PARIS — Satellite geospatial imagery and services provider UrtheCast Corp. on May 15 reported progress in securing financial commitments needed to avoid bankruptcy but said the deals leave it $25 million short, with time running out.
As previously disclosed — https://bit.ly/2uJebCc — none of the financial developments survive unless all of them do. Here’s where the Canadian company stood as of May 15:
— UrtheCast was obliged to raise at least $25 million as a first step in resolving its liquidity crisis. This was achieved, and then some, on May 3 when the company reported concluded an agreement for $27 million. The transaction was led by Clarus Securities Inc. and Canaccord Genuity Corp. But these funds cannot be used unless the other steps are concluded.
— UrtheCast told investors that its search for a senior secured credit facility totaling $142 million to finance its six-satellite UrtheDaily constellation was nearing completion.
In a brief, no-questions-taken conference call with investors, Interim Chief Executive Greg Nordal said “our financial partners have informed us that we can expect to close the credit facility by Friday of this week,” or May 18.
The two financings are designed to give UrtheCast funds to complete the UrtheDaily constellation, under construction by Surrey Satellite Technology Ltd. (SSTL) of Britain. UrtheCast said there is still time enough to get the satellites launched in 2020.
— To be able to access the credit facility’s cash, UrtheCast needs to raise an additional $45 million. The company said it has secured $20 million in vendor financing.
That leaves $25 million still to be found. Among the options are “additional vendor financing, refinancing its 25-million-euro ($30 million) senior secured loan from Banco de Sabadell S.A., and securing government grants, in each case on terms acceptable to the Senior Lenders,” the company said in a statement to the Toronto Stock Exchange (TSX).
UrtheCast in 2017 received 19.8 million Canadian dollars ($15.5 million) in government grants, mainly from Canada’s Innovation, Science and Economic Development Canada as part of is Strategic Aerospace and Defense Initiative to support UrtheCast’s optical/radar Earth observation satellite constellation, called OptiSAR. Ninety percent of these grants are repayable.
Banco de Sabadell of Spain has already waived loan covenants relating to UrtheCast’s leverage ratio and agreed to defer, by six months, a 4-million-euro principal payment due last December.
UrtheCast bypassed seeking shareholder approval of its $142-million credit agreement, normally a requirement for TSX-traded companies, after invoking a “serious financial difficulty” exemption that TSX approved. But that triggered a TSX inquiry into whether UrtheCast should be allowed to retain its listing.
As of April 30, UrtheCast had cash totaling 4.8 million Canadian dollars, down from 7.5 million Canadian dollars as of March 31 and 18.4 million reported on Dec. 31, 2017. It had 16.2 million in restricted cash.
The makes it urgent to satisfy the terms of the financial agreements.
UrtheCast estimates it will cost $192 million to build, launch and begin operations of its UrtheDaily constellation.
For the three months ending March 31, the company reported 4.27 million Canadian dollars in revenue, down 55% from the same period a year ago as an engineering-services contract’s completion was delayed and forced a delay in recognizing the contract revenue over a longer period.
Operating costs in the three months ending March 31 were 15.4 million Canadian dollars, unchanged from the same period a year ago.
UrtheCast said it had 45 million Canadian dollars in contract obligations due in less than 12 months. It did not say whether it was negotiating with its contractors to delay these payments.
UrtheCast operates two satellites, Deimos-1 and the higher-resolution Deimos-2 operated by Deimos Imaging SLU subsidiary of Spain.
On May 15, Deimos announced a 3-year contract with the Brazilian Defence Ministry’s Aeronautics Command (COMAER) for Deimos-2 imagery for new and archived Deimos-2 imagery. The contract is valued at more than $2.6 million and may be extended by two years.