Some Details Emerge on Sea Launch Investor Group

By Peter B. de Selding

Sea Launch President Kjell Karlsen. Credit: Space News photo by Abby Brack Enlarge Image

PARIS — The unidentified investor group providing initial financing to Sea Launch Co., the commercial launch provider that is in Chapter 11 bankruptcy proceedings, includes an Isle of Man-based company created in 2005 to build a space tourism business using existing Russian hardware, according to industry officials.

The company, Excalibur Almaz Ltd., includes on its board several people who are well-known in the U.S. space industry, according to the company’s 2009 registration statement with the Isle of Man government. The company’s directors, according to the statement, include George W.S. Abbey, former director of NASA’s Johnson Space Center; J. Buckner Hightower, described in company documents as chief fundraiser; Arthur M. Dula, who has a long history of dealing with Russian space ventures; and Leroy Chiao, a former NASA astronaut.

Excalibur Almaz officials did not return e-mails seeking confirmation of whether they are behind the company called Space Launch Services LLC, which on Nov. 10 was selected to finance Sea Launch Co. as it reorganizes under the auspices of the Delaware Bankruptcy Court.

Bankruptcy court records show that Space Launch Services, which lists a Houston address, has been approved to provide $5 million immediately to Long Beach, Calif.-based Sea Launch. Sea Launch President Kjell Karlsen said Space Launch Services will be providing another $7.5 million in cash in early December at the next court hearing.

In a Nov. 11 interview, Karlsen declined to identify who is behind Space Launch Services beyond insisting that the company does not include Sea Launch customers. He said the backers are strategic, not financial, and ultimately want to manage Sea Launch through bankruptcy and a return to commercial activity. He specifically said they were not private-equity investors but companies with a long-term interest in the space industry.

“These are people who are interested in access to space,” Karlsen said. “They believe Sea Launch will give them that. They are people who have worked in the past with one of our partners and whom we know.”

Karlsen said the $12.5 million promised by Space Launch Services should be enough to carry Sea Launch through February. He said he still expects Sea Launch to emerge from Chapter 11 bankruptcy in the spring.

The world’s three largest commercial satellite fleet operators — Intelsat of Bermuda and Washington, SES of Luxembourg and Eutelsat of Paris — all submitted statements to the court on behalf of Sea Launch, Karlsen said. In addition to wanting access to a broader supply of commercial rockets, all three of these companies are among Sea Launch’s unsecured creditors because of launch contracts that are now at risk in the Chapter 11 proceeding.

Karlsen said Space Launch Services is one of three investor groups that had offered to provide what is known in bankruptcy proceedings as debtor-in-possession (DIP) financing. DIP finance providers generally position themselves to take an ownership stake in the bankrupt company, and Karlsen said that is the case for Sea Launch.

With the Nov. 10 approval of the bankruptcy court, Sea Launch accepted Space Launch Services’ offer above the other two because it carried far more favorable interest and payment terms, Karlsen said.

Excalibur Almaz was created in 2005 to refurbish Russia’s Almaz spacecraft and transform it into a capsule for week-long trips to space by paying customers. The company said it owns “several Almaz spacecraft, including reusable re-entry vehicles and space stations.”