Boeing, Lockheed Gaze Abroad as Ex-Im Closure Costs them Satellite Sales

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PARIS — Satellite builders Boeing and Lockheed Martin said they would use their global presences to create at least the semblance of satellite production facilities outside the United States to tap into export-credit agency funding if the U.S. Export-Import Bank did not reopen.

Speaking Sept. 16 here during the World Satellite Business Week conference, the two companies said they already do more than enough business in Canada and Europe to be able to source satellite orders there even if the work continues to be done at their California operations.

The extent to which export credit agency financing is needed and available to U.S. companies assuming a legally acceptable identity outside the United States was a topic of regular debate during the conference.

Thomas Choi, chief executive of Satellite fleet operator ABS of Hong Kong, which suspended a satellite order from Boeing Space and Intelligence Systems of El Segundo, California, in the wake of the June 30 closure of the Ex-Im Bank, said Ex-Im and other export credit agencies offer low interest loans and, above all, payback schedules that do not start until years after the satellite is in service. These are not available from commercial banks, he said.

Choi said he was working with Boeing and others on alternative financing for the company’s ABS-8 telecommunications satellite.

The Ex-Im shutdown, which may be of short duration if the U.S. Congress finds a way to re-authorize the bank this fall, has created an opportunity for non-U.S. satellite builders.

Regine Schapiro, head of the energy, telecom and space unit at France’s Coface export-credit agency, and Sven List, director of project and structured finance at Export Development Canada (EDC), said their agencies were likely to see more business in the absence of Ex-Im.

For satellite loans, Ex-Im’s departure has created a special, if not sought-after, opportunity for satellite builder SSL of Palo Alto, California, a major builder of commercial telecommunications satellites.

List said that under EDC’s bylaws, SSL is considered a Canadian company because it is owned by MDA Corp. of Canada. SSL, he said, is eligible for EDC backing and is under no obligation to provide work in Canada in return.

Export-credit agencies have long had wide leeway in determining what satellite projects are eligible for their backing, whether in the form of guarantees of commercial bank loans or direct loans from the credit agency.

ViaSat of Carlsbad, California, won Ex-Im backing for its ViaSat-2 satellite despite the fact that both ViaSat, the satellite builder – Boeing – and launch provider SpaceX of Hawthorne, California, are obviously U.S. companies. ViaSat used a small subsidiary in the United Kingdom to “order” the satellite and thus become eligible for Ex-Im support.

Coface is now evaluating whether to guarantee loans for launches of Russian Soyuz rockets from Russia’s Baikonur Cosmodrome in Kazakhstan by virtue of their being managed by Arianespace of Evry, France.

Mark Spiwak, president of Boeing Satellite Systems International, said Boeing will consider how to get a Canadian or European passport for satellite orders if that is what it takes to win business that otherwise would be lost in the absence of Ex-Im.

Carl A. Marchetto, general manager of commercial programs for Lockheed Martin Space Systems Co., said Lockheed Martin would do likewise.

Craig R. Cooning, president of Boeing Network and Space Systems, the division that includes satellite production, said Singapore-based Kacific Broadband Satellite of Singapore recently informed Boeing that it should not bother to bid on Kacific’s proposed satellites without Ex-Im support.

Kacific is a long way from being ready to build satellites, with or without Ex-Im, but Cooning said it was an example of what could happen if Ex-Im were to remain closed for business for an extended period.

Choi was more blunt. U.S. satellite builders, he said, could forget winning business from emerging-market and start-up satellite owners unless they had export credit availability.