WASHINGTON — Rocket Lab announced plans March 11 to buy its optical communications terminal supplier Mynaric, which entered restructuring last month following production delays and supply chain issues.
The deal is contingent on Germany-based Mynaric completing its restructuring process, which would eliminate all publicly traded shares and transfer full ownership to a lender affiliated with U.S. investment firm PIMCO.
U.S.-headquartered Rocket Lab would then acquire a majority stake in Mynaric for an initial $75 million, payable in cash or shares, with an additional $75 million tied to revenue targets.
The initial purchase price is a fraction of the more than $300 million invested in Mynaric to date, Rocket Lab noted in a news release, and would give the launch provider, spacecraft maker and satellite component supplier a foothold in Europe to chase growth opportunities in the region.
The deal would also further vertically integrate a company originally founded in 2006 with a focus on small satellite launch services.
“Rocket Lab would acquire extensive production assets, Intellectual Property, product inventory and committed backlog related to satellite-to-satellite optical connectivity solutions for next generation constellations,” the company said in the news release, “augmenting Rocket Lab’s already extensive portfolio of satellite components, subsystems and software.”
Optical terminals enable satellites to send and receive high bandwidth data to and from each other using laser beams. They are integral to the mesh satellite network the U.S. Space Development Agency (SDA) is planning to enhance communications, surveillance and missile tracking capabilities.
Mynaric supplies optical terminals as a subcontractor to Rocket Lab under its $515 million prime contract with SDA to produce 18 satellites for the Tranche 2 Transport Layer-Beta. The company is also supplying these terminals to other manufacturers, including Northrop Grumman, York Space and Loft Federal, for their own SDA contracts supporting the agency’s mesh network.
However, Mynaric said it entered restructuring under German law last month after extended product development and higher-than-expected costs left it unable to generate sufficient earnings to service its debt.
The company said it had heavily invested in production, manufacturing and market expansion for its CONDOR Mk3 optical terminal, but delays drove up costs and cash burn.
“The Company remains in pre-profit state and despite cash-in from customers as milestones were achieved, earnings have recently not been sufficient to achieve a sustainable positive operating result that is able to service the debt burden,” Mynaric said Feb. 7.
Demand for optical communications is high in the space sector, industry executives said March 10 during the Satellite Conference here, but satellite makers continue to struggle with sourcing laser communication systems, along with propulsion and radiation-hardened components, due to limited availability and high costs.
Through past acquisitions, Rocket Lab said it has scaled satellite subsystems previously limited to low production volumes and long lead times. It plans to do the same with Mynaric’s optical terminals to meet growing demand from large constellations and an expanding customer base.
Mynaric said it expects to complete its restructuring process before the end of June.