PARIS — Geospatial satellite imagery and services provider UrtheCast Corp., which in May seemed to have secured financing to develop its planned satellite constellation, is confronting a new cash crisis following the resignation of a key member of its executive team.
As has been the case before with UrtheCast, an event at one end of the business can have domino effects throughout the company.
In this case, the Oct. 24 resignation of Fabrizio Pirondini, chief executive of UrtheCast’s Deimos Imaging subsidiary, has triggered the threat of a default notice by UrtheCast’s prospective lenders.
Pirondini, who has been the public face of UrtheCast since the departure in March of founding chief executive Wade Larson, was listed as a “key man” in the company’s May credit agreement. His departure could by itself cause finding of default on the loan package.
Vancouver, British Columbia-based UrtheCast, in a filing with the Toronto Stock Exchange, said the lenders have agreed to wait until Nov. 23 before notifying the default.
The May 2018 loan for $ 142 million was designed to finance UrtheCast’s UrtheDaily constellation of optical satellites. The company has booked binding commitments for more than 350 million Canadian dollars ($271 million) in binding customer commitments to use UrtheDaily capacity.
These commitments were used to conclude the credit facility in May. UrtheCast said it is “exploring alternative funding sources” if its creditors are no longer willing to back the project.
UrtheCast has not made the first drawdown of the credit agreement, in part because it has not yet satisfied other conditions in the loan agreement, including raising an additional $45 million. In its TSE filing, dated Nov. 14, the company said it had aliased $25 million in vendor financing and continues the search for the remaining $20 million.
The loan package, if secured, carries a 12% annual interest rate, part of which may be paid in kind.
TSE-listed companies are usually required to get shareholder approval for loans of this importance. In this case, UrtheCast has asked the exchange for an exemption based on “serious financial difficulty.” The TSE has agreed to maintain the company’s listing until Jan. 3.
Meanwhile, the difficulties of the geospatial imagery business for a company with one small high-resolution Deimos-2 satellite and one small medium-resolution Deimos-1 satellite have slowed revenue substantially in the past year.
A July contract with the European Commission and the European Space Agency (ESA), concluded as part of an Airbus Defence and Space- led consortium, has not generated as much revenue as forecast.
UrtheCast said it had delivered more than 90% of the contracted products koto Airbus, but that only 50% of it had been accepted by Airbus as of Sept. 30. Because of that, ESA had not accepted the full data sets expected of the Airbus consortium under the contract by Sept. 30, meaning UrtheCast could not recognize revenue from the contract.
As of Oct. 31, UrtheCast had 6.9 million Canadian dollars in cash, down from 7.2 million Canadian dollars on Sept. 30 and 24.2 million Canadian dollars on Dec. 31.
The November 7 agreement to purchase, for $20 million, Geosys Technology Holding LLC from Land O’Lakes Inc. also may be compromised if the UrtheDaily credit agreement collapses.
UrtheCast said it stood to generate $10 million in annual revenue from Land O’Lakes over 13 years following the transaction, assuming the UrtheDailly constellation is operational.