OneWeb files for Chapter 11 after its failure to raise finance is blamed on COVID-19

by | Mar 30, 2020 | Finance, History, Satellites, Seradata News

OneWeb LLC, a major player in the nascent LEO (Low Earth Orbit) satellite communications market, put itself into Chapter 11 bankruptcy in a New York court on 27 March 2020.  It follows failure to negotiate additional funding, which was partly blamed on the “market turbulence” caused by the COVID-19 coronavirus pandemic. OneWeb had previously managed to raise about US$3.4 billion to fund its planned LEO constellation but needed more to carry on.

See the OneWeb statement here.

One of the main factors behind the OneWeb decision was the state of its largest shareholder and investor, Softbank Group Corp, of Japan. It had been struggling with its own indebtedness as the result of poor investment decisions, aggravated by the global fall in share prices. It currently holds 37.41 per cent of OneWeb and has invested about US$2 billion in the company.

OneWeb itself has accumulated US$1.7 billion in debt, which it owes to thousands of creditors (as shown in the Chapter 11 filing). The largest single creditor is Arianespace, of France, which is owed US$238 million as part of a US$1.1 billion contract to provide 21 launches for the firm.

Other significant creditors include: manufacturer Qualcomm Technologies (owed US$8 million), satellite operator EchoStar Hughes (owed US$5.4 million), insurance broker Willis Towers Watson PLC (owed US$1.9 million), and the satellite operator Viasat (owed US$1.2 million).

Chapter 11 bankruptcy protection will be used as a shield from these creditors until a buyer is found for the business rather than for debt restructuring. The four major shareholders of OneWeb are Softbank (37.41 per cent), Qualcomm (15.93 per cent), 1110 Ventures LLC (10.04 per cent) and Airbus (8.5 per cent). Other industry-related investors are EchoStar with 2.57 per cent and Intelsat with 1.87 per cent.

OneWeb has already laid off nearly 85 per cent of its staff.  This saving should enable a small team to manage its in-orbit satellites while a buyer is sought. A few employees are being retained to conduct business with the New York court and investors.

Post Script: OneWeb satellites were due to fly on the first (maiden) flight of Europe’s new Ariane 6 later this year, with the EU/ESA Galileo navigation satellites due to fly on this rocket  after this proving flight. Update: Russian sources now indicate that the launch of two Galileo satellites will now take place in December 2020 on a Soyuz ST-B launch vehicle. This announcement, if correct, brings forward the launch from 2021.

 

 

 

 

 

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