09 Apr 20. Milrem LCM rebrands as Milworks. Estonia-based Milrem LCM has completed a name change to support the company’s brand development and avoid confusion with Milrem Robotics. The company is now known as Milworks and focuses on the maintenance, repair and overhaul (MRO) of defence equipment. Milworks is a partner organisation of the Estonian Defence Forces and it also has a Latvian subsidiary which similarly works with Latvian National Armed Forces.
Ingvar Pärnamäe, Managing Director of Milworks, said: ‘The name comes from the words ‘military’ and ‘works’… And the colours blue, black and white represent the colours of the flag of Estonia.’
In recent years, Milworks has focused on military vehicles with MRO activities on Patria XA-180 Pasi (pictured) and XA-188 APCs as well as CV-9035 IFVs. Milworks is owned by Patria Group and Mootor Grupp. It has facilities in Tallinn, Tapa and Voru. (Source: Shephard)
09 Apr 20. Lockheed Martin (NYSE: LMT) today announced its 2020 Annual Meeting of Stockholders will be conducted exclusively online by remote communication due to public health concerns regarding the coronavirus (COVID-19) and government-recommended and required limits on gatherings and events. A virtual event will assist in protecting the health and safety of the Corporation’s stockholders, employees and the community.
As previously announced, the Annual Meeting will be held on Thursday, April 23, 2020, at 8 a.m. EDT. Stockholders will not be able to attend the Annual Meeting in person, however stockholders attending the Annual Meeting virtually can vote their shares during the Annual Meeting by following the instructions below.
To access the virtual meeting please go to: www.meetingcenter.io/207456471. To login to the virtual meeting, you will be required to have a control number and the meeting password, LMT2020. If you do not have a control number, you may attend as a guest but will not have the option to vote or ask questions at the virtual Annual Meeting.
Attending the Meeting as a Registered Stockholder (your shares are held in your name)
Registered stockholders as of the close of business on Feb. 24, 2020, (the record date) will be able to vote their shares during the Annual Meeting by following the instructions available on the meeting website. For registered stockholders, your control number can be found on your proxy card or notice, or email you previously received.
Registering to Attend the Meeting as a Beneficial Owner (your shares are held through a broker, bank or nominee)
Beneficial owners as of the record date must register in advance to attend the virtual Annual Meeting. To register you must obtain a legally valid proxy from your broker, bank or other nominee and present it to our transfer agent, Computershare. After you have received a valid proxy from your broker, bank or other agent, it should be emailed to Computershare at firstname.lastname@example.org and should be labeled “Legal Proxy” in the subject line. Please include proof from your broker, bank or other agent of your valid proxy (e.g., a forwarded email from your broker, bank or other agent with your valid proxy attached, or an image of your valid proxy attached to your email or included in your mailing). Requests for registration must be received by Computershare no later than 5 p.m. EDT, on Monday, April 20, 2020. You will then receive a confirmation of your registration, with a control number, by email from Computershare.
Submitting Questions at the Meeting
Stockholders attending the meeting as a registered stockholder or registered beneficial owner will be able to submit questions at www.meetingcenter.io/207456471. Lockheed Martin will hold a general discussion session at the conclusion of the meeting during which we intend to answer pertinent questions submitted during the meeting, as time permits.
Online access to the live audio webcast will open at 7:45 a.m. EDT on April 23, 2020, to allow time for you to log in and test your device’s audio system. We encourage you to access the meeting in advance of the start time. If you need technical support after you access the webcast, click the “Support” link in the upper right of the broadcast screen.
The proxy card previously distributed will not be updated to reflect the virtual-only meeting format and may continue to be used to vote your shares in connection with the Annual Meeting. Whether or not you plan to attend the Annual Meeting, the Corporation encourages stockholders to vote on the proposals prior to the Annual Meeting using the instructions provided in the proxy materials previously distributed.
08 Apr 20. Maxar Announces Close of MDA Divestiture and Provides Update on Ongoing Support of Critical Customer Missions. Maxar Technologies (NYSE:MAXR) (TSX:MAXR), a trusted partner and innovator in Earth Intelligence and Space Infrastructure, today announced it has closed the sale of MDA, previously a wholly owned subsidiary of the company, to a consortium of investors led by Northern Private Capital for CAD$1bn. Net proceeds, including customary adjustments, and after application of currency hedges related to the transaction is expected to be approximately US$729m.
“The closing of the MDA transaction concludes the near-term reshaping of our balance sheet and business portfolio,” said Dan Jablonsky, Maxar CEO. “Going forward, our growth strategy remains focused on providing leading capabilities in Earth Intelligence and Space Infrastructure, including geospatial data, data analytics and spacecraft and robotics that are well aligned with the strategic priorities of our government and commercial customers.”
“The closing of this transaction — when combined with the recently completed sale of real estate in Palo Alto — reduces Maxar’s overall net debt by roughly $1bn and significantly improves the company’s leverage ratio,” said Biggs Porter, Maxar CFO. “Importantly, we believe these actions provide Maxar increased flexibility, range and focus to drive revenue, profit and cash flow growth over the next several years. We also have good liquidity with only $15m drawn on our $500m credit facility as of March 31, 2020.”
After deducting fees, expenses and any reserves for contingencies, the proceeds will be used to reduce indebtedness as proscribed in the company’s credit arrangements.
Update on Maxar’s COVID-19 Operational Posture
Maxar has activated its standing pandemic crisis response plan to protect the health and safety of its team members, families, customers and communities while continuing to meet our commitments to customers. Our mitigation strategies cover employee preparation, travel, security, supply chain, virtual work, facility preparation and communications.
All Maxar locations are currently operational through a combination of work from home and limited personnel working onsite for essential operations, though in some cases capacity utilization and productivity are below normalized levels. As aerospace manufacturing, communications and defense are federal critical infrastructure sectors, Maxar is allowed to keep some of our workforce on site to maintain critical operations. And in doing so, the company continues to diligently follow CDC protocols including social distancing, alternating shifts, temperature checks, deep cleaning and isolation strategies for essential personnel working at Maxar sites.
Our protocols and operational posture are part of a greater collective effort across communities and regions to flatten the curve on COVID-19 case volumes to avoid overwhelming the capacity of the healthcare system.
It is difficult to predict exactly how the course of events will unfold in the months ahead, but Maxar is encouraged by the cooperation it has already seen between governments and the private sector.
Maxar Continues Delivery of Essential Services for Critical Missions
Maxar has long-held customer relationships with U.S. and allied governments and a diverse set of commercial companies, multi-year service contracts for data and data analytics in its Earth Intelligence segment and multi-year manufacturing and service contracts in its Space Infrastructure segment. Maxar continues to perform on all these contracts.
Maxar’s Earth Intelligence capabilities provide actionable insights that allow governments, commercial partners and non-governmental organizations to make decisions with confidence. Our Mission Operations Center is staffed 24/7, flying our WorldView imaging satellites and delivering timely data without interruption to customers over secure networks. Hundreds of Maxar team members perform classified geospatial intelligence work in support of national security missions, and nearly all of these employees have been able to continue their work remotely or at company facilities while many government facilities are closed.
More than 300,000 U.S. Government users have online access to Maxar’s imagery collections in near-real time. More than 50 allied nations around the world rely on Maxar products and services to augment their national intelligence missions. Additionally, the company is leveraging artificial intelligence and machine learning tools to automatically detect change and characterize levels of activity related to the COVID-19 pandemic, helping decision makers deploy resources efficiently and understand economic impacts.
In our Space Infrastructure segment, Maxar is responsible for providing operational support to 92 on-orbit, operating communications satellites worldwide. A large proportion of these provide critical communications to national governments, state and local first responders and television and radio networks. The company also continues work on various satellite programs that will provide important resiliency and continuity for these critical communications and network infrastructures.
In addition to communications satellites, Maxar is developing spacecraft and robotics for NASA that will demonstrate in-orbit satellite refueling and assembly; improve pollution monitoring in North America; explore an all-metal asteroid; and provide power and propulsion for the Gateway spacecraft that will enable a sustainable human deep-space presence in collaboration with international partners.
America, allied nations and citizens across the world are uniquely reliant on commercial firms for many essential services, and commercial firms like Maxar have a responsibility to continue delivering those services while minimizing risk to employees.
The near and long-term impacts of the current pandemic on the cost and schedule of the numerous programs in the Company’s existing backlog and the timing of new awards remains uncertain. The Company previously disclosed that it is observing stress in its supplier base in and outside the United States and that it continues to monitor and assess the actual and potential COVID-19 impacts on employees, customers, suppliers and the productivity of the work being done, all of which to some extent will affect revenue, earnings and cash flow. The company is currently assessing the U.S. Coronavirus Aid, Relief, and Economic Security (CARES) Act signed into law on March 27, which provides support for the resiliency of the defense industrial base and critical infrastructure industries. The Company plans to provide an update on the impact of the COVID-19 pandemic on its financial outlook when it releases first quarter 2020 earnings on May 6, 2020. (Source: BUSINESS WIRE)
09 Apr 20. Myriota raises $28m in Series B funding for IoT satellite network. South Australia-based Myriota has announced a $28m Series B funding round led by Hostplus and Main Sequence Ventures to support the development of a larger satellite network.
Additional investors include In-Q-Tel, Right Click Capital, the South Australian Venture Capital Fund, Singtel Innov8, Boeing HorizonX, and Malcolm Turnbull – who led the government that established the Australian Space Agency in 2017. This latest round of funding brings Myriota’s total funding to more than $50m.
As a testament to Myriota’s strength in the market – all participants in Myriota’s Series A have returned to participate in this new raise.
With this new round of funding, Myriota plans to continue its exponential growth by scaling its platform globally to connect billions of devices to power energy-efficient technology for customers for years to come.
New investor In-Q-Tel is a US-based not-for-profit strategic investor that supports cutting-edge and critically needed technology capabilities that benefit the national security of the US and its allies.
From asset tracking, to measuring groundwater levels, to keeping tabs on weather stations, to remote infrastructure management – prior to Myriota, sharing and receiving data from remote locations was notoriously time-consuming and expensive.
Alex Grant, co-founder and chief executive of Myriota, said, “This is a critical time for [the Internet of Things]. Presently, 90 per cent of the Earth’s surface lacks connectivity. At Myriota, we’ve been focused on filling that gap and overcoming constraints in existing infrastructure. With this new round of funding, we’ll continue to grow our network of satellites to deliver an affordable, environmentally friendly, and powerful solution to make data accessible for our global customer base.”
Founded in 2015, Myriota has pioneered a new way to retrieve data from anywhere on Earth through the connectivity between its constellation of satellites and low-power IoT modules; revolutionising the way companies share information across multiple industries, such as agriculture, defence, mining, transport, logistics and more.
With its Series B raise, Myriota plans to continue to establish its global market leadership through bolstering its constellation of satellites to 25 by 2022, growing its headcount by 50 per cent in the next two years, expanding internationally to serve demand in key international markets, while it continues to work towards providing real-time connectivity.
Myriota’s plans for expansion have already begun, with its acquisition of satellite communications assets from data services company, exactEarth. With this deal, Myriota acquired four satellites, additional staff members, and a global network of ground station assets to build a presence across international markets.
Martin Duursma, partner at Main Sequence Ventures, said, “Since our initial investment, we’ve witnessed an impressive acceleration in Myriota’s customers’ delivering solutions, from agriculture to defence. This next wave of funding secures the bigger opportunity to scale the company globally and execute on the core product vision of universal, low-cost IoT connectivity.”
Malcolm Turnbull, 29th prime minister of Australia, said, “Myriota is a leader and innovator in low-cost, low-power IoT. They have paved the way in bringing products to market for global and local applications, both here in Australia’s flourishing space sector and across the world. Myriota’s growth plans will only strengthen its ability to provide industry-leading connectivity across its network of international partners.”
South Australian Minister for Innovation and Skills David Pisoni said, ”I am very pleased to see this significant investment into Myriota from local and international investors, including investment from the South Australian Venture Capital Fund.
“Myriota is an important emerging IoT company in South Australia, located at Lot Fourteen, and we look forward to their continued growth.”
Myriota was founded to revolutionise IoT by offering disruptively low-cost and long-battery-life global connectivity.
Based in Adelaide, a focal point of the Australian space industry and home of the Australian Space Agency, Myriota has a growing portfolio of more than 60 granted patents, and support from major Australian and international investors.
With a deep heritage in telecommunications research, world-first transmission of IoT data direct to nanosatellite was achieved in 2013. (Source: Space Connect)
08 Apr 20. BAE Systems to raise $1.3bn in debt to fund pension deficit. Britain’s BAE Systems (BAES.L) is looking to raise $1.3bn in debt to fund its pension deficit and repay related loans, the company said on Wednesday, as it prepares to deal with the fallout of the coronavirus outbreak.
The company had said in February it will pay off bn pound ($1.23bn) by raising debt in the coming months. Its pension deficit was 1.9bn pounds at the end of October last year.
The maker of Typhoon fighters, combat vehicles and Astute Class nuclear-powered attack submarines said the bonds will be issued at a coupon rate of 3.4% and will mature in April 2030.
The company had last week decided to defer a decision on dividend payout and launched cost cuts after seeing significant disruption from coronavirus in recent weeks.
It also said it had significant cash and access to a 2bn pound line of credit until April 2024. (Source: Reuters)
08 Apr 20. Go defensive with Ultra Electronics. As Covid-19 wreaks its havoc, there are still corners of the stock market where investors can take shelter. The defence industry is more insulated than most from the impact of the pandemic as demand is typically underpinned by long-term contracts funded by governments. Enter Ultra Electronics (ULE), a defence engineering group that derives almost three-quarters of its revenue from supplying high-tech systems to militaries around the world.
Ultra’s order book saw 11 per cent organic growth in 2019, taking it to over £1bn. This reflects improving defence budgets as well as contract wins on new and existing programmes. Its core markets are the ‘five eyes’ nations – the US, Canada, the UK, Australia and New Zealand. Increasingly pivoting towards the world’s largest defence market, over 60 per cent of the group’s revenue now comes from the US. This is up from 44 per cent in 2015. With its focus on niche technologies, such as anti-submarine warfare and cybersecurity, Ultra is well placed to tap into high-priority areas of defence spending. Last year it won a five-year sole source contract to supply the US army with radio systems, worth a maximum of $500m (£406m).
There are concerns that, as the world hurtles towards a recession, future defence spending could be squeezed as governments pour money into welfare spending. But while coronavirus is monopolising attention right now, decision makers are likely to be conscious that the same geopolitical tensions will exist once this crisis has passed.
Ultra’s shares have been on something of a rollercoaster, tumbling in 2017 following a profit warning and struggling to rebound across 2018. This was compounded by the collapse of its acquisition of defence contractor Sparton in 2018 after the US Department of Justice (DoJ) raised competition concerns over the ‘sonabuoy’ market. Sonabuoys are electronic sensors that detect enemy submarines and Ultra and Sparton are the two major suppliers to the US navy via their joint venture, Erapsco. The DoJ has signalled an intention to open an anti-trust investigation into Erapsco, with a view to opening the market to other players. Analysts at stockbroker Berenberg view the threat to Ultra’s incumbent position as low given that new entrants will take time to develop, test and scale their technology. Meanwhile, Erapsco has secured a $1bn deal to supply the US navy with sonabuoys for the next five years.
March 2019 heralded a turning point in fortunes when Ultra revealed it had returned to organic growth in 2018 for the first time in seven years. It had previously been plagued by weak UK defence spending and disruption to US procurement processes. The positive momentum carried into 2019, with 7 per cent organic revenue growth and Berenberg expects this to continue. The aerospace and infrastructure division – which accounts for a quarter of total turnover – saw 10 per cent organic sales growth on the back of higher orders for high-pressure pure-air generating units for the F-35 jet.
Ultra’s bosses hope to sustain the upward trajectory with a “focus, fix, grow” strategy. This aims to streamline Ultra’s portfolio and boost research and development (R&D) investment, something that had been neglected in favour of short-term profit growth. Last year saw self-funded R&D jump over a tenth to £31m and the aim is to increase this from 3.8 per cent of revenue to up to 4.5 per cent. Together with £3m of transformation costs and legacy contract losses, the effect of higher R&D spending was to push the underlying operating profit margin down 0.4 percentage points to 14.3 per cent in 2019. Management is guiding for stable margins in 2020.
Including operating lease liabilities of £41.2m, net debt ticked down 2 per cent to £155m last year. Equivalent to 1.6 times cash profits (Ebitda), this is within the group’s target range of 1.5 to 2 times. Meanwhile, free cash flow increased by 7 per cent to £72.5m.
True, a Serious Fraud Office investigation into suspected corruption in Ultra’s business in Algeria is a problem. The case was opened after the group self-reported to the watchdog in 2018. While the outcome is unpredictable, the risk should be baked into the share price. Prior to the ‘corona-crunch’, investor confidence in Ultra certainly seemed to be on the up. Short positions in the stock have receded from a high of 13 per cent of shares in February 2019 to just 1 per cent now. Offering stability over its outlook, the order book provides more than 70 per cent visibility for 2020. With the shares trading at 15 times 2020’s forecast earnings (see table), we think the defensive growth on offer is underpriced. Buy. Last IC View: Hold, 2,132p, 10 Mar 2020. (Source: Investors Chronicle)
08 Apr 20. Aerospace on the descent as defence stays on course. With Covid-19 wreaking havoc on international travel, the woes of the airlines are having knock-on effects for aerospace companies. It’s especially bad news for engine maker Rolls-Royce (RR.) which derives just over 50 per cent of its revenue from civil aerospace. The group is paid by airlines according to how many hours its engines fly and also sells spare parts and accessories as part of its higher margin aftermarket services. It’s not ideal, then, that half the world’s aircraft fleet has now been parked, the highest level in history. Widebody aircraft flying hours plunged by 50 per cent year-on-year in March and Rolls expects further deterioration in April and beyond.
Looking beyond the pandemic, Rolls’ focus on widebody engines will likely prove detrimental as long-haul travel is expected to take longer to recover than domestic and short-haul flights. Airlines are also projected to curtail orders for new planes and retire older aircraft earlier than anticipated. With a cost-cutting regime already in place before the crisis struck, the group is now squeezing out a further £750m of savings. The final 7.1p dividend declared for 2019 has also ended up on the chopping block, conserving £137m.
The future of Boeing’s (US:BA) 737 Max jet is now even more up in the air with coronavirus thrown into the mix. That makes for a more uncertain outlook for Meggitt (MGGT) and Senior (SNR), both of which feed into the plane’s supply chain.
Things are more stable in the defence industry, where earnings tend to be underpinned by long-term government contracts and rising defence budgets. There are questions over whether the economic shock of Covid-19 will see countries row back on their military spending as they prioritise other parts of the economy. But countries have committed to investing more in defence in recent years “because we live in a more uncertain, more unpredictable world”, says secretary general of the North Atlantic Treaty Organisation (NATO), Jens Stoltenberg. “That hasn’t changed.”
The signing of the National Defence Authorisation Act in the US will see the top-line defence budget rise by 3 per cent to $738bn (£603bn) in 2020 and the Pentagon is proposing to lift this to £740.5bn in 2021. That bodes well for BAE Systems (BA.), which will see funding support maintained for key programmes such as its combat vehicles and the F-35 jet. The US Department of Defense (DoD) is Avon Rubber’s (AVON) largest client. Thanks to its $91m acquisition of 3M’s (US:MMM) ballistic protection business, Ceradyne, the group recently secured a $333m framework to supply body armour plates to the US army. The aerospace industry may be floundering, but defence still looks robust. (Source: Investors Chronicle)
07 Apr 20. Elbit Systems Issues a Cash Tender Offer for Ashot’s Shares. Elbit Systems Ltd. (NASDAQ: ESLT) (TASE: ESLT) (“Elbit Systems” or the “Company”) announced today that its wholly-owned Israeli subsidiary, IMI Systems Ltd. (“IMI”), has issued a conditional full cash tender offer (the “Tender Offer”) to acquire all ordinary shares of the Israeli publicly-traded company, Ashot Ashkelon Industries Ltd. (“Ashot”), held by the public, currently representing approximately 15.02% of Ashot’s outstanding share capital. The remaining ordinary shares, representing approximately 84.98% of Ashot’s outstanding share capital, are currently held by IMI.
The Tender Offer will remain open through April 26, 2020 and is for the price of NIS 7 (approximately $1.9) per share and for a total consideration of NIS 24,779,671 (approximately $6.832m). The price reflects a premium of approximately 8.95% above the closing price of Ashot’s shares on April 6, 2020. The Tender Offer is subject to the fulfillment of at least one of the following conditions: (1) offerees that do not accept the Tender Offer, represent less than 5% of the total outstanding share capital of Ashot and more than half of the offerees that do not have a personal interest in the Tender Offer, accept it, or (2) offerees that do not accept the Tender Offer represent less than 2% of the total outstanding share capital of Ashot (the “Purchase Condition”). Therefore, there is no assurance at this stage that the Tender Offer will be completed. If the Purchase Condition is fulfilled, IMI will purchase, at the tender price, all of Ashot’s outstanding ordinary shares held by the public, including those held by shareholders who do not accept the Tender Offer. The Tender Offer documents, detailing the terms of the offer, have been filed with the Israeli Securities Authority and the Tel Aviv Stock Exchange. (Source: PR Newswire)
07 Apr 20. Korea’s LIG Nex1 Invests in Drone Sensor Company. South Korean aerospace and defense firm LIG Nex1 has acquired a 20 percent stake in Microinfinity, a domestic firm that makes navigation sensor chips for unmanned aerial vehicles. According to LIG Nex1’s business report, it converted loans made to Microinfinity into 5 million shares worth 2.5bn won ($2m), equal to a 20 percent stake in the company, at the end of last year. This is the first case of LIG Nex1’s equity participation in a drone-related company.
A navigation sensor is a key component for drones and guided missiles to fly their planned trajectories.
“Currently, LIG Nex1 is developing small-sized drones for surveillance,” a company official said.
In 2018, the company won a military contract for small drones which are capable of vertical take-off and landing. The exact weight of the projectile that could be mounted on the drone is unknown. The drones are expected to be ready for military use by 2021.
“Microinfinity is currently supplying navigation devices to LIG Nex1. Though it’s unclear why the company made the investment, LIG Nex1 might have thought that there could be a strategic technology in Microinfinity,” an official from Microinfinity said. (Source: UAS VISION/The Korea Herald/Investor)
07 Apr 20. France’s Thales withdraws final dividend, suspends outlook. France’s Thales (TCFP.PA) on Tuesday became the latest major company to slash its dividend, suspend profit guidance and top up liquidity in response to the coronavirus crisis.
The aerospace and defence supplier said it had withdrawn the proposed final instalment of its 2019 dividend, saving 430m euros ($465m). The company has already paid an interim dividend of 0.6 euros, meaning the remaining 2.05 euros will not be paid.
Thales also suspended its 2020 financial guidance, which had assumed only a limited impact from the crisis, which is now grounding airline fleets and seizing up economies worldwide.
“We want to limit cash outflows that are not strictly necessary…to contain the economic and industrial impact on the group as much as possible,” Thales Chief Executive Patrice Caine told reporters.
Thales said it had also signed a new 2bn-euro credit facility that can be used over the next 12 months, with the option to extend it by another 6 months.
At the end of last year, Thales had 2.9bn euros in cash or cash equivalents and an undrawn revolving credit facility worth 1.5bn euros, expiring in December 2021.
Chief Financial Officer Pascal Bouchiat said the resulting available liquidity of 6.4bn euros “allows us to build a liquidity reserve that is totally sufficient”.
The new credit line, arranged and underwritten by Credit Agricole (CAGR.PA), is not backed by guarantees offered by the French state to help companies through the crisis, he added.
Airlines worldwide have grounded the bulk of their fleets to cope with a slump in demand and travel restrictions designed to contain the coronavirus outbreak.
Thales says 21% of its annual revenues come from commercial aerospace activities such as air traffic management, with the rest coming from defence, government agencies and private infrastructure.
Caine declined to comment in detail on reported disruption in the French aerospace supply chain, but said that Thales’ operations in Singapore and Australia were running almost normally.
Industry executives have said up to half of small French aerospace suppliers have halted production at some point since the government imposed a lockdown to slow the spread of coronavirus in mid-March, but that work is gradually resuming.
“Today I have the impression that the supply chain, like Thales, is in a recovery phase,” said Caine. (Source: Reuters)
06 Apr 20. Rolls-Royce to ditch targets and suspend dividend due to coronavirus: FT. British aero-engine maker Rolls-Royce (RR.L) will abandon its targets on profits, cash and deliveries, and suspend its dividend, as airlines around the world ground planes due to the coronavirus outbreak, the Financial Times reported late on Sunday.
Rolls-Royce is also aiming to announce new credit facilities in excess of 1bn pounds ($1.22bn) to bolster liquidity, the newspaper said on.ft.com/2ULsL7q. Rolls-Royce, which makes engines for large civil and military planes, has been hit hard by the pandemic as its airline customers park hundreds of planes.
In March, engine flying hours were down by about 40%, the newspaper said, citing a source. The company is paid by airlines based on how many hours its engines fly.
At the end of February, Rolls Royce had forecast 2020 free cash flow of 1bn pounds, excluding any material impact from COVID-19. The group will ditch that pledge, the FT said.
The dividend payment of 11.7 pence per share, which has been frozen since 2016, will also be suspended, the newspaper added.
Rolls-Royce declined to comment.
In addition, the FT said the company on Monday will reopen its civil aerospace facilities in the UK with a fraction of the normal workforce, after suspending operations in March.
The company could also eventually furlough some 50% of its 7,500 UK shop-floor workers, with wages supported by government subsidy, two sources told the newspaper. (Source: Reuters)
07 Apr 20. Thales strengthens its resilience to lower the impact of the Covid-19 crisis.
- Implementation of a global crisis adaptation plan
- Completion of an additional €2bn syndicated credit facility
- Withdrawal of final dividend proposal, with cash value of €430m
- Withdrawal of 2020 financial outlook
Thales (Euronext Paris: HO) announces the implementation of a global adaptation plan in response to the Covid-19 pandemic.
“Today we are announcing a series of exceptional measures to deal with the scale of the Covid-19 crisis.
Our first priority is and will remain the implementation of all the measures necessary to preserve the health of our employees, their relatives, our customers and the population at large, in all the countries where we operate.
Our direct exposure to the most affected markets is limited. Our civil aeronautics businesses represent only around 12% of the Group’s turnover.
However, like all industrial companies, this crisis is currently seriously disrupting production chains and project execution.
This is why we are implementing a global adaptation plan in order to limit the impacts of this crisis and strengthen our resilience.
The remarkable mobilization of our teams, combined with our unique positioning, built on a portfolio of key technologies in critical domains, a diversified customer base and a strengthened balance sheet, will be structural assets to mitigate the effects of this unprecedented crisis.” Patrice Caine, Chairman and Chief Executive Officer
The global environment in the first half of 2020 is profoundly changed by this unprecedented health crisis, which affects Thales like all companies.
The measures implemented to limit the spread of Covid-19 have a significant impact on the Group’s production, project execution, supply chain and customers’ ability to take delivery of products and systems.
In addition, this crisis affects demand across the Group’s markets. The greatest impact is expected to be on civil aeronautics businesses, which generated sales of approximately €2.15bn in 2019.
In this context, and while keeping as number one priority the health and safety of its employees, Thales is implementing a global adaptation plan in order to (1) maintain its productive capacities at the service of its customers, (2) limit the financial impact of this crisis and (3) strengthen its funding capacity in the event that the crisis persists or worsens.
The main levers of this plan are as follows:
- implementation of sanitary guidelines ensuring health protection for employees: organization in separate shifts, adaptation of workstations to facilitate physical distancing measures, deep cleaning and disinfection, work from home, etc.;
- maintaining the continuity of critical and strategic client services, followed by a gradual resumption of operations;
- coordination of actions within every supply chain, in particular to avoid supply disruptions, for example within the framework of GIFAS in France;
- paid leave during the lockdown period, sharp reduction of temporary work, implementation of exceptional government-supported temporary furlough in the countries which provide for them, hiring freeze in support functions;
- Deferral of non-critical investments (R&D, IT, real estate, etc.);
- Significant reduction in discretionary spending (marketing, travel, external consultants, etc.);
- Strengthening of actions to control working capital requirements, in particular to take into account the impact of the crisis on demand and supply chains.
Completion of an additional €2bn syndicated credit facility
The Group enjoys a very robust financial position. At 31 December 2019, it held €2.9bn in cash and cash equivalents and an undrawn committed credit facility amounting to €1.5bn, maturing in December 2021.
In order to bolster its liquidity, Thales has signed a further €2bn syndicated credit facility. This new facility has no covenant and can be utilized in the next 12 months, with a 6-month extension option.
At 31 March 2020, the amount of outstanding commercial paper is comparable to the level at 31 December 2019 (€746m).
Furthermore, in January 2020, the Group refinanced the €500m bond maturing on 19 April 2020. The next bond maturity is in March 2021 and amounts to €300m.
Withdrawal of final dividend proposal, with cash value of €430m
In a spirit of responsibility vis-à-vis all Group stakeholders, and in order to preserve funding capacity if the crisis were to last, the Board of Directors decided, during its meeting of 6 April 2020, to modify its 2019 dividend proposal.
In consequence, the dividend proposal submitted to the Annual General Meeting scheduled for 6 May 2020 will be limited to the interim dividend of €0.60 per share already paid in December 2019, allowing the Group to avoid a cash outflow of around €430m. The Annual General Meeting will take place on 6 May 2020 as planned, but will be held behind closed doors at the Group’s head office.
Withdrawal of 2020 financial outlook
The scale of the Covid-19 outbreak invalidates the financial outlook that was announced when the Full Year 2019 results were disclosed on 26 February 2020, which was assuming a limited impact of the Covid-19 crisis based on the situation to date.
At this stage, it is impossible to quantify the financial impact of this crisis on the Group’s financial statements. The impact will depend in particular on the scope, duration and depth of the crisis, as well as the potential catch-up effects at the end of the year.
As soon as it is able to do so, Thales will provide an update on the financial impact of this crisis on its financial statements and adjust its financial outlook.
06 Apr 20. Boeing suppliers Hexcel and Woodward call off $6.4bn merger. Aircraft parts manufacturers pull plug in first big deal to collapse due to coronavirus pandemic. Hexcel and Woodward had agreed to combine partly to cope with the impact of the halt in production of Boeing’s 737 Max aircraft. Hexcel and Woodward, two Boeing suppliers, have pulled the plug on their $6.4bn merger, becoming the first big deal to collapse due to the coronavirus pandemic. The two companies, which had agreed to combine in January partly to cope with the impact of Boeing’s grounding and halting production of its 737 Max aircraft, said that the market instability following the coronavirus outbreak made it harder to realise the benefits of the deal.
“The termination was approved by the boards of directors of both companies and is in response to the increasing impact on both the aerospace and industrial sectors, and global markets broadly, resulting from the health crisis caused by the coronavirus (Covid-19) pandemic,” the companies said in statement on Monday. “The pandemic has resulted in a need for each company to focus on its respective businesses and has impacted the companies’ ability to realise the benefits of the merger during these unprecedented times,” they added. Several agreed mergers and acquisitions have fallen into limbo in recent weeks, as government actions to curtail the coronavirus outbreak have wreaked havoc in global markets and forced many companies to reconsider their priorities. Raytheon’s all-stock $120bn merger with United Technologies, two companies also hit by Boeing’s woes, was approved last week after some concerns it could be delayed due to the impact of coronavirus.
Meanwhile, Boeing’s deal to acquire Brazil’s Embraer has stalled because of the market turmoil. Cash deals are the ones at greatest risk, as buyers have seen the value of the companies acquired drop significantly below their agreed offer. Hexcel and Woodward had agreed to an all-stock merger, which makes ending a transaction substantially easier as no financing is linked to the merger. “The move [to call off the merger] was not entirely surprising,” analyst Ken Herbert of Canaccord Genuity said in a note. “Both the supply and demand shocks to the commercial aircraft market have created much more distraction now, and require a focus on near-term cost actions and execution, as opposed to white-knuckling a merger on the scale of Woodward-Hexcel.” Boeing’s struggles predate the pandemic. The company was dealing with the fallout of the worldwide grounding of its workhorse 737 Max following two crashes that killed a combined 346 people. It estimated the crisis would cost $18.6bn, and S&P Global Ratings has predicted the Chicago company will see a free cash outflow of $11bn this year. Airlines and aircraft lessors are delaying or cancelling orders for Boeing jets, and the company has halted production at factories in Washington state and Philadelphia because of the virus.
The Chicago company said on Sunday the factories in the Seattle area would remain closed indefinitely. Hexcel said in Monday’s announcement that it had issued a shareholders rights dividend as a poison pill to guard against a hostile takeover. The company’s “massive” reduction in share price, down 64 per cent from a 52-week high of $87 makes it an attractive target, Mr Herbert said. But until Boeing and Airbus give more information on their production plans, it is hard to value Hexcel, which derives nearly three-quarters of its revenue from supplying the aerospace manufacturers. Hexcel had $64m in cash at the end of 2019 and no debt maturing until June 2024, “which gives the company a fair amount of breathing room to ride out the temporary effects of the pandemic”, Mr Herbert said. (Source: Yahoo!)
06 Apr 20. Who’d Be A Constellation Provider? The OneWeb Declaration of Bankruptcy. OneWeb’s Chapter 11 bankruptcy (under the SEC’s ‘debtor in possession’ rules) on Friday, March 27, was shocking, given that the company had just launched an extra 34 satellites into orbit on March 21.
One can only imagine the nightmare – and no doubt deep depression — taking place at OneWeb’s various offices during the intervening six days.
Following the Baikonur launch, OneWeb’s CEO Adrian Steckel said, “In these unprecedented times following the global outbreak of Covid-19, people around the world find themselves trying to continue their lives and work online. We see the need for OneWeb, greater now more than ever before.”
Steckel also spoke optimistically of more launches during the year, saying, “We think it is inevitable that there will be delays to our launch schedule and satellite manufacturing due to increasing travel restrictions and the disruption of supply chains globally. Therefore, we made the difficult decision to eliminate some roles and responsibilities as we work to focus on core operations. We are sorry to have had to take this step and we’re doing everything we can to support those affected.”
Now the company, with its ‘debtor in possession’ bankruptcy, is actively seeking a buyer for its 74 orbiting assets and what’s left of the tarnished dream of founder Greg Wyler.
One investment banker, speaking on March 30, suggested that a potential buyer could be Eutelsat, given that the Paris-based geo-operator has no LEO plans.
However, its tough imagining how any satellite player would want the challenge of launching another 600 satellites, with the massive manufacturing obligations and with the even bigger challenge of mounting a sales and marketing campaign.
In a note on March 30, investment bank Exane/BNPP’s Sami Kassab said, “We note that Eutelsat has no broadband LEO constellation project and believe it might find an interest in looking at OneWeb for its orbital rights and market access licenses could be of value for the French operator.”
Of course, while OneWeb’s principle backer, Japan’s SoftBank, was instrumental in bringing OneWeb to its knees by declining further bail-outs, there are other investors in OneWeb who might have the deep pockets to mount a rescue, not the least if which is chip-developer Qualcomm (Q1/2020 revenues $5.07bn) or even India’s Bharti Airtel (2020 revenues expected to be above $1bn).
However, the challenges ahead are huge. A year ago, SES CEO Steve Collar was blunt, saying he doubted whether any of the would-be mega-constellation operators could fund the cost of finding subscribers.
Plus, the current debts are significant. Examining the OneWeb Chapter 11 ‘debtor in possession’ documents, it is Arianespace that is the company’s top creditor and is owed $238m in unsecured claims. OneWeb signed a contract worth $1.1bn back in 2015 for a total of 21 launches using Ariane’s Soyuz rocket. Three of those launches have happened, the most recent at the beginning of March when 34 satellites were orbited.
However, OneWeb also has contracts in place with Arianespace for the maiden flight of its all-new Ariane 6 rocket and has also signed options for two further Ariane 6 launches.
The company is understood to have laid off some 85 percent of its staff and has some $1.7bn of debt.
OneWeb’s Chapter 11 bankruptcy petition to the Court seeks a “Restructuring to execute sale process.” The company, in its statement, stated, “OneWeb is actively negotiating debtor-in-possession financing, which, if acquired and approved by the Bankruptcy Court, will ensure OneWeb is able to fund additional financial commitments as it conducts a sale process under Section 363 of the US Bankruptcy Code. Together, these actions will allow OneWeb to meet post-petition obligations to its remaining employees and certain vendors in the ordinary course.”
Should a buyer not come forward and a full bankruptcy follow, then the 74 satellites already orbiting could fall into the hands of the UK government, along with the licenses held by OneWeb/WorldVu.
OneWeb’s shareholders are listed as:
- Softbank: 37.41%
- Qualcomm: 15.93%
- Greg Wyler*: 11.94%
- Airbus: 8.5%
*Greg Wyler 1110 Ventures LLC
OneWeb’s main backer, SoftBank, saw its share price plunging 10 percent in trading on March 30. Other investors, in addition to the listed shareholders, include Coca-Cola, Bharti Airtel, Virgin Group and others.
OneWeb’s Associated companies, also in Ch 11 bankruptcy, include…
- Network Access Associates Limited
- OneWeb ApS
- OneWeb Chile SpA
- OneWeb Communications Limited
- OneWeb G.K.
- OneWeb Global Limited
- OneWeb Holdings LLC
- OneWeb Limited
- OneWeb Ltd
- OneWeb Network Access Holdings Limited
- OneWeb Norway AS
- WorldVu Australia Pty Ltd.
- WorldVu Development LLC
- WorldVu JV Holdings LLC
- WorldVu Mexico, S. DE R. L. DE C.V.
- WorldVu Satellites Limited
- WorldVu South Africa (Pty) Ltd.
- WorldVu Unipessoal Lda 1021823 B.C. LTD
Not specifically itemized is OneWeb’s Florida joint-venture (OneWeb Satellites) with Airbus, which is building the company’s satellites.
In addition to Arianespace, other key creditors include…
- Qualcomm: $8.0m
- Deloittes: $6.8m
- Hughes Network Sys.: $5.3m
- Deutsche Bank: $5.2m*
- Wipro: $2.5m
- Willis Towers: $1.9m
- Viasat: $1.2m
- Nokia: $988,000
- Redapt: $662,275
- Rockwell Collins: $596,775
It is expected that Chapter 11 will affect OneWeb’s London-based parent company (OneWeb Communications Ltd.) and its Jersey (Channel Islands) businesses OneWeb Ltd. and WorldVu Satellites Ltd. The company’s latest Consolidated Financial Statements were filed in London on October 10 of last year (for the year to December 31, 2018, the financials show that OneWeb had secured about $3.3bn in equity and debt financing.) KPMG are the company’s auditors.
There are numerous formal Financial Charges listed against the company, notably with SoftBank Group Corp. on March 18, 2019, which granted SoftBank a Charge over the entire issued share capital of the company (both ordinary and preferred shares).
This failure is a major body-blow to the satellite industry and it will take time to unravel the complexities of the business. There is also a joint-venture in place with Airbus for a satellite-building facility in Florida near the Kennedy Space Centre.
More details will emerge as the bankruptcy process rolls on. CEO Steckel’s statement on March 27, which accompanied the liquidation announcement, was candid, but hopeful. He said, “OneWeb has been building a truly global communications network to provide high-speed low latency broadband everywhere. Our current situation is a consequence of the economic impact of the COVID-19 crisis. We remain convinced of the social and economic value of our mission to connect everyone everywhere. Today is a difficult day for us at OneWeb. So many people have dedicated so much energy, effort, and passion to this company and our mission. Our hope is that this process will allow us to carve a path forward that leads to the completion of our mission, building on the years of effort and the billions of invested capital. It is with a very heavy heart that we have been forced to reduce our workforce and enter the Chapter 11 process while the Company’s remaining employees are focused on responsibly managing our nascent constellation and working with the Court and investors.”
One might say that the two remaining major mega-constellation operators, SpaceX’s Starlink and Jeff Bezos’ Project Kuiper, both have very deep pockets. They’ll need them!
Note: Additional information about OneWeb’s Chapter 11 cases can be found at this direct Infolink https://cases.omniagentsolutions.com/?clientId=CsgAAncz%252b6bw8GCDW3fZU5I8EB97MbKJRMulZfejfoiuzZoM%252b6mnEzuN6SF%252f48MvykqyagNUXtM%253d (Source: Satnews)
06 Apr 20. DroneUp Acquires AeroVista Innovations. DroneUp, LLC, an end-to-end drone pilot service provider for aerial data collection, is pleased to announce that it has acquired AeroVista Innovations, LLC to provide full-service drone training to private and public sector organizations. DroneUp has acquired AVI’s assets, employees, and customer contracts, and will transition merged business operations into the DroneUp brand as The DroneUp Training Academy.
AeroVista Innovations, founded in 2016, provides training, in-house drone program implementation, and FAA regulatory compliance consultation that aid public agencies and corporations in their drone training, consulting, and sourcing projects. Its collaboration with UAS industry leaders provides a market-leading proposition and ensures complete drone solution programs that minimize risk and maximize safety and results.
Brendan Stewart, President of AeroVista Innovations, stated
“We are thrilled to integrate our operations into DroneUp’s global business model and combine our industry knowledge to accelerate turn-key solutions for drone program adoption with both public sector and enterprise organizations. AVI’s value is rooted in consulting, integrating, and training in-house operations for sectors such as emergency management and law enforcement, offering DroneUp the ability to further serve these markets through its NASPO ValuePoint Multi-State Contract.”
Since its inception in 2016, DroneUp’s service and business contributions have evolved to meet the demand of dynamic and maturing markets. The DroneUp Training Academy will continue to be led by both Brenden Stewart, Training Director, and Melanie Harris, Sales Director, furthering momentum to offer training and equipment purchases implementing one-stop drone solutions.
“DroneUp is looking forward to the expansion through this acquisition. Bringing AVI into DroneUp allows us to extend our capabilities to create valuable solutions for our customers. We have an exceptional network of pilots and an experienced team of leaders,” stated Tom Walker, Founder & CEO of DroneUp. “Our training division allows us to enhance the skills of our pilots who fly complex missions for our customers and to assist our clients in problem-solving internal and off-site issues impacting safe and complete drone solutions.” (Source: UAS VISION)
31 Mar 20. A Potential Buyer for OneWeb? Following its Chapter 11 bankruptcy protection, OneWeb’s aim is to carry on operations under ‘debtor in possession’ rules and is looking for a buyer to acquire the assets – such as they are.
Sami Kassab, satellite analyst at investment bank Exane/BNPP, said that Eutelsat could be a potential buyer.
Kassab said, “We note that Eutelsat has no broadband LEO constellation project and believe it might find an interest in looking at OneWeb for its orbital rights and market access licenses could be of value for the French operator.” Kassab added that OneWeb’s problems could be good news for satellite operator SES and in particular its subsidiary mPower. mPower is the name given to SES-owned O3b (which coincidentally was also founded by Greg Wyler who went on to form OneWeb).
“OneWeb’s failure is likely to benefit incumbent satellite operators, in particular SES. SES is the only company to have a non-GEO broadband infrastructure in the market at this stage. It is to launch its second-generation network (mPower) next year and will face less competition as OneWeb and Leosat are out of business. By the nature of Chapter 11 OneWeb might be able to remain in business and deploy a second-generation constellation as did Iridium, Globalstar or Orbcomm two decades ago or might be taken over. However, this is likely to take several years and will still provide a competitive relief for SES mPower in 2021,” said Kassab. (Source: Satnews)