SpaceX disaster casts doubts on Spacecom takeover

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The SpaceX explosion in Florida last week

The Israeli company, whose satellite was destroyed in an accident at Elon Musk’s SpaceX last week, said on Tuesday it still hoped its planned acquisition by a Chinese company would go ahead, but acknowledged that any deal agreed would not be at the same price.

Spacecom lost its AMOS-6 communications satellite, which was due to help Facebook offer satellite internet service in Africa, in an explosion at SpaceX’s Florida launch site on September 1.

The satellite’s successful launch was a condition of Spacecom’s planned $285m purchase by companies from China’s Beijing Xinwei Group, announced in late August.

“We are speaking to them; we are trying to adapt it to the new situation,” David Pollack, chief executive, said of the proposed merger in an interview with the Financial Times. “It definitely might go ahead . . . everybody is trying to keep the deal”. However, he acknowledged that price negotiations for the deal were going ahead “at other levels”.

Beijing Xinwei said this week that the company was “still studying the meaning of the events” on September 1, when a SpaceX rocket exploded during pre-launch ground tests. A person familiar with the Chinese company’s thinking said that the price of any deal would have to be lower “because it’s not the same company now”.

Spacecom’s share price in Tel Aviv trading has collapsed by more than a third in the days since Thursday’s accident. The company’s owners, led by Israeli holding group Eurocom, have been trying to sell it for years.

Mr Pollack said a refund was expected for the loss of the satellite from state-owned Israel Aerospace Industries (IAI), its producer, that would be worth more than $190m including interest. The company also expects to get a refund of $40m it paid to insurers, who did not compensate it for the accident because it happened before Thursday’s planned launch.

On Sunday, Spacecom said that it would also be seeking $50m or a free launch of another satellite from Mr Musk’s company. It told shareholders that the loss of the satellite would have a significant impact.

“AMOS-6 was very important, and definitely it’s a blow to our company,” Mr Pollack said. Spacecom, he added, was now looking for a “gap-filler” satellite to use, while discussing when and how it could launch a new one.

He said that Spacecom was aiming to decide on a provider of a replacement satellite as soon as possible, and would be talking to both IAI and competing producers. “We will go to IAI, but we will [als]) speak to others because time to market will be a major factor,” he said. “IAI will have a real challenge; maybe others can launch a satellite faster.”

Joseph Weiss, IAI’s CEO, said this week he believed his company could build a satellite within two years, if it received an order with the same design as AMOS-6. IAI says it is insured for the loss, and expects to be fully compensated through its policy.

from Department of Private Space Inc.