[11-14-07 – Satellite News] While Mobile Satellite Ventures’ (MSV) financial performance “remains on track,” the company only has enough cash on hand to last through June and is negotiating with vendors, including satellite manufacturer Boeing, to delay payments, MSV executives said Nov. 14.
“Having such a short funding runway is a no doubt concern to investors, particularly given the challenging financing and credit markets,” Scott Macleod, the company’s CFO, said during a telephone conference to discuss the company’s 2007 third quarter financial performance. “We share that concern and our pursuing alternative means to extend our liquidity and capital resource.”
    Among those efforts are pushing payment schedules from 2008 in 2009 and beyond, Macleod said. In the 2007 third quarter, MSV paid Boeing $51.1 million under a contract signed in early 2006 for the construction of the MSV-1 and MSV-2 satellites.
    MSV estimates the total cost to develop and construct the two satellites, including launch, launch insurance and associated ground segment, will be $1.1 billion, the company said in a Nov. 11 filing with the U.S. Securities and Exchange Commission. The Boeing contract also included a third satellite, MSV-SA, which MSV deferred construction on in September 2006. The option to restart construction expires Nov. 8, 2008, but the company does not have plans to resume construction, MSV said.
    MSV’s license from the U.S. Federal Communications Commission also requires a spare satellite be constructed, which would cost an estimated $250 million. MSV has applied for a waiver of this requirement based on a proposal to use the two new North American satellites as in-orbit spares for each other, the company said.
    Other MSV efforts to conserve cash or raise financing include the sale of some of SkyTerra’s stake in TerreStar, reduction of discretionary spending such as some L-band development testing and discussions with carriers who may be interested in the company’s spectrum.
    While MSV is seeking to delay payments, the development of MSV-1 and MSV-2 remain on track, Alex Good, the company’s CEO and president, said. Payload and bus integration testing will begin in the first half of 2008, with spacecraft integration and testing scheduled for the second half of the year. The satellites remain on track to be launched in 2009 and 2010, respectively, he said
    In the third quarter, MSV recorded revenues of $9.1 million, with $7.2 million from services and $1.7 million from equipment sales. The company posted an operating loss of $17.9 million, up from $16.3 million in the 2006 third quarter.