Sponsored by TCI International Inc.
www.tcibr.com
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21 Dec 20. BlueHalo, an Arlington Capital Partners Portfolio Company, Announces the Acquisitions of Base2 Engineering and Fortego in Cyber and SIGINT Portfolio Expansion. Arlington Capital Partners (“Arlington”) today announced that its portfolio company, BlueHalo (the “Company”), a leading provider of advanced engineering solutions and technology to the national security community, has completed the acquisitions of Base2 LLC (“Base2”) and Fortego LLC (“Fortego”).
Both Base2 and Fortego are Maryland-based leading providers of complex, mission-critical cyber and SIGINT solutions that serve the most demanding missions in national security. Base2 specializes in the design and development of cutting-edge cyber solutions across the domains of Computer Network Operations (“CNO”), Signals Intelligence (“SIGINT”), and Quick Reaction Capability (“QRC”). Fortego has proven capabilities in advanced SIGINT and cyber operations solutions, with end-to-end solutions in cyber analytics, vulnerability research, and CNO engineering.
The two companies have highly complementary capabilities that, together with BlueHalo, will enable the Company to address the most complex cyber programs in the national security community. BlueHalo’s accelerated growth strategy will capitalize on three new state-of-the-art operational facilities with a fourth under construction, and drive additional investments to increase growth in Base2 and Fortego’s core markets, as well as to expand BlueHalo’s cyber and SIGINT offerings across its portfolio of solutions addressing manned and unmanned aircraft, missile defense, and space assets on orbit.
BlueHalo is a rapidly expanding national security platform with capabilities spanning space superiority, directed energy, missile defense, C4ISR, cyber, and intelligence. Together, the acquisitions of Base2 and Fortego add a critical mass of highly talented and credentialed cyber and SIGINT employees to BlueHalo, franchise prime contracts that provide some of the most sophisticated cyber solutions in the world, and customer access that significantly enhances the Company’s presence in the cyber and intelligence markets. The Company now has advanced cyber capabilities covering strategic level network operations all the way to the tactical cyber domains of space, air, ground, and sea. BlueHalo expects to end 2020 with over $250 million in revenue and nearly 900 employees located across 11 states that are strategically positioned near major Intelligence and DoD organizations.
“Base2 and Fortego are highly differentiated companies that will establish BlueHalo as a leading provider of cutting-edge cyber and SIGINT solutions to the most demanding national security customers,” said David Wodlinger, a Partner at Arlington Capital Partners. “As long-time investors in these markets, we have followed each company’s success closely and are excited to now be able to bring them together with BlueHalo to accelerate their exceptional growth potential.”
Chad Price and Eric Rothenberger, co-founders of Fortego, explained, “Fortego’s culture of People, Family, Mission is paramount to our success in helping our customers achieve impactful and lasting outcomes in their Cyber & SIGINT Operations missions. Combining with BlueHalo, who also believes in the importance of an employee and mission focused culture, was a natural fit as we lead Fortego into the next phase of its evolution. We are thrilled to join forces with the BlueHalo family to help lead the transformation of modern warfare.”
“We are thrilled to partner with the management teams at both Base2 and Fortego,” said Jonathan Moneymaker, CEO of BlueHalo. “The strong cultural alignment between our organizations around driving inspired engineering of complex solutions for our customers and our mission focus and unique access to specialized programs attracts the best of the best to the team. BlueHalo is leading the transformation of modern warfare and the acquisitions of Base2 and Fortego enhance our ability to deliver on this vision and accelerate our ability to grow organically into new mission areas.”
“We reached a point where it was time to consider being part of a larger organization that could help our company grow long-term. BlueHalo resonated with us because they focus on solving the hardest engineering problems while contributing to national defense imperatives. They understand the mission, and the importance of making the mission happen. In BlueHalo, we saw a larger version of ourselves. We are excited to stay on and join a like-minded organization that can help us achieve our aspirations with greater impact,” stated Base2 co-founders, Edward Wright and Michael Curry.
Henry Albers, a Vice President at Arlington, said, “Base2 and Fortego have highly complementary technical capabilities and a shared commitment to attracting and retaining talent. We are confident that as part of BlueHalo these companies will unlock new synergistic growth opportunities, delivering better mission outcomes for customers and career advancement opportunities for employees.”
Robert W. Baird & Co acted as financial advisor to Fortego and Aronson Capital Partners acted as financial advisor to Base2. Sheppard Mullin served as legal advisor to BlueHalo and Miles & Stockbridge served as legal advisor to both Base2 and Fortego. Eureka Strategic Consulting served as the strategic leadership consulting advisor to Fortego.
About BlueHalo
BlueHalo is purpose-built to provide industry leading capabilities in the domains of Space Superiority and Directed Energy, Missile Defense and C4ISR, and Cyber and Intelligence. BlueHalo focuses on inspired engineering to develop, transition, and field next generation capabilities to solve the most complex challenges of our customers’ critical missions and reestablish our national security posture in the near-peer contested arena. www.BlueHalo.com(Source: BUSINESS WIRE)
21 Dec 20. Dive Technologies Closes on New Equity Financing Round to Deliver on 2021 Commercial and Defense Opportunities.
Company prepares to transition to growth phase.
Dive Technologies, Inc., a Boston-based subsea robotics designer and manufacturer, today announced a new round of equity funding of $4mm, bringing total funds raised to date to $9.5mm. Dive’s financing was led by Tanis Venture Management which was joined by other investors including Virginia Tech Carilion Innovation Fund, Mill Town Capital, Virginia Tech Carilion Seed Fund, Cavalier Angels, and Charlottesville Angel Network. Dive’s venture debt financing is through MassDevelopment’s Emerging Technology Fund.
“We’re pleased to continue to grow our partnership with Tanis Ventures through this financing round. Our team is fortunate to have a strong syndicate of experienced funds and angel investors that have supported us through our technology development and have helped us to position the company to build upon our successes going forward,” says Sam Russo, COO at Dive Technologies.
“Tanis is thrilled to continue working with Dive as it transitions from successful prototyping to commercial implementation of the DIVE-LD platform,” says Jack Seaver, Managing Director at Tanis Venture Management. “We look forward to Dive demonstrating the innovative capabilities of its product across the defense and commercial sectors.”
“Our team is very excited to bring in additional funding that affords us the runway to continue to grow our business in 2021 and beyond,” says Jerry Sgobbo, CEO at Dive Technologies. “Our engineers worked tirelessly over the last two years to bring a highly capable autonomous underwater vehicle (AUV) to the market and as we look to 2021, we will deepen our customer partnerships by delivering on our Robot-as-a-Service business model. We are very pleased to have early adopters of our technology already onboard and we look forward to scaling our technology and business to meet their needs and the quickly emerging needs of others.”
The new round of funding will be used to realize sales opportunities in 2021 and accelerate efforts to expand geographically and through new partnerships. Dive is poised for increased demand for Robot-as-a-Service work with commercial customers in offshore wind, oil and gas, and deep-sea exploration as well as with government customers.
Dive’s first commercial autonomous underwater vehicle offering to the market, the DIVE-LD, is a 4’ diameter, 19’ long vehicle designed for up to ten days of mission endurance and ocean depths of 6,000 meters. The company also boasts a novel commercial AUV Kit that allows customers to customize an AUV to their liking and mission needs easily by leveraging Dive’s cutting-edge manufacturing processes.
About Dive Technologies: Founded in 2018, Dive Technologies designs, develops, and deploys premier autonomous underwater vehicles for large-scale commercial and defense data collection. Utilizing deep domain expertise, Dive Technologies is building a lowest-cost, fastest to the sea, and best-in-class large displacement AUV platform that combines purpose-driven technology with an intuitive, elegant exterior design and internal architecture to help customers rapidly and efficiently collect underwater data. For more information please visit www.divetechnologies.com. (Source: BUSINESS WIRE)
21 Dec 20. Moog Announces Acquisition of Genesys Aerosystems Group, Inc.. Moog Inc. (NYSE: MOG.A and MOG.B) announced today that it has completed the acquisition of Genesys Aerosystems Group, Inc. (Genesys) for a purchase price of approximately $77.7m. Genesys Aerosystems is headquartered in Mineral Wells, Texas and has 143 employees. The purchase includes the operating subsidiaries S-Tec Corporation and Genesys Aerosystems, Inc.
Genesys designs and manufactures a full suite of electronic flight instrument systems and autopilot solutions specializing in fixed wing, rotorcraft, military and special mission aircraft fleet support with state-of-the-art avionics and product sustainment services.
“Genesys is proud to bring over 40 years of avionics experience into the Moog family,” said Genesys CEO Roger Smith. “Joining Moog positions us to continue our development of industry-leading avionics products and our relentless focus on delighting our customers for the long term.”
“We’re excited to bring Genesys Aerosystems’ products and people into Moog’s Aircraft Controls Segment,” said Mark Trabert, Moog Aircraft Controls Segment President. “Genesys adds to our product and capabilities portfolio. The product synergies and cultural alignment of our two organizations will enable future growth beyond our current core flight control business.”
Moog Inc. is a worldwide designer, manufacturer, and integrator of precision control components and systems. Moog’s high-performance systems control military and commercial aircraft, satellites and space vehicles, launch vehicles, missiles, automated industrial machinery, marine, and medical equipment. Additional information about the Moog can be found at www.moog.com. Additional information about Genesys Aerosystems can be found at www.genesys-aerosystems.com. (Source: BUSINESS WIRE)
21 Dec 20. RADA Expects 2021 Revenues to Grow by Over 60% to Above $120m.
Expects Continued Strong Growth in Profitability.
RADA Electronic Industries Ltd. (NASDAQ: RADA) today provided its revenue guidance for 2021. Management expect full year 2021 revenue of over $120m, with sequential quarter on quarter revenue and profitability growth throughout the year.
Guidance is based on the growing market acceptance of RADA’s tactical radars, the recent level of new and expected orders, as well as the backlog which RADA has started to build for 2021 and onwards. The majority of revenues in 2021 will be derived from RADA’s growth engine: multi-mission, software-defined tactical radar systems, especially in the US market.
Dov Sella, RADA’s CEO, commented, “We continue to experience an unprecedented period of growth for our Company, driven by our new and growing market of tactical radars. The new orders received throughout the past year, along with our very healthy pipeline for our tactical radars’ growth engine, give us excellent visibility into 2021 and strong confidence that our 60%+ revenue growth rate will continue. Furthermore, given our improving gross margins and operating expense structure, we expect to significantly improve our profitability.” (Source: PR Newswire)
18 Dec 20. DJI Added to US to Department of Commerce Blacklist. The US Bureau of Industry and Security, Commerce has added DJI to its ‘Entity List’, identifying the Chinese company as a national security concern and banning US-based companies from exporting technology to the company.
DJI is one of four companies accused of enabling wide-scale human rights abuses within China through abusive genetic collection and analysis or high-technology surveillance, and/or facilitated the export of items by China that aid repressive regimes around the world, contrary to U.S. foreign policy interests
Overall seventy-seven entities have been determined by the U.S.Government to be acting contrary to the national security or foreign policy interests of the United States.
This rule is effective December 18, 2020.
The Entity List (supplement no. 4 to part 744 of the Export Administration Regulations (EAR)) identifies entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entities have been involved, are involved, or pose a significant risk of being or becoming involved in activities contrary to the national security or foreign policy interests of the United States. The EAR (15 CFR parts 730-774) impose additional license requirements on, and limit the availability of most license exceptions for exports, reexports, and transfers (in-country) to listed entities.
The license review policy for each listed entity is identified in the “License review policy” column on the Entity List, and the impact on the availability of license exceptions is described in the relevant Federal Register notice adding entities to the Entity List. BIS places entities on the Entity List pursuant to part 744 (Control Policy: End-User and End-Use Based) and part 746 (Embargoes and Other Special Controls) of the EAR.
The End-User Review Committee (ERC), composed of representatives of the Departments of Commerce (Chair), State, Defense, Energy and, where appropriate, the Treasury, makes all decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entry to the Entity List by majority vote and all decisions to remove or modify an entry by unanimous vote.
Under § 744.11(b) (Criteria for revising the Entity List) of the EAR, entities for which there is reasonable cause to believe, based on specific and articulable facts, that the entities have been involved, are involved, or pose a significant risk of being or becoming involved in activities that are contrary to the national security or foreign policy interests of the United States, and those acting on behalf of such entities, may be added to the Entity List. Paragraphs (b)(1) through (5) of § 744.11 provide an illustrative list of activities that could be considered contrary to the national security or foreign policy interests of the United States.
This rule implements the decision of the ERC to add seventy-seven entities, under a total of seventy-eight entries, to the Entity List.
In the case of DJI, BIS imposes a license review policy of case by case review for items necessary to detect, identify and treat infectious disease and a presumption of denial for all other items subject to the EAR.
This Final Rule from the Bureau of Industry and Security (BIS) amending the Export Administration Regulations (EAR) is scheduled to be published in the Federal Register on 12/22/2020 and available online here.
“DJI is disappointed in the U.S. Department of Commerce’s decision,” a representative of the company said in a statement. “Customers in America can continue to buy and use DJI products normally.” (Source: UAS VISION/US Department of Commerce Statement)
21 Dec 20. Opportunity Set: Next-Generation Jammer Gets Low – LHX in Final Downselect. On Dec 18 AMC, the Naval Air Systems Command awarded LHX as prime a $496m contract for the EMD phase of the Next Generation Jammer – Low Band. The award was a final downselect, with L3Harris (LHX) competing against Northrop Grumman (NOC). The initial award runs for five years, implying annual revenues in the $100m/year range (0.5 pts). The total development program is budgeted at over $3bn, with funding expected to step up from $91m in FY20 to $170m in FY21.
Then There was One. The Naval Air Systems Command awarded LHX a $496m prime contract for the EMD phase of the Next Generation Jammer – Low Band. The award was the final downselect in a competition between LHX and a NOC team, which included LHX as a supplier. The contract follows a 20-month demonstration phase, with the contract duration stretching five years, or through September 2025. Under the initial contract, LHX will deliver 10 pod simulators and eight operational prototype pods along with additional equipment as part of the engineering and manufacturing development of the NGJ-LB. The total development phase is expected to be in the $3bn range with about half of the funding tied to EMD and prototype development. The overall budget for the program could increase from $91m in FY20 to $243m in FY23. Averaging the contract over five years implies $100m of annual revenue for LHX or 0.5 pts on our 2021 revenue estimate.
Program Background. The Next Generation Jammer (NGJ) is a standoff electronic attack platform. The external jamming pod uses software-based array technology and airborne electronic attack (AEA) capability to disrupt, deny, and defeat enemy air defenses and ground communication systems. Within the jammer, there are three pods, covering the mid, low, and high range of the electromagnetic spectrum. The NGJ is a replacement for the legacy ALQ-99 pod and will fly on the EA-18G. The program was further expanded in July 2020, with Australia signing a project agreement for cooperative development of the program. In 2013, RTX was selected and awarded a $279m contract for the Next Generation Jammer’s Mid Band with a follow-on award of $1bn in 2016. In 2017, the Naval Air Systems Command pursued the demonstration of existing technology for the low band increment. NOC and L3 (Now LHX) were selected in 2018 to develop a low band solution.
History of the NGJ Low Band Competition. In October 2018, LHX and NOC were selected for a 20-month contract by the Navy. NOC was awarded a $35m contract with LHX receiving $36MM. The two competitors beat out bids by RTX and a team of LMT and Cobham. HRS (now LHX) was partnered with NOC. Given the 2019 merger of LLL and HRS to form LHX, the company was competing as both a prime and supplier to NOC. The contract scope included the demonstration of solutions for the low band to assist in refining and finalizing requirements in addition to reducing risk. In January of this year, final bids were submitted. The program moved further forward on Dec 8, when the Navy approved the Engineering and Manufacturing Development acquisition phase of the program. (Source: Jefferies)
20 Dec 20. Lockheed Martin to Acquire Aerojet Rocketdyne. Lockheed Martin to Acquire Aerojet Rocketdyne, Strengthening Position as Leading Provider of Technologies to Deter Threats and Help Secure the United States and its Allies.
Aerojet Rocketdyne’s Complementary Capabilities and Skilled Workforce to Enable Growth in Hypersonics, Tactical Missiles, Integrated Air and Missile Defense, Strategic Systems and Space Exploration
Provides Greater Value and Innovation for Customers by Integrating
Critical Component of Supply Chain
Total Transaction Value of $4.4bn
Lockheed Martin to Host Analyst and Investor Webcast at 8:30 a.m. EST on Monday, Dec. 21, to Discuss the Transaction
Lockheed Martin Corporation (NYSE: LMT) today announced it has entered into a definitive agreement to acquire Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) for $56 per share in cash, which is expected to be reduced to $51 per share after the payment of a pre-closing special dividend. This represents a post-dividend equity value of $4.6bn and a total transaction value of $4.4bn including the assumption of net cash.
As part of approving the transaction, Aerojet Rocketdyne announced a special cash dividend, revocable at its option through the payment date, of $5 per share to its holders of record of common stock and convertible senior notes (on an as-converted basis) as of the close of business on March 10, 2021, and payable on March 24, 2021.
“Acquiring Aerojet Rocketdyne will preserve and strengthen an essential component of the domestic defense industrial base and reduce costs for our customers and the American taxpayer,” said James Taiclet, Lockheed Martin president and CEO. “This transaction enhances Lockheed Martin’s support of critical U.S. and allied security missions and retains national leadership in space and hypersonic technology. We look forward to welcoming their talented team and expanding Lockheed Martin’s position as the leading provider of 21st century warfare solutions.”
With 2019 revenue of approximately $2bn, nearly 5,000 employees, and 15 primary operations sites across the United States, Aerojet Rocketdyne is a world-recognized aerospace and defense rocket engine manufacturer. Aerojet Rocketdyne has deep customer relationships and significant demand for its innovative technologies. The proposed acquisition adds substantial expertise in propulsion to Lockheed Martin’s portfolio, and expands on the solid foundation built by Lockheed Martin and Aerojet Rocketdyne over many years. Aerojet Rocketdyne’s propulsion systems are already a key component of Lockheed Martin’s supply chain and several advanced systems across its Aeronautics, Missiles and Fire Control and Space business areas.
The transaction is expected to close in the second half of 2021 and is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by Aerojet Rocketdyne’s stockholders. Lockheed Martin has a history of successful integrations and will work to efficiently deliver the many strategic and financial benefits of this transaction. A transition team will be formed to allow for a seamless integration and ensure continuity for customers, employees and other stakeholders.
21 Dec 20. AJRD to be Acquired by LMT; Immediate Monetization of IP and Cash. Aerojet Rocketdyne Holdings, Inc (AJRD), BUY, $42.04 PT: $55.00. LMT announced that it has entered into a definitive agreement to acquire AJRD for $56/share, or a 33% premium to Friday’s close. In March 2021, AJRD shareholders will receive a $5/share special dividend, adjusting the transaction price to $51/share. We like the transaction as it immediately monetizes AJRD’s cash stockpile, while the deal price reflects the attractiveness of the asset. LMT is the likely acquirer, with a competing bid unlikely in our view.
Insights
LMT to Acquire AJRD. On December 20th, LMT announced it had entered into a definitive agreement to acquire AJRD for $56/share, a 33% premium to Friday’s closing price of $42.04. The $56/share deal is expected to be reduced to $51/share after the payment of a pre-closing special dividend of $5/sh to be paid to AJRD shareholders in Mar. 2021. The adjusted $4.4BB deal price represents 14.9X our FY21 AJRD EBITDAP estimate. We believe part of the multiple reflects the monetization of AJRD’s real estate, that has long been an overhang given a prolonged process to sell the asset. If we assume the acreage in the Sacramento area could be sold for $500MM, the deal represents a multiple closer to 13.2X our 2021E EBITDA estimate.
Immediate Monetization of the Asset. We like the deal from AJRD’s perspective with the $56/share bid in line with our $55 price target. Although AJRD’s organic growth prospects were attractive (MSD growth over five years), we believe it would have been challenging to synergistically move upstream. AJRD’s balance sheet was attractive, with >$1BB of cash as of the end of Q3 vs. only $629MM of debt. In a net cash position, M&A was likely to be prioritized over other capital deployment. The biggest challenge was there aren’t many assets that made sense that fit with AJRD’s key propulsion markets. With the 2013 acquisition of Rocketdyne by Aerojet, the industry was fairly consolidated. AJRD’s main competitor, Orbital ATK, was acquired by NOC in 2018.
What Happens From Here. We don’t expect any issues with the deal closing. There will likely be a similar process as NOC went through with OA, with likely some pushback from key customers such as RTX and BA. Similar safeguards could be put in place as terms of close to maintain competition, but none of these issues should be a deal stopper. Product overlap is not a concern. In the end, the industry is used to competing in some aspects, but partnering in others. In addition, we believe a competing bid is unlikely. LMT was likely one of the only realistic bidders given overlap (34% of AJRD’s sales to LMT) and balance sheet strength, in addition to antitrust that eliminates NOC as a potential bidder for the asset.
Pipeline Supports MSD Revenue Growth. On Dec 16th, we held virtual meetings with Dan Boelhe, CFO of AJRD, and Kelly Anderson, Senior Director, FP&A and Investor Relations. Although there were no indications of any potential transaction, aspects of the underlying business were discussed. Key was confidence in the organic growth outlook, with sustainable MSD revenue growth supported by key missile programs coupled with emerging growth drivers including GBSD, Next Generation Interceptor and hypersonics. (Source: Jefferies)
18 Dec 20. Iris Automation Closes $13m Series B Financing. Iris Automation has closed a successful round of $13m in Series B venture capital funding. Founded in 2015, Iris Automation is a computer vision technology company pioneering the development of advanced detection systems used to help provide Detect-and-Avoid (DAA) capabilities that enable safe commercial drone operations including scalable Beyond Visual Line of Sight (BVLOS) missions.
The funding includes follow-on investment by Bessemer Venture Partners, Bee Partners, OCA Ventures, and new investors Sony Innovation Fund and Verizon Ventures. The addition of this strategic investment acknowledges the criticality of collision avoidance and safety technology to the future aviation community.
Quote from Jon Damush, CEO of Iris Automation
“We are incredibly excited about this show of support from our current and new investors, particularly during this unprecedented global pandemic. We have always known that our approach to the problem solves a critical missing link for unpiloted systems, and plan to deploy this capital to further expand our capabilities and improve safety for unpiloted systems as global regulators work to integrate UAS into existing airspaces. The investment clearly illustrates investor confidence in growth of the sector and specifically Iris’ role in the ecosystem.”
With this investment, Iris Automation will:
- Expand machine learning and AI capabilities and testing to improve and extend the Casia system’s performance envelope.
- Continue to participate in the Federal Aviation Administration’s BEYOND program, focused on enabling Beyond Visual Line of Sight operations with Unmanned Aircraft Systems (UAS) to advance airspace integration. BEYOND will demonstrate operations that are repeatable, scalable and economically viable with specific emphasis on infrastructure inspection, public safety operations and small package delivery.
- Continue to improve detection and classification capabilities of the Casia system to support expanded use cases, operational environments and aircraft compatibility.
- Build out fulfilment capabilities to produce, deliver and support the growing installed base of aircraft OEM partners and end use customers, and enter new markets associated with aircraft safety.
Quote from David Cowan, Bessemer Venture partner and Iris board member
“We see explosive demand in energy, agriculture, construction, security and logistics for long-range and remotely operated drones. Iris’ collision avoidance product, the only on-board, visual aircraft recognition system to receive government approval, provides a critical piece of air safety needed to unlock this enormous market.”
Quote from Tess Hatch, Bessemer Venture vice president and Iris board member
“One day drones will ubiquitously operate in our airspace making our lives safer, easier, and better, and Iris Automation is the key to unlocking the full potential of commercial operations. Enabling drones to fly beyond visual line of sight helps expand a myriad of operations from inspecting oil pipelines and railroad tracks to agricultural farms to last mile delivery, and makes all of those operations much more efficient and less expensive.”
Quote from Gen Tsuchikawa, CEO and Chief Investment Officer at Innovation Growth Ventures and the Sony Innovation Fund (SIF), Corporate Vice President, Sony Corp.
“Iris Automation is pushing the innovation envelope by using machine vision and on-board AI to bring unparalleled safety to the unmanned aircraft industry, which will fully unlock the commercial drone market beyond visual line-of-sight. This further builds upon Sony Innovation Fund’s drone investment thesis, and we believe the company’s scalable technologies makes it uniquely positioned to usher a new era in autonomous aviation.”
The investment reflects the continued growth at Iris Automation and the opportunities in the global commercial drone market space. Aviation industry veteran and entrepreneur Jon Damush recently joined Iris Automation as CEO, and the company also recently conducted a live drone flight demonstration for the City of Reno Fire Department of its Casia onboard (DAA) collision avoidance system, under the FAA’s UAS Integration Pilot Program (IPP). This closely followed Transport Canada also having issued the second Special Flight Operations Certificate (SFOC) for BVLOS flights in uncontrolled airspace utilizing infrastructure masking and Iris Automation’s Casia system to MVT Geo-solutions. (Source: UAS VISION)
17 Dec 20. Counter-drone startup Epirus raises $70m, plans to hire 100 people. Epirus, a venture-backed startup offering a counter-drone capability, announced Thursday it raised $70m to speed its technology to market. The round was led by San Francisco, California-based Bedrock Capital, and brings the 2-year-old company’s total capital raised to roughly $80m.
The news comes six months after Epirus inked a strategic supplier agreement with Northrop Grumman to provide exclusive access to Epirus’ software-defined electromagnetic pulse system Leonidas. Since then, the firm has doubled in size and plans to add 100 jobs in 2021.
“We’re aggressively hiring and expanding our footprint on the East and West coasts,” Epirus CEO Leigh Madden told Defense News. He added that the firm is shifting its headquarters from the Hawthorne, California, office to its newer offices in Tysons Corner, Virginia.
Alongside Bedrock and several other investment firms, L3Harris Technologies is investing in Epirus. Epirus developed a SmartPower power-management technology that underpins its counter-unmanned aircraft system, and the company plans to partner with L3Harris to create greater power efficiencies within some of its existing systems.
The technology, which allows the system to deliver a high-power output with a relatively low-power input, has a range of applications across other radio frequency systems, Madden said. (The company’s systems involve a combination of high-power microwave technology and, for enhanced targeting, artificial intelligence.)
The new funding, “enables us to rapidly build out our counter-UAS system,” Madden said. “We’ll be bringing the Leonidas system to market as well as advancing the capabilities of our SmartPower technology ― and working with government customers and partners to expand the application of that technology.”
Beyond Bedrock and L3Harris, the new Series B funding came from Piedmont Capital Investments, 8VC, Fathom VC and Greenspring Associates. In 2019, Epirus closed $17m in Series A funding, which was led by 8VC. (Series A is meant to help a company progress to the development stage, and Series B is meant to help a company market or expand its existing market footprint.)
Geoff Lewis of Bedrock Capital said in a statement that investors are “confident Epirus has the capacity to integrate its technology into top tier counter-UAS systems and lead the way in developing new and compelling directed energy applications.”
“Epirus counters the weak assumption baked into standard VC models that the economic and cultural gaps of defense-focused investments are too wide to overcome,” Lewis said. (Source: Defense News)
18 Dec 20. Test failure blasts a hole in Avon Rubber’s bulletproof rise. Shares in Avon Rubber fell sharply yesterday after the military supplier warned of problems with its bullet-proof vest kits. The Wiltshire-based company warned investors that profits would not be as high as expected for the year to the end of September 2021 because of issues with two crucial contracts supplying the US military.
Shares in Avon Rubber, which had been one of the best performing stocks in London this year, fell 445p, or nearly 12 per cent, to £32.95.
Avon Rubber is the former tyre-maker which became an engineer producing kit to milk cows. In the past couple of years the company has transformed itself to become an important supplier of combat protection gear for American service personnel, law enforcement agencies, state militia and police departments. As investors sought safe havens amid the storms of Covid-19, Avon’s shares were bid up from £20 at the start of the year to £46 by the start of this month, steering clear of the wider pandemic sell-offs. However, much of that gain was given up yesterday.
Avon said in a stock market statement that the bullet-proof materials it makes to be inserted in protective vests had encountered a failure in “first article testing” — a rigorous, pre-certification test to make sure the materials actually work.
The contract was worth $50m of sales for next year but now faces delays, prompting analysts to lower projected profits by about $10m, or 16 per cent, from the previous consensus estimate of $62m.
Avon also said that its exclusive contract to supply helmets to the US army, won in September, is the subject of a challenge by an unnamed under-bidder on the contract. (Source: The Times)
17 Dec 20. Additional Seed Funding for Orbit Fab’s Gas Stations in Space™. A unique vision that has come to life receives additional funding. Orbit Fab’s Gas Stations in Space™ Propellant Supply Chain has raised a seed extension round led by Munich Re Ventures, the strategic corporate venture capital arm of Munich Re Group that enables Orbit Fab to achieve its vision of an in-orbit ecosystem for satellite servicing, national security, and space commercialization. Orbit Fab recently announced that it will launch its first fuel tanker, Tanker 001 Tenzing, in the coming year.
Munich Re Ventures is the strategic corporate venture capital arm of Munich Re Group, a major provider of reinsurance, primary insurance, and insurance-related risk solutions.
The funding will help Orbit Fab achieve its vision of an in-orbit ecosystem for satellite servicing, national security, and space commercialization. Orbit Fab recently announced that it will launch its first fuel tanker, Tanker 001 Tenzing, in the coming year.
Last month, Orbit Fab announced that it had signed an agreement with Spaceflight Inc. to launch its first operational fuel depot to orbit in 2021. Tanker 001 Tenzing will store propellant in sun synchronous orbit, where it will be available to satellite servicing vehicles or other spacecraft that need to replenish fuel supplies.
“We’re honored to have Munich Re Ventures join the team of investors that understand our vision of the importance of building a refueling infrastructure in orbit,” said Daniel Faber, Chief Executive Officer of Orbit Fab. “Whether for national security, space exploration, or telecommunications, it is no longer acceptable to throw away valuable space assets because they have run out of fuel. A great opportunity is unfolding for the companies that are prepared to support the growing on-orbit servicing ecosystem.”
“Having the backing of Munich Re Ventures cements an important relationship for us based on their unique understanding of risk among investors,” said Jeremy Schiel, Chief Development Officer and Co-Founder of Orbit Fab. “Refueling in space is going to be essential to advanced space architectures, and we are a leader in terms of providing capabilities that support next-generation commerce and protection of the space domain.”
Orbit Fab’s fuel depots are designed to sustain spacecraft with a Self-Driving Satellite™ docking kit, known as SPARK, for guiding spacecraft without the need for complex robotic arms. Its Satellite Gas Cap™ fluid transfer interface, known as RAFTI, has been adopted by multiple spacecraft manufacturers to extend the life of their satellites. SPARK and RAFTI were developed in cooperation with 50 companies and organizations and are expected to become the industry’s common cooperative docking and refueling interfaces.
“Munich Re Ventures sees significant value in the Orbit Fab refueling infrastructure as an enabling part of the in-space servicing ecosystem,” said Timur Davis, PhD, Investment Principal at Munich Re Ventures. “The pace of growth of new entrants in the satellite servicing market is a key indicator that there will be demand for a propellant supply in space. Orbit Fab has the talent and technology to meet that need and has already announced its first operational mission.”
Earlier this year Orbit Fab was selected by the U.S. Air Force to fully flight qualify the RAFTI service valve and it received a National Science Foundation (NSF) grant to test its SPARK docking system. Previously, Orbit Fab successfully demonstrated its propellant storage and delivery systems in an unprecedented private transfer of water to the International Space Station. (Source: Satnews)
17 Dec 20. AST Space Mobile To Become A Publicly Traded Company. AST & Science LLC (“AST SpaceMobile”) has entered into a business combination agreement with New Providence Acquisition Corp. (“New Providence”) (NASDAQ: NPA, NPAUU and NPAWW), a publicly traded special purpose acquisition company. Upon closing of the transaction, AST SpaceMobile will become a publicly traded company and it is expected that its common stock will be listed on the NASDAQ exchange under the symbol “ASTS” upon closing the transaction.
Abel Avellan, Chairman and Chief Executive Officer of AST SpaceMobile, will continue to lead the business post-transaction. The combined company will have an implied pro forma enterprise value of approximately $1.4bn and is expected to have an equity value of approximately $1.8bn at closing.
Backed by an extensive IP and patent portfolio, AST SpaceMobile will address the $1trn global mobile wireless services market by delivering seamless broadband cellular connectivity directly to unmodified, existing mobile phones, without any need for specialized hardware.
With an expected initial access to 1.3 billion subscribers of some of the world’s largest cellular operators, AST SpaceMobile will be positioned to rapidly scale its revenue streams as it deploys its space assets for nearly complete global coverage, while benefiting from operating leverage and low maintenance capital costs via its super-wholesale, business-to-business model.
Once deployed, AST SpaceMobile’s services will meet the needs of at least five billion mobile subscribers who face broadband connectivity issues when moving in and out of cellular coverage, and will enable access by more than half of the world population that do not have internet on their phone.
AST SpaceMobile and New Providence have secured a commitment for a $230m private placement investment (“PIPE”) to be consummated at the closing of the transaction. The PIPE is being led by AST SpaceMobile’s strategic partners, including Vodafone, Rakuten (Japan) and American Tower (communications infrastructure), as well as UBS O’Connor and a broad base of financial institutions.
Pursuant to the transaction, New Providence, which currently holds approximately $232m in cash in trust, will combine with AST SpaceMobile at an estimated $1.4bn pro forma enterprise value, or 1.4 times calendar year 2024’s estimated EBITDA of approximately $1bn. The company will have no debt on the balance sheet at closing. Assuming no redemptions by New Providence’s existing public stockholders, AST SpaceMobile’s existing shareholders will hold approximately 71 percent of the issued and outstanding shares of common stock immediately following the closing of the business combination.
The combined company expects to receive up to $462m in gross proceeds, assuming no redemptions of New Providence’s existing public stockholders, including the private placement backed by strategic partners, existing investors and a broad base of financial institutions. All AST SpaceMobile shareholders are retaining 100% of their equity in the combined company. The cash proceeds are expected to be used to fund phase one of the commercial launch of AST SpaceMobile’s space assets.
The transaction has been unanimously approved by the New Providence Board of Directors, as well as the Board of Directors of AST SpaceMobile, and is subject to the satisfaction of customary closing conditions, including the approval of the shareholders of New Providence.
Additional information about the proposed business combination, including a copy of the equity purchase agreement and investor presentation, will be provided in a Current Report on Form 8-K to be filed by New Providence today with the Securities and Exchange Commission and available at www.sec.gov. The investor presentation can also be found on AST SpaceMobile’s website at https://ast-science.com/ and www.npa-corp.com. (Source: Satnews)
15 Dec 20. Redwire Acquires LoadPath, a Leading Developer of Payload Adapters for the Space Industry. Redwire, a new leader in mission critical space solutions and high reliability components for the next generation space economy, announced today that it has acquired LoadPath, a leading developer of payload adapters, deployable structures, and thermal products for the space industry. Terms of the transaction were not disclosed.
“LoadPath brings market-leading capabilities to augment Redwire’s space infrastructure portfolio and broaden our range of technology products and services to support our customers’ missions,” said Peter Cannito, Chairman and CEO of Redwire. “We are excited to work with Adam and Greg and the LoadPath team to leverage their impressive technology flight heritage and advance their capabilities as a part of Redwire.”
“Joining Redwire creates new opportunities for us to build on our success while integrating our industry-leading capabilities into ambitious space infrastructure missions that will intersect a broad range of customers,” said Adam Biskner, co-founder of LoadPath.
“We are excited to join Redwire, which will enable us to grow faster and employ resources, that weren’t previously available, to increase our technology portfolio,” said Greg Sanford, co-founder of LoadPath.
Mr. Biskner and Mr. Sanford will continue as part of the Redwire team
Founded in 2009, LoadPath specializes in the development and delivery of advanced engineered products and services for launch vehicles and satellite manufacturing. The company’s capabilities include multi-payload launch adapters, structural testing, deployable space structures, spacecraft thermal management components, and thermal analysis. LoadPath’s technology has supported more than 20 spaceflight missions with government customers such as NASA and the Department of Defense, and commercial customers. Based in New Mexico, LoadPath is a trusted technology developer with more than 200 flight articles delivered.
LoadPath marks the fifth acquisition by Redwire this year. Redwire was formed in June 2020 following the strategic acquisition of Deep Space Systems and Adcole Space by AE Industrial Partners, LP, a private equity firm specializing in aerospace, defense and government services, power generation, and specialty industrial markets. Redwire subsequently acquired Made In Space, a leader in on-orbit space manufacturing technology, in June, and Roccor, a premier manufacturer of deployable space structures, in October.
“We’re thrilled to support the ongoing growth of Redwire, as it continues on its course to become the leader in mission critical solutions for the space industry,” said Kirk Konert, Partner at AE Industrial Partners. “LoadPath brings new technologies to the organization, allowing Redwire to better serve its customers.”
PricewaterhouseCoopers LLP served as the financial advisor and Kirkland & Ellis LLP served as the legal advisor to Redwire. Butler Snow was the legal advisor and Pulakos CPAs served as the financial advisor to LoadPath.
About Redwire
Redwire is a new leader in mission critical space solutions and high reliability components for the next generation space economy. With decades of flight heritage combined with the agile and innovative culture of a commercial space platform, Redwire is uniquely positioned to assist its customers in solving the complex challenges of future space missions. For more information, please visit www.redwirespace.com.
About LoadPath
LoadPath specializes in the development and delivery of aerospace structures, mechanisms, and thermal control solutions. The company performs design, analysis, testing, and fabrication to advanced technologies through the complete concept-to-flight development cycle. Specific product and services include multiple payload adapters, deployable structures and booms, thermal management technology, spacecraft mechanisms, CubeSat components and launch accommodations, Veritrek, ground support equipment, and testing services. For more information, please visit www.loadpath.com.
About AE Industrial Partners
AE Industrial Partners is a private equity firm specializing in aerospace, defense and government Services, power generation, and specialty industrial markets. AE Industrial Partners invests in market-leading companies that can benefit from its deep industry knowledge, operating experience, and relationships throughout its target markets. AE Industrial Partners is a signatory to the United Nations Principles for Responsible Investment. Learn more at www.aeroequity.com. (Source: PR Newswire)
15 Dec 20. Oshkosh Corporation to Acquire Pratt & Miller. Strengthens key technologies and strategic growth opportunities. Oshkosh Corporation (NYSE:OSK), a leading innovator of mission-critical vehicles and essential equipment, today announced that it has entered into a definitive agreement to acquire Pratt & Miller, which specializes in advanced engineering, technology and innovation across the motorsport and multiple ground vehicle markets, for a cash-free, debt-free purchase price of $115m. Additional terms of the transaction were not disclosed. Pratt & Miller will maintain its name, team members, facilities and branding elements.
Founded in 1989 and headquartered in New Hudson, Mich., Pratt & Miller brings over 30 years of experience solving its customers’ most complex and technical challenges. Led by its world-class engineering and motorsports heritage, Pratt & Miller has made significant advances in dynamic growth areas such as artificial intelligence, robotics, autonomous and connected systems and electrification.
“We look forward to welcoming the Pratt & Miller team to Oshkosh Corporation,” said John Pfeifer, Oshkosh Corporation President and Chief Operating Officer. “We believe combining Pratt & Miller’s engineering expertise with Oshkosh’s innovation and operational strengths will enable us to better serve customers and position our Company for growth.”
“Pratt & Miller’s motorsports heritage has created a culture of speed and agility that has defined our success. Oshkosh is an ideal partner for us to apply that mindset to some of the most significant challenges facing customers today,” said Matt Carroll, Pratt & Miller Chief Executive Officer. “Together, we expect to grow our decade-long partnership and expand our pipeline of new business opportunities. We look forward to learning from one another and continuing to innovate to bring market-leading products to our customers.”
The transaction is expected to close in the first calendar quarter of 2021 and is subject to customary closing conditions.
About Oshkosh Corporation
At Oshkosh (NYSE: OSK), we make innovative, mission-critical equipment to help everyday heroes advance communities around the world. Headquartered in Wisconsin, Oshkosh Corporation employs more than 14,000 team members worldwide, all united behind a common cause: to make a difference in people’s lives. Oshkosh products can be found in more than 150 countries under the brands of JLG®, Pierce®, Oshkosh® Defense, McNeilus®, IMT®, Frontline™, Jerr-Dan®, Oshkosh® Airport Products and London™. For more information, visit oshkoshcorp.com.
®, ™ All brand names referred to in this news release are trademarks of Oshkosh Corporation or its subsidiary companies. (Source: BUSINESS WIRE)
15 Dec 20. Iris Automation Closes $13m in Series B Venture Capital Financing. Computer vision-based technology innovator to advance unmanned air safety through expanded use cases and market channels.
Iris Automation has closed a successful round of $13m in Series B venture capital funding. Founded in 2015, Iris Automation is a computer vision technology company pioneering the development of advanced detection systems used to help provide Detect-and-Avoid (DAA) capabilities that enable safe commercial drone operations including scalable Beyond Visual Line of Sight (BVLOS) missions.
Iris Automation
The funding includes follow-on investment by Bessemer Venture Partners, Bee Partners, OCA Ventures, and new investors Sony Innovation Fund and Verizon Ventures. The addition of this strategic investment acknowledges the criticality of collision avoidance and safety technology to the future aviation community.
Quote from Jon Damush, CEO of Iris Automation
“We are incredibly excited about this show of support from our current and new investors, particularly during this unprecedented global pandemic. We have always known that our approach to the problem solves a critical missing link for unpiloted systems, and plan to deploy this capital to further expand our capabilities and improve safety for unpiloted systems as global regulators work to integrate UAS into existing airspaces. The investment clearly illustrates investor confidence in growth of the sector and specifically Iris’ role in the ecosystem.”
With this investment, Iris Automation will:
- Expand machine learning and AI capabilities and testing to improve and extend the Casia system’s performance envelope.
- Continue to participate in the Federal Aviation Administration’s BEYOND program, focused on enabling Beyond Visual Line of Sight operations with Unmanned Aircraft Systems (UAS) to advance airspace integration. BEYOND will demonstrate operations that are repeatable, scalable and economically viable with specific emphasis on infrastructure inspection, public safety operations and small package delivery.
- Continue to improve detection and classification capabilities of the Casia system to support expanded use cases, operational environments and aircraft compatibility.
- Build out fulfillment capabilities to produce, deliver and support the growing installed base of aircraft OEM partners and end use customers, and enter new markets associated with aircraft safety.
Quote from David Cowan, Bessemer Venture partner and Iris board member
“We see explosive demand in energy, agriculture, construction, security and logistics for long-range and remotely operated drones. Iris’ collision avoidance product, the only on-board, visual aircraft recognition system to receive government approval, provides a critical piece of air safety needed to unlock this enormous market.”
Quote from Tess Hatch, Bessemer Venture vice president and Iris board member
“One day drones will ubiquitously operate in our airspace making our lives safer, easier, and better, and Iris Automation is the key to unlocking the full potential of commercial operations. Enabling drones to fly beyond visual line of sight helps expand a myriad of operations from inspecting oil pipelines and railroad tracks to agricultural farms to last mile delivery, and makes all of those operations much more efficient and less expensive.”
Quote from Gen Tsuchikawa, CEO and Chief Investment Officer at Innovation Growth Ventures and the Sony Innovation Fund (SIF), Corporate Vice President, Sony Corp.
“Iris Automation is pushing the innovation envelope by using machine vision and on-board AI to bring unparalleled safety to the unmanned aircraft industry, which will fully unlock the commercial drone market beyond visual line-of-sight. This further builds upon Sony Innovation Fund’s drone investment thesis, and we believe the company’s scalable technologies makes it uniquely positioned to usher a new era in autonomous aviation.”
The investment reflects the continued growth at Iris Automation and the opportunities in the global commercial drone market space. Aviation industry veteran and entrepreneur Jon Damush recently joined Iris Automation as CEO, and the company also recently conducted a live drone flight demonstration for the City of Reno Fire Department of its Casia onboard (DAA) collision avoidance system, under the FAA’s UAS Integration Pilot Program (IPP). This closely followed Transport Canada also having issued the second Special Flight Operations Certificate (SFOC) for BVLOS flights in uncontrolled airspace utilizing infrastructure masking and Iris Automation’s Casia system to MVT Geo-solutions.
About Iris Automation
Iris Automation is a safety avionics technology company pioneering Detect-and-Avoid (DAA) systems and aviation policy services that enable customers to build scalable Beyond Visual Line of Sight (BVLOS) operations for commercial drones; operations unlocking the potential of countless industries. Iris’ DAA system runs entirely onboard Unmanned Aircraft Systems (UAS), allowing them to fly safely at long distances and without human intervention. We work closely with civil aviation authorities globally as they implement regulatory frameworks ensuring BVLOS is conducted safely, partnering on multiple FAA BEYOND UAS Integration Programs and Transport Canada’s BVLOS Technology Demonstration Program. Iris is recognized by AUVSI as the number one Technology and Innovation Leader for 2020. Visit www.irisonboard.com.
About Bessemer Venture Partners
Bessemer Venture Partners is the world’s most experienced early-stage venture capital firm. With a portfolio of more than 200 companies, Bessemer helps visionary entrepreneurs lay strong foundations to create companies that matter, and supports them through every stage of their growth. The firm has backed more than 130 IPOs, including Shopify, Yelp, LinkedIn, Skype, LifeLock, Twilio, SendGrid, DocuSign, Wix, Fiverr, and MindBody. Bessemer’s 16 investing partners operate from offices in Silicon Valley, San Francisco, New York City, Boston, Israel, and India. Follow @BessemerVP and learn more at bvp.com. (Source: PR Newswire)
15 Dec 20. Deepwave Digital Raises $3m in Series Seed Funding to Accelerate Growth in the 5G, Defense, and Aerospace Markets. Deepwave Digital announced today the closing of their $3m series seed investment round led by Northrop Grumman and Jumpstart NJ Angel Network. Deepwave Digital provides enterprise-level sensor solutions for a wide range of radio frequency (RF) and wireless system companies. Their software-defined technology merges traditional processes with the latest advances in artificial intelligence (AI) and deep learning to solve the most challenging problems in telecommunications, spectrum management, defense, and aerospace.
Other participants in the series seed funding round include Robin Hood Ventures, Ben Franklin Technology Partners, and Lehigh Valley Angel Investors. This investment adds to the $1.2M previously raised.
Deepwave’s Artificial Intelligence Radio Transceiver (AIR-T) product line has shown to be a valuable asset for a wide range of aerospace and defense applications including cognitive radio, signal detection, classification, and localization. Deepwave Digital is working with Northrop Grumman to integrate Deepwave’s technology and innovations in edge compute AI into an array of sensor systems which improve capabilities and longevity.
“We’re evolving the way we think and the way we work, to use emerging commercial technologies to provide our warfighters the most advanced capabilities more quickly,” said Chris Daughters, Vice President of Research, Technology and Engineering, Aeronautics Systems, Northrop Grumman. “Our partnership with Deepwave Digital combined with our advanced autonomy expertise will enhance the agility, speed, and affordability our customers expect.”
In addition to supplying core technologies to the aerospace and defense markets, Deepwave is a critical component in the 5G Citizens Broadband Radio Service (CBRS). CBRS is a shared spectrum network that changes the traditional methods of spectrum allocation by allowing the 3.5 GHz band to be simultaneously utilized by both existing federal users and commercial services such as private LTE. CBRS has the potential to transform local wireless networks as much as the development of Wi-fi and has resulted in nearly $4B raised at auction in new FCC spectrum licenses to date. Deepwave’s AIR-T hardware, combined with their Radar Signal Classifier (RSC) neural network are being used as the Environmental Sensing Capability (ESC) sensor in the Key Bridge Wireless CBRS network. This sensor provides customers in a wide area the ability to know when priority users are present and efficiently share spectrum. According to Jesse Caulfield, CEO of Key Bridge Wireless, “Deepwave’s AI-based receiver technology coupled with the Key Bridge’s ESC service provides a robust solution to detect the presence of priority users in the 3.5 GHz band. Our advanced signal detectors were recently certified by the US Government with a 100% success rate. The deep learning approach also reduces false alarms and contributes to a trusted, stable spectrum sensing capability.”
Deepwave Digital is located in Philadelphia, Pennsylvania (USA) and develops integrated hardware/software solutions to improve the performance of wireless systems using deep learning. Deepwave’s AIR-T product line offers customers the most user-friendly software defined radio for implementing neural networks within wireless radios. (Source: PR Newswire)
15 Dec 20. Chemring blasts through earnings expectations.
- Underlying operating profit of £55m came in 4 per cent ahead of analyst consensus
- Fellow defence company Cohort saw its half-year adjusted operating profit rise despite a drop in sales
As we have already seen with the likes of QinetiQ (QQ.) and Avon Rubber (AVON), the defence sector continues to be a bright spot amid the Covid carnage. Chemring’s (CHG) underlying operating profit rose by close to a quarter in the year to 31 October, to £55m, coming in 4 per cent ahead of consensus analyst expectations. The earnings beat saw the group’s shares jump by over a tenth, completing their rebound to above pre-pandemic levels.
Demand for the group’s defence equipment continues to grow. Chemring pulled in £436m of new orders during the year – 6 per cent higher than a year earlier – and it now has visibility over 78 per cent of expected revenue for 2021. This has been driven by the US market, with the larger ‘countermeasures and energetics’ division extending its contract with the US Department of Defense (DoD) to supply defensive flares for the F-35 Jet. Meanwhile, the ‘sensors and information’ business has received $200m (£150m) of additional orders for the ‘indefinite delivery, indefinite quantity’ (IQIQ) contract for the Husky mounted detection system (HMDS), which should underpin the programme’s revenue through to 2024.
With free cash flow more than doubling to £51m, Chemring’s net debt has declined by almost two-fifths to £48m, equivalent to just 0.65 times cash profits (Ebitda). This has supported a higher dividend payment.
Looking ahead, the main concern for the entire industry is the path of global defence spending post-pandemic. While there are concerns that the incoming Biden administration will spend less generously on defence, the shift towards more modern capabilities does play into Chemring’s wheelhouse. Its Roke engineering businesses has already secured its first electronic warfare order with the DoD for the tactical ‘Resolve’ system.
Chemring is less exposed to the UK Ministry of Defence (MoD), which accounts for less than 5 per cent of its revenue. But it should nonetheless benefit from the £16.5bn funding boost over the next four years. The focus of the UK’s plans should also bode well for defence technology group Cohort (CHRT) as its areas of expertise include cyber warfare, artificial intelligence and a focus on naval capability.
“I am optimistic about the future as far as the UK market is concerned,” says Cohort chief executive Andy Thomis. “Of course, we have domestic markets in Portugal and Germany and export markets around the world as well. But there is nothing going on which suggests that these are in contraction, particularly in Asia.”
Unlike Chemring, the group’s revenue dipped by a tenth year on year in the six months to 31 October, to £54m. This came as its largest business, tracking and targeting systems supplier Chess, delivered fewer counter-drone systems to export customers and advanced electronics provider MCL saw lower demand for equipment from the UK MoD.
Despite the drop in sales, adjusted operating profit climbed by 8 per cent versus a year earlier to £4.3m as electronic warfare specialist MASS benefited from more higher-margin service activity for the MoD. Engineering business SEA also returned to profitability, although restructuring charges, a loss on disposal of SEA’s subsea business and a write-down of intangible assets meant that Cohort swung from a £364,000 statutory operating profit to a £42,000 loss.
The order book has expanded by almost a fifth since the April year-end to £219m, underpinning £71m of revenue for the second half. Providing long-term visibility, the group also has £51m of orders for beyond 2023. New order wins were led by Chess – which finished the first half with a record closing order book – laying the groundwork for a better second half.
Excluding lease liabilities, net debt has risen by 30 per cent since the April year-end to £6.1m, although this is expected to fall back to around £5m notwithstanding the €11.3m (£10.3m) acquisition of naval sonar business ELAC that completed earlier this month. Mr Thomis says ELAC is “a very significant step forward for the next stage of our development”. While it will not impact the bottom line this year, it is expected to boost EPS by 2 to 3 per cent over the next two years.
Both Cohort and Chemring benefit from the stability and visibility of long-term government contracts. Even if there are defence cuts to come, they are well positioned to capitalise on modernisation efforts and the shift away from conventional warfare. Buy on both counts.
Last IC View: Cohort: Buy, 571p, 23 Jul 2020; Chemring: Buy, 256p, 4 Jun 2020. (Source: Investors Chronicle)
14 Dec 20. Honeywell Acquires Sine Group To Create A Mobile Platform For Honeywell Forge Offerings And To Enhance Connected Buildings Solutions.
– Sine’s visitor management software, designed with mobile users in mind, will augment Honeywell’s Connected Buildings offerings with expanded safety, security and compliance capabilities
– Sine’s technologies for mobile and software as a service will provide Honeywell with opportunities to expand Honeywell Forge’s capabilities for mobile devices.
Honeywell (NYSE: HON) today announced that it has acquired Sine Group, an Adelaide, Australia-based technology and software as a service (SaaS) company that provides visitor management, workplace and supply chain solutions that are readily accessible with mobile devices. Sine’s technologies will support a cloud-based mobile platform for Honeywell Forge, Honeywell’s enterprise performance management offering, and Sine’s software will augment Honeywell’s Connected Buildings offerings with expanded safety, security and compliance capabilities.
Honeywell will also expand on Sine’s features and solutions and make Sine’s offerings available to more customers, globally.
“Sine’s innovative and intuitive self-service software, combined with Honeywell Forge, will enable our customers to return to work and help keep their employees and customers safe,” said Que Dallara, president and CEO, Honeywell Connected Enterprise. “We will leverage Sine’s technological know-how and expertise to create a mobile extension of Honeywell Forge while also substantially enhancing our Connected Buildings offerings to enable even greater levels of safety and productivity for building occupants and their guests.”
Sine’s intuitive mobile application enables touchless check-in by mobile phone across a wide variety of industries including commercial real estate, pharma, education, industrial, logistics, construction and others. Sine’s SaaS solution provides companies with capabilities to help improve safety, security, and compliance across their facilities for visitors, building occupants and workers. Sine has also built a suite of features to enable organizations to manage their COVID-19 return-to-workplace protocols, including pre-screening, thermal camera integrations, capacity management and contact tracing.
“The combination of Sine’s visitor management software and Honeywell’s enterprise performance management software is a powerful one for businesses globally,” said Antony Ceravolo, founder and chief executive officer of Sine. “Sine’s solutions will bolster Honeywell’s capabilities to help organizations operate more efficiently and safely. Sine will benefit from Honeywell’s global scale and buildings management expertise. Together, with an accelerated roadmap, we will deliver a deeper set of solutions globally, while continuing to grow our ecosystem of partners and third-party integrations.”
Honeywell Forge is purpose-built on a native edge-to-cloud, data-driven architecture designed to accelerate digital transformation of operations. For industrial businesses, this enterprise performance management SaaS application provides capabilities for facility, plant, or warehouse managers to help make their operations smarter, leaner and more efficient. Terms of the deal were not disclosed, and there is no change to Honeywell’s 2020 financial guidance as a result of the acquisition.(Source: PR Newswire)
14 Dec 20. Thales signs €1.5bn climate-linked revolving credit facility. On 7 December 2020, Thales signed a new €1.5bn multi-currency revolving credit facility with a group of 17 banks to replace the existing undrawn credit facility signed on 19 December 2014.
This backup line of credit can be used to cover general corporate purposes (including backup for the NeuCP* programme) and has a term of three years with two one-year extension options.
Fully in line with its commitments to corporate responsibility, the company has taken the initiative to incorporate the achievement of climate goals into the terms and conditions of its new revolving credit facility. Under this arrangement, the cost of the credit facility will be linked to the reduction of Thales’s carbon footprint (Scopes 1, 2 and 3) in line with the Group’s strategy for a low-carbon future and its commitments for the next 10 years. The cost of the revolving credit facility will rise or fall depending on the company’s performance against its emissions reduction targets.
Crédit Agricole Corporate & Investment Bank is acting as documentation agent, facility agent and ESG coordinator. BBVA, Banco Santander, BNP Paribas, Commerzbank, CM-CIC, Deutsche Bank, HSBC, JP Morgan, Natixis, Société Générale Corporate & Investment Banking and Unicredit are taking part as mandated lead arrangers and bookrunners, while ANZ Bank, Barclays Bank, Citibank et Standard Chartered Bank are taking part as mandated lead arrangers. * NeuCP: Negotiable EUropean Commercial Paper
08 Dec 20. SpaceLink Corporation Forms and Names Their CEO. SpaceLink has formed a corporation and named satellite communications innovator and industry visionary, David Bettinger as Chief Executive Officer. With significant spectrum rights in the Medium Earth Orbit (MEO), and the backing of Electro Optic Systems — a wholly owned subsidiary of Electro Optic Systems Holdings Limited of Australia (EOS) — SpaceLink will provide a secure, continuous, high-capacity data relay service between near Earth space and the ground.
Mr. Bettinger has 30 years of experience in satellite communications systems engineering, and has played key roles at OneWeb, iDirect and Hughes Network Systems. As CEO, he will assume responsibility for the design, delivery, and operations of the SpaceLink MEO Satellite Relay System.
Mr. Bettinger was a founding member of the OneWeb team and was responsible for the technology roadmap of the end-to-end communications network including the satellite payload, user terminals, and ground segment. As Vice President of the Advanced Development Group, he led a team of satellite, aerospace, and communications engineers to design its first- and second-generation systems.
EOS previously announced that it acquired significant spectrum rights in MEO and completed all U.S. Government approvals to deploy a constellation of three communication satellites that will relay data and imagery to meet pent up demand for fast and affordable access to the growing flood of data available from space.
SpaceLink has strong financial backing, enviable bandwidth, and a roadmap to benefit from EOS’ advanced optical communications technology to unlock massively scalable capacity in its next-generation system. The relay system will optimize access to imagery from Earth Observation satellites and will provide continuous communications for human spaceflight. It will provide a secure connection for the defense and intelligence communities and fast data transfer for space agencies.
“The innovative architecture of the SpaceLink constellation means that at least one of the three relay satellites is always in sight of a spacecraft in LEO and a dedicated gateway Earth station,” said David Bettinger, CEO of SpaceLink. “With the support of EOS we are providing an important resource with speeds and capacity to bring sensitive data down to secure networks anywhere in the world within milliseconds.”
Executive Comment
“SpaceLink is an important part of the EOS strategic ecosystem, which brings synergies to all three of our business units – Space Systems, Defence Systems, and Communications Systems,” said Glen Tindall, Chief Executive Officer of EOS Communications Systems. “David’s track record of transforming startup ventures into a competitive position makes him the ideal CEO to lead the SpaceLink effort to meet the growing demand for continuous connectivity from LEO.”
SpaceLink will help advance humanity to a new age of space commerce, exploration, environmental awareness, and security. The Always in Sight™ data relay system provides global coverage to empower space system operators to maximize use of their assets. SpaceLink Corporation is headquartered in the Washington DC area, with offices in Silicon Valley and secure facilities collocated with sister company EOS Defense Systems USA, Inc. in Huntsville, Alabama. It is a wholly owned subsidiary of Electro Optic Systems Holdings Limited, a public company traded on the Australian stock exchange. (Source: Satnews)
07 Dec 20. Trial Date Set For The SES + Intelsat Legal Dispute. Intelsat’s bankruptcy court on December 3 said the dispute between SES Americom and Intelsat would go to trial next June — the news coincides with a 126-page filing to Intelsat’s court from SES that pulls no punches in its claims.
At the heart of the legal dispute between SES and Intelsat is an argument over Intelsat’s handling of an alleged 50-50 agreed division within the C-Band Alliance (CBA) and how the FCC ‘incentive’ payments over the reallocation of both satellite operators’ C-band frequencies would be allocated. SES is claiming $1.8bn from Intelsat.
The FCC-organized auction over the sale of the spectrum is now occurring.
The SES vs Intelsat legal action kicked off with a July 14 claim lodged by SES where SES claimed damages and which included alleged breaches of contract, fiduciary duties and unjust enrichment. Intelsat firmly rejected the claim and, in October, added in its own allegations that SES had “improperly shared” a confidential report with the FCC and that the SES claims are without merit.
SES responded on December 4 and described its action against Intelsat as being “about corporate desperation, greed, and dishonesty… Saddled with crippling debt and facing bankruptcy, Intelsat betrayed its faithful contractual partner in a brazen attempt to steal approximately $450m. This case will hold Intelsat accountable for its unlawful and bad faith conduct”.
The SES filing to the court explains that for 16 months,the pair worked closely together and with a 50-50 agreement – SES claims – firmly in place. SES supports its claim with “proofs” and a slew of documents and describes how the agreement was “repudiated” and renegade upon by Intelsat. “The 50-50 split was the cornerstone of the Agreement, with SES and Intelsat sharing control over the CBA and the vast majority of its proceeds equally, and the remaining proceeds going to the two other satellite operators in the CBA and covering the costs of the CBA. Without the 50-50 split, SES would not have entered into the Agreement,” stated the SES document.
The court filing adds that even following the FCC’s decision to hold its own auction, the two parties continued to work together for many months and reaffirmed the 50-50 split in words and conduct. Numerous documents were jointly filed to the FCC, some two dozen press releases issued, FCC officials met, joint technical work undertaken, and the commencement of updating the 50-50 Agreement started while retaining the 50-50 split.
The SES document explains how there was a celebratory dinner between Intelsat’s CEO Stephen Spengler and SES’s CEO Steve Collar following the FCC decision. But then, SES alleges, Intelsat reversed course. “At that critical time, Intelsat was facing severe financial distress, including a crippling amount of debt that exceeded $15bn, and spiralling toward bankruptcy. The temptation to steal hundreds of millions of dollars from SES proved too great,” stated the filing.
The document continues in similar vein, describing Spengler “contritely” making a telephone call to Collar at 3:00 a.m. (EST) one morning and saying he had “a problem” and that the Agreement was no longer binding. “Mr. Collar was shocked. Intelsat’s position was a sham and pretext. Not only was it contrary to the parties’ course of performance under the Agreement, but also the written terms of the Agreement itself.”
“SES now seeks to recover for the massive harm that Intelsat’s breach will cause and for Intelsat’s intentional, wanton, and bad faith conduct. SES’s claims should be allowed in full, and Intelsat’s claim objection and motion for equitable subordination should be dismissed,” continued the SES filing.
The key dates in the action now are:
- February 7: The parties must make pre-trial disclosures
- January 11: Third-party documents discovery
- March 19: Expert testimony disclosed
- April 30: All fact discovery completed
- May 14: Rebuttals disclosed
- May 28: Motions filed
- June 7: Arguments narrowed, by agreement
- June 14: Exhibits declared, and witnesses filed
- June 28: Trial date, if not settled prior
(Source: Satnews)
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TCI International, Inc., is a wholly-owned subsidiary of SPX Corporation. TCI provides turn-key solutions for spectrum management and monitoring, direction finding, geolocation and communications intelligence to civilian, government, military and intelligence agencies as well as antennas for communications and high-power radio broadcasting. TCI is headquartered in Fremont, California, USA. For more information, visit www.tcibr.com.
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