Expected to close in the fourth quarter, the deal would help Terran dodge a cash-and-debt cliff that the company is staring down. Terran’s cash reserves were less than $15 million at the end of July, it reported in a filing on Monday, and it also has about $300 million in debt.
The small spacecraft maker went public via a special purpose acquisition company in early 2022 at a $1.8 billion valuation. Like several other space stocks that debuted in the past few years, the yet-unprofitable company has been hit hard by the shifting risk environment in the market.
Lockheed Martin is already a significant stakeholder in Terran Orbital, having bought in during the company’s SPAC process and again in late 2022. Lockheed Martin is also an important customer for Terran, making up 70% of Terran’s $30.4 million in revenue during the second quarter.
Terran signed a blockbuster spacecraft production contract 18 months ago from prospective satellite communications operator Rivada Space Networks, worth $2.4 billion for 300 satellites. But the deal has yet to drive meaningful funds for Terran, which reported that it recognized just $6.2 million from the Rivada agreement in the first half of this year.
On Monday, Terran said it was removing the Rivada deal from its total contract backlog — which reduced the backlog of orders by 88%, from $2.7 billion to $312.7 million. Of its non-Rivada orders, 91% of Terran’s contracts are programs associated with Lockheed Martin.
