Israeli Government Intervention Likely to Void Deal with U.S Satellite Contractor Loral
Last month, Israeli satellite operator Spacecom announced it awarded Loral with a contract to design a new communication satellite, choosing the U.S.-based company over Israeli state-owned aerospace contractor IAI
Just one month after Israel-based satellite operator Spacecom announced it has awarded Palo Alto, California-based Space Systems/Loral LLC with a contract to design and manufacture its new communication satellite AMOS-8, an announcement concerning a letter sent by the Israeli government may indicate the deal is far from finalized.
In a filing to the Tel Aviv Stock Exchange on Monday, Spacecom, also known as Space Communication Ltd., announced it has received a letter from a government official on Sunday, informing the company that the state intends to “work towards placing a satellite by Israel Aerospace Industries Ltd. (IAI),” a state-owned company, at the geostationary position intended for AMOS-8, which belongs to Israel.
IAI has built five of Spacecom’s seven satellites to date. It was one of four companies vying for the AMOS-8 contract but was unable to make a competitive offer. Following the announcement of Loral as the winner, IAI announced in March that it considers manufacturing, launching and operating a satellite of its own, using Israeli government funds. If successful, Spacecom could potentially lose the commercial contracts associated with AMOS-8.
Spacecom declined to comment.
In 2016, IAI’s AMOS-6 satellite was destroyed in a SpaceX launchpad rocket explosion. Spacecom was the intended operator. As a result, a planned $285 million acquisition of Spacecom by Shanghai-listed telecommunications technologies supplier Beijing Xinwei Technology Group Ltd. was canceled.
In March, an IAI spokesperson said that the Israeli government backed away from financially supporting IAI’s bid and as a result “IAI did not stand a chance to compete with the offers made by foreign companies.”
Earlier this month, after signing the $112 million deal with Loral, for which it lacks the necessary funds, Spacecom announced plans to raise $110 million through bond options and collateral bonds.