long Beach, but they are not gone.  On the other hand, the Boeing people may actually be gone, as in "left Boeing".

So, could Energia and Yuzhnoye pull off a SeaLaunch without Boeing?

[kq6ea]

Yep, a lot of us couldn't find other employment within Boeing, so we separated from the company. Others have transferred, some out of state, and getting them back would be difficult, and others still are on "Long Term Loan". Some of the systems Boeing operated were ITAR, so having non US people operate them might be a real sticking point. Other systems were highly proprietary, so you'd need "Factory Authorized" people to operate them.
Believe me, there was much wailing and gnashing of teeth *by the management* as people were given their 60-day notices of impending layoff.
Still, almost anything is possible, given the suitable application of cash.

[Danderman]

Yep, a lot of us couldn't find other employment within Boeing, so we separated from the company. Others have transferred, some out of state, and getting them back would be difficult, and others still are on "Long Term Loan". Some of the systems Boeing operated were ITAR, so having non US people operate them might be a real sticking point. Other systems were highly proprietary, so you'd need "Factory Authorized" people to operate them.
Believe me, there was much wailing and gnashing of teeth *by the management* as people were given their 60-day notices of impending layoff.
Still, almost anything is possible, given the suitable application of cash.

Given the reality of LandLaunch, what aspects of the SeaLaunch operation did Boeing operate that would be difficult to operate, apart from the "launching at sea" set of issues?

[anik]

Sea Launch Files Plan of Reorganization
http://www.sea-launch.com/news_releases/2010/nr_100512.html

LONG BEACH Calif., May 12, 2010 – Sea Launch Company LLC, a leading provider of launch services to the commercial satellite industry, has filed a Plan of Reorganization (the "Plan”) with the U.S. Bankruptcy Court in Delaware, in preparation for its emergence from Chapter 11. Sea Launch filed voluntary petitions to reorganize under Chapter 11 of the U.S. Bankruptcy Code on June 22, 2009.

Pursuant to the terms of the Plan, Energia Overseas Limited (EOL) will purchase 85% of the stock in the reorganized Sea Launch in exchange for an equity investment of $140 million. EOL will also provide Sea Launch with access to a working capital facility in the amount of $200 million. EOL is a joint venture company collaborating with RSC Energia, a founding Sea Launch partner with lead responsibility as a key supplier and manager of rocket operations. The remaining 15% stake in the company will be owned by Sea Launch’s unsecured creditors.

"Submitting our Plan to the Bankruptcy Court is the result of an extraordinary effort among all of the participants in the Sea Launch partnership,” said Kjell Karlsen, president and general manager of Sea Launch. "The reorganization process has required commitment, tenacity and focus on the part of all involved. The completion of the Plan is a significant accomplishment, and brings us a step closer to returning to normal business operations so that we may continue to provide reliable launch services for our current and prospective customers.”

"This transaction constitutes not only an EOL investment, but also an operational opportunity for experienced professionals in the U.S., Russia, Ukraine, Norway and U.K. to combine their efforts in returning this unique, international business to the commercial launch market,” said an EOL spokesperson. "The significance of maintaining a competitive launch alternative for the U.S. and the international commercial satellite industry with Sea Launch should not be underestimated and we believe the satellite community will welcome these efforts.

"We understand this business, we understand the complexities and challenges and, most importantly, we know how to manage the processes. Therefore, it will be a 'win-win' combination for all parties involved. For customers, this translates into Sea Launch continuing as a reliable partner for providing best-in-class satellite launch service. Implementation of the proposed reorganization plan will result in a strong, sound and stable world-class corporation, allowing Sea Launch to offer its proven high quality and unmatched value. We look forward to fulfilling the regulatory requirements to return Sea Launch to operations.”

Jefferies & Company, Alston & Bird LLP and Chris Picone of Buccino & Associates, Inc., serve as advisors to Sea Launch. EOL is advised by Salans LLP and Avicon (UK).

[Salo]

http://www.spacenews.com/launch/100514-sealaunch-resume-launch-2011.html
http://www.spaceflightnow.com/shuttle/sts132/status.html

[D_Dom]

Danderman,

apart from the "launching at sea" set of issues?

What part of launching at sea seems easy to you?

kq6ea, hope to see you back soon. Personally, I can't imagine launch ops without you.