A minority of Terran Orbital Corp. [LLAP] shareholders upset with the direction of the small satellite company and its current valuation this week wrote the company’s board seeking a new chief executive, improved corporate governance, and a review of strategic alternatives to include a sale of the business.

The frustrated shareholders include the co-founders of Tyvak Nano-Satellite Systems, which was acquired a decade ago by Terran Orbital.

“While we believe Tyvak’s significant competitive advantages developed over the last decade remain with the company—including its industry-leading technical capabilities, flight heritage across a diverse set of missions and orbital regimes, market position, vertical integration, deep bench of highly dedicated and talented employees, low cost, and speed to market—the company is operating from a position of weakness due to leadership missteps, lack of internal controls, poor corporate governance and a loss of credibility in the public markets,” wrote the concerned investors that include Sophis Investments LLC, Roark’s Drift LLC, and Tyvak co-founders Jordi Puig-Suari, Roland Coelho, and Austin Williams.

Together, the concerned investors own 8.4 percent of Terran’s shares.

Terran went public in March 2022 through a special purpose acquisition company (SPAC) combination with Tailwind Two Acquisition Corp. The company’s stock price high in the past year was $3.45 per share and is currently trading in the mid-70 cents range. The investor group laments a 96 percent decline in the stock price since going public despite Terran reporting a $2.6 billion backlog as of Aug. 2023 and believes the company should currently be trading at around $3 per share.

The shareholders also say that the transition to being a public company has gone poorly and the company is “in constant need of cash.”

In September, Terran raised more than $30 million through a new public offering of stock.

The shareholders wrote the board on Oct. 11 and the letter was disclosed on Oct.12 in a filing with the Securities and Exchange Commission.

Asked to comment on the shareholder letter, Terran replied that “This is certainly a troubling sequence of events. Sophis Investments approached us several weeks ago in a manner that suggested if we did not pay them a monthly fee and give them shares for their ‘services’ and the services of a hand-picked investment bank, that they would send this letter. We did not agree to their demands and so this letter followed – evidently as part of a contrived media strategy.”

There are three demands from the dissident group. The first calls for a separation of the chairman and CEO roles, both currently held by Marc Bell, and the ouster of Bell as CEO to be replaced by an individual “with demonstrable industry experience” that can turn the company around. Bell has run Terran since 2013. The shareholder group says they have a “highly credible and qualified CEO candidate with over 30 years of relevant industry experience” waiting in the wings.

Second, the shareholders want new, independent board members, arguing that the current board “has seemingly rubberstamped poor corporate governance practices.”

The board has also endorsed “excessive” management compensation, backing incentives that favor increased capacity, employee count, and pursuing government work that may not be funded, the investor group says. As with a CEO in waiting, the group says they have potential board candidates.

In September, Terran opened a new 60,000 square-foot factory addition in California.

Finally, the investors want a strategic review to explore a potential sale of the company, naming Lockheed Martin [LMT] as a possible suitor “at a substantial premium.” Lockheed Martin currently owns more than 30 percent of Terran and has used the company’s satellite busses for some small spacecraft it is providing to the Space Development Agency.

Other options include obtaining a debt guarantee from Lockheed Martin or selling to a “strategic third party.”

Terran said the challenges it has faced going public are the same as other “New Space” companies that have also emerged from SPAC combinations and that all these companies struggle to increase sales, turn a profit, and raise capital.

“Some have failed or are about to fail, but Terran Orbital has real customers and business, and we expect will be cash flow positive in 2024,” Terran said.

In August, Terran reported second quarter financial results, including a 51 percent increase in sales to $32.2 million from a year ago and a narrowed loss of $28.1 million versus $32.3 million from a year ago.

In addition to work with Lockheed Martin, Terran has a $2.4 billion contract with Rivada Space Networks to build 300 spacecraft for a satellite communications constellation.