GREY:LFDEF - Post by User
Post by
BlueHorseshoe13on Jan 15, 2016 6:13am
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Post# 24460940
Converting MOUs to Binding Agreements
Converting MOUs to Binding AgreementsSo this may be a moot point given the current implied valuation, but I think the numbers behind the constellation are hard to understand.
They said 8 pairs of Opt/SAR birds would cost roughly $1.6b (8x200m). So let’s say they only need to front end 10% of that (which is likely optimistic). That leaves them with 1.44b to convert and 160m to raise. I’m guessing this would need to be committed as a condition precedent to closing on the balance of the binding agreements. Problem 1, that more than they’re currently worth, and a lot more than they could raise in these markets. So maybe my numbers are off and they need a lot less than this going forward.
The bigger problem in my mind is converting the balance of the MOUs to binding agreements. That involves raising another 1.44b from governments on the back of EO sales from 2019 to 2025 (roughly). We can guess that the US/NASA is first in line for this since they were backing the 2nd gen HRC project. Name me the seven other country partners most likely to sign a binding agreement for circa 150-200M in 2016 for imagery received in 2020-2025.
A follow on to this is sequencing. There’s a good chance their current MOU says something like, “you need to have firm commitments to finish the project, and we’ll only fund once we see evidence of a fully committed sources and uses reconciliation”, which means there’s a good chance they wont be announcing incremental binding commitments.
The biggest problem with the plan is the structure. Since the countries are not signing up for exclusive access to one pair, but rather joint access to the constellation, UR will need to deal with “inter-investor” issues, like how tasking and priority allocation will work, rights under default, intellectual property allocations, etc.
Someone help me understand how these are non-issues and why converting the MOUs to binding agreements should be immanent.