Sea Launch Exits Bankruptcy Under Russian Ownership

PARIS (10/28/10) By Peter B. de Selding — Commercial launch-services provider Sea Launch formally exited Chapter 11 bankruptcy protection Oct. 27 and on the same day received a cash investment of about $55 million from its new Russian owners, Sea Launch President Kjell Karlsen said Oct. 28. A second payment, for approximately the same amount, is expected within the next week.

Energia Overseas Limited of Russia, which has now taken over Boeing’s former role as Sea Launch’s general contractor, had already invested $43 million in cash in the Long Beach, Calif.-based company as it reorganized its debt and operations with the oversight of the Delaware Bankruptcy Court.

The new, debt-free Sea Launch, called Sea Launch S.a.r.l., is a Swiss-registered enterprise and expects to take up permanent legal residence in Luxembourg, Karlsen said in an interview. The company plans to conduct two launch campaigns in 2011 from its floating platform operated at a mid-Pacific Ocean site on the equator.

The first launch of the post-Chapter 11 Sea Launch is scheduled for early 2011 and will be of the Land Launch variant, which is operated at Russia’s Baikonur Cosmodrome in Kazakhstan and is used to place smaller telecommunications satellites into geostationary transfer orbit. Land Launch uses the same Ukrainian- and Russian-built Zenit-3SL vehicle that carries heavier telecommunications satellites into the same orbit from the Pacific Ocean site.

Karlsen said Sea Launch and its new owners are determined to clear up market confusion over who owns what rights to the Land Launch operation. Currently, Sea Launch has marketing rights to the vehicle.

Space International Services (SIS) Ltd. of Moscow has marketed the Land Launch system in the past, but Karlsen said Sea Launch has a binding contract that gives it sole rights to commercialize the service. SIS is owned in part by the builders of the Zenit rocket system.

“We will vigorously defend our marketing rights over Land Launch,” Karlsen said in an interview. “We will never allow it to happen” that another company is given Land Launch marketing rights. “We fully intend to find a mutually acceptable solution with SIS.”

With its near-term cash requirements now apparently fulfilled, Sea Launch has answered one of two recurring questions relating to its emergence from bankruptcy protection. The second has to do with the state of Zenit rocket-hardware production in Dnepropetrovsk, Ukraine. Sea Launch’s last mission occurred in April 2009.

Karlsen said a Zenit vehicle to be used to launch the Intelsat 18 satellite for Washington- and Luxembourg-based Intelsat in early 2011 is about completed, and that the production line is sufficiently robust to produce two more Zenit vehicles in time for launches in September and November 2011.

He said the company plans to take representatives of its customers on a tour of the Ukrainian and Russian production facilities later this year so that they can see for themselves the status of the Zenit manufacturing base.

“The biggest overhaul we are undertaking now that we are out of bankruptcy court relates to our supply chain,” Karlsen said. “We are going to have people on the ground, in the [Zenit] factories, all the time. Trying to manage that across time zones from California was not the most effective way of doing business.”

Dennis Shomko, a spokesman for Energia Overseas Limited, said his company intends to demonstrate Sea Launch’s reliability to customers.

“We are confident that we can deliver a competitive level of ‘business comfort’ to them, while ensuring that our suppliers are managed appropriately,” Shomko said in an Oct. 27 statement.

The prebankruptcy Sea Launch, which devoted a substantial share of its annual revenue to servicing its debt, mainly to Chicago-based Boeing, is now able to generate a profit with just two Sea Launch campaigns per year, Karlsen said. Annual operating costs are less than $50 million, he said.

Sea Launch has launch reservations from Eutelsat of Paris, AsiaSat of Hong Kong and EchoStar of Colorado in addition to Intelsat.

Credit: Space News

http://www.spacenews.com/launch/101028-sealaunch-exits-bankruptcy.html

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