Following the destruction of its Amos 6 satellite when the SpaceX rocket that was to carry it into orbit exploded on the launch pad in Cape Canaveral last week, Spacecom Satellite Communications Ltd. (TASE:SCC), controlled by notified the Tel Aviv Stock Exchange this morning that because the failure occurred before the launch, the company had not invoked the insurance policy covering the satellite. The insurance premium will be returned to the company, which will claim the cost of building the satellite from Israel Aerospace Industries (IAI).
Spacecom also states that, under the agreement it has with IAI, IAI is obliged to return to it the cost of construction of the satellite with interest at Libor plus 4% on each payment it made to IAI. Out of this, Spacecom has to repay the state $17 million. The company states that once it collects the repayments from IAI, it will be able to repay the bond series of which the bondholders now have cause to demand immediate repayment.
As for its other bond series, Spacecom says that it is abiding by all the financial covenants relating to them, and that it expects to meet all repayments on them.
Spacecom says that it is due to receive $50 million compensation from SpaceX, but that it can choose instead to use SpaceX's services for its next satellite launch without payment.
As far as the agreement on sale of Spacecom to China's Beijing Xinwei is concerned, Spacecom says that the two companies are examining adjustment of the agreement between them in the light of the failure with the Amos 6 satellite.
IAI's statement about the Amos 6 disaster last week made no mention of financial liability, but Spacecom says that responsibility for the satellite lies with IAI and that it will pay compensation. IAI reports that it bought insurance as necessary and that to the best of its knowledge it is due to receive compensation, which it will transfer to Spacecom under the terms of the agreement with it. This means that if all goes smoothly, IAI will receive $173 million and additional costs, which will be transferred to Spacecom in accordance with its liability.
Spacecom's share price is down 44% on the Tel Aviv Stock Exchange.
Published by Globes [online], Israel business news - www.globes-online.com - on September 4, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016