Uncertainty over Rivada’s ‘ability to pay’ for satellites influenced Terran Orbital sale

An American satellite manufacturer’s decision to sell itself to aerospace giant Lockheed Martin was partly down to “uncertainty” over Rivada Networks’ “ability to pay” for 300 satellites it had ordered, new stock exchange filings show.
Terran Orbital, which last year struck a $2.4 billion (€2.17 billion) deal to build the satellites for Rivada’s OuterNet project, said “uncertainty about Rivada’s ability to pay significantly deteriorated the company’s cash forecast”.
It added that it had to reduce the value of its contract backlog from $2.7 billion to $312.7 million, in part because “several uncertainties remained regarding Rivada’s ability to continue funding contract performance”.
Rivada is in the midst of raising funds to build a multibillion-dollar satellite constellation made up of hundreds of low-earth orbit satellites in order to deliver a kind of private, unhackable internet, which founder Declan Ganley has termed the OuterNet.
[ Declan Ganley’s satellite builder changes handsOpens in new window ]
In a disclosure to the New York Stock Exchange this week, Terran’s directors set out the details of its relationship with Rivada ahead of a major vote on the Lockheed deal.
The filings show that initially the company had not been relying on Rivada because it had other contracts, but the cancellation of those other projects meant it came to rely more and more on Rivada for critical funding.
In an account of the history of its contractual dealings with Rivada, Terran said that when it signed the contract it “believed that Rivada was on the verge of obtaining financing for its constellation”. However, it notes, “Rivada ultimately did not obtain any material financing during 2023″.
The work on Rivada’s project had been delayed at some point in 2023, but in November Terran’s board heard from its chief executive, Marc Bell, that Rivada “would provide a material payment in the near term, facilitating a restart of the company’s work”.
Rivada made a payment in late December 2023, the filings show. Overall in 2023, Terran booked $6.9 million in revenue from Rivada.
That revenue became increasingly important in early 2024, due to “delays and cancellations’ in other projects, which created “substantial doubts about [Terran’s] ability to continue as a going concern”.
[ Declan Ganley’s Rivada pays €6.5m to Terran Orbital as part of satellite dealOpens in new window ]
In March, Terran received a buyout offer from Lockheed Martin. Terran disclosed that, at the time, its chief executive, Mr Bell, believed that if Rivada obtained significant funding it could make a payment to Terran that “would impact the company’s valuation and the Lockheed Martin… offer”. A week later it told the market in a statement that “its contract with Rivada was subject to uncertainty and its backlog may not be converted into revenue”.
On April 30th, Lockheed withdrew its offer and Terran’s balance sheet continued to weaken. During this period, the company’s board heard that Rivada was “expecting an investment”, but that Terran was “not relying on that expectation”, and would “start reducing staff on the programme in the next few weeks in the absence of positive developments”.
In August, Terran’s chief financial officer was asked to approach Rivada to see if it could make “an immediate [advance] cash payment”. The request was seen “as a last option” before either a sale or a bankruptcy filing. The filings note “Rivada did not advance any payments to the company”.
A spokesman for Rivada said: “We have worked closely and collaboratively with Terran Orbital from the beginning, and continue to do so. We have never asked Terran to do unpaid work on our behalf and they have never done so.
“We are confident that Lockheed Martin’s ownership of Terran Orbital will be good for Terran, and will ensure that Terran can continue to be an agile and innovative satellite manufacturer. We look forward to working with Terran and Lockheed on bringing the Rivada OuterNet into service.”