Terran Orbital [LLAP] has found DoD and/or intelligence community users for a set of synthetic aperture radar (SAR) panels that the company had been developing, company CEO Marc Bell said on Sept. 26.
“We built one set of [SAR] panels and others, and they’re being used for government customers,” he said in a telephone interview. “PredaSAR did not go to waste.”
Terran Orbital did not finish building the two PredaSAR demonstration satellites, however.
“The PredaSAR contract/award originally had several deliverables,” Lt. Col. Vinamra “Vinny” Pande, U.S. Space Force Space Systems Command’s branch chief for persistent tactical surveillance, wrote in an email through SSC public affairs. “Less than 20 percent of the contract’s total deliverables were delivered or billed against. The remaining tasks were not billed by PredaSAR, and the government is in the process of descoping the contract as part of the close-out process.”
In an Aug. 9 earnings call last year, Bell said that Terran Orbital was “well along” in building the antennas for the PredaSAR bus and that the intent was to launch the first PredaSAR satellite in the first quarter of this year.
Last October, however, Bell announced a change in direction
for the company, which had absorbed PredaSAR as a subsidiary in 2021 (Defense Daily, Oct. 31, 2022). The transition was from a SAR data as a service business that was to use a future constellation of 96 PredaSAR satellites to a strategy of selling satellite buses, including to Lockheed Martin [LMT] for the Space Development Agency’s Transport Layer. At the time of the change in strategy, Lockheed Martin took a 33.5 percent stake in Terran Orbital with a $100 million investment to allow Terran Orbital to scale up its building of satellite buses.
The war was a “sea change” moment for the commercial satellite imaging industry, demonstrating that there is not near enough SAR capacity, Bell said last October. And by going public, Terran Orbital decided not to pursue its own constellation of SAR satellites and instead be a manufacturer of choice for commercial and government customers, he said then.
Terran Orbital said last October that it will provide customers SAR satellites based on its PredaSAR product line. Given demand for SAR satellites and a five-year replacement cycle shows that focusing on satellites and related capabilities for customers is the right business model, Bell said.
That has changed, and money is a major cause.
All of the equipment built for the PredaSAR satellites “is being reused by other programs because the government’s just not ready for unclassified commercial SAR,” Bell said on Sept. 26. “There are a handful of people that are trying commercial, and they’re not making money at it.”
The special purpose acquisition company (SPAC), Tailwind Two Acquisition Corp., merged with Terran Orbital in October 2021, and Terran Orbital began trading on the New York Stock Exchange under the ticker, LLAP. The latter stands for “live long and prosper,” Spock’s saying in Star Trek, as Bell is a Star Trek fan who decked out his Boca Raton, Fla., mansion with the show’s memorabilia.
SPACs typically raise capital in initial public offerings (IPOs) to buy private firms and take them public, while a de-SPAC is the merger of a public shell company and a private firm and the resulting public stock listing of the formerly private firm.
Terran Orbital’s change in strategy last October “was basically two things,” Bell said on Sept. 26. “One, we only raised so much money…a lot less than we thought. The SPAC market collapsed, and the money available from the government for SAR data as a service was miniscule. The market was just not big enough.”
Out of the $350 million that Terran Orbital hoped to raise from the SPAC, it raised about $70 million, Bell said.
SPACs were an esoteric investment choice, but in 2017 SPAC IPOs and mergers began to take off as sponsors viewed them as better alternatives to traditional IPOs. In the spring of 2022, however, the Securities and Exchange Commission tightened restrictions on SPACs due to their poor performance and the previous lack of regulation on them. SPAC stock prices and the number of new SPAC IPOs dropped precipitously starting in the second quarter of last year.
One SEC change in the spring of last year was prohibiting SPACs from raising funds through a basket of different securities for a year.
“We wanted to back out of the SPAC, but we couldn’t do so because it would have put us into litigation from the SPAC sponsor because we had a contract to merge, and we got caught between a rock and a hard place,” Bell said on Sept. 26. “We’re still suffering from that today. Our stock price is being treated like a SPAC stock. We’re doubling our revenues every year, and no one seems to care.”