UPDATED April 4, 12:09 p.m. EDT

PARIS — Satellite fleet operator AsiaSat of Hong Kong said April 3 it had tentatively entered into a $185 million partnership with startup commercial satellite weather-data provider GeoMetWatch (GMW) to place a GMW-designed hyperspectral sounding instrument on an AsiaSat satellite to launch in 2016.

AsiaSat said it will finance, on its own, the purchase of the sensor and its integration onto an AsiaSat satellite to operate at 122 degrees east longitude in geostationary orbit, and incur the associated operating costs. The company said the project’s total cost should be no more than $185 million including finance charges.

In return, Las Vegas-based GMW will issue, by July 31, a convertible note to AsiaSat of a value that the two companies have not yet settled, AsiaSat said in a filing with the Hong Kong Stock Exchange.

GMW, through a Hong Kong-based special-purpose company, will also pay AsiaSat a cost-contribution fee and a service fee, with amounts dependent in part on what the two companies agree on as a reasonable cash-flow projection for the business of selling weather data in the Asia-Pacific region.

GMW also must obtain U.S. government authorizations for the partnership by July 31.

AsiaSat is requiring GMW to submit guarantees from “a guarantor acceptable to AsiaSat” that GMW will be able to meet its obligations under the agreement.

The two companies will share revenue from the GMW sensor, AsiaSat said.

GMW Chief Executive David J. Crain said that with the AsiaSat agreement in hand, his company will now approach the half-dozen nations that have indicated an interest in his service and ask for formal commitments. If GMW can transform the current informal agreements into firm backlog, the company will have an easier time raising money.

In an April 4 interview, Crain said GMW will be reimbursing AsiaSat its $185 million advance through the service revenue generated. Once the reimbursement is complete, the two companies will share the revenue.

The sounder instrument is based on hardware originally developed for NASA and then modified by Utah State University’s Advanced Weather Systems laboratory.

Scott Jensen, director of the Advanced Weather Systems facility, said the university and NASA have resolved all relevant intellectual property rights issues. In an April 4 interview, Jensen said the sounder instrument to be integrated onto the AsiaSat satellite is the size of a refrigerator and weighs 300 kilograms. It will consume 500 watts of power.

‘Playing the Field’

Crain said GMW approached several commercial satellite operators about the commercial weather service, but that all wanted an up-front payment from GMW and then a fixed annual payment over the project’s life. AsiaSat, he said, has treated the transaction as a partnership and has agreed that its revenue share, after the $185 million is reimbursed, will be a percentage of what is generated by the instrument.

“We were playing the field until late last year, when AsiaSat told us they were seriously interested, and we signed an exclusivity agreement with them in December,” Crain said. “AsiaSat has really taken a leap of faith with this.” About the convertible note, he said: “I’m not worried about it.”

AsiaSat Chief Executive William Wade, in an April 3 statement, said: “We are excited to take part in this groundbreaking project that will provide advanced data to improve weather forecasting, natural disaster monitoring and climate modeling. This new partnership with GeoMetWatch will open up new opportunities to expand our satellite services into new areas, and allow us to explore a new source of revenue.”

GMW’s longer-term business plan is to place six sounding instruments on six geostationary-orbiting telecommunications satellites as hosted payloads. Once the service begins generating revenue on the AsiaSat satellite, the Hong Kong-based special-purpose company created by GMW will be able to apply to the U.S. Export-Import Bank for a low-interest loan to help finance the other five sensors, he said.

The first hyperspectral sounder is under construction at Utah State’s Advanced Weather Systems laboratory in Logan, Utah. Expertise in developing the sensor’s algorithms and data-processing capacity has come in part from the University of Wisconsin’s Space Science and Engineering Center, GMW said in a statement. Jensen said the Utah facility is large enough to handle the manufacture of all six instruments.

In its Hong Kong Stock Exchange filing, AsiaSat said the GMW sounder will return data on atmospheric temperature, humidity, winds and chemistry “with far greater precision and accuracy than current systems, and at much higher speed,” especially for storm forecasts.

AsiaSat said GMW is the only company with a U.S. Department of Commerce Remote Atmospheric Sensing License to use hyperspectral sounder technology in geostationary orbit.

Crain said GMW has been granted a Technical Assistance Agreement by the U.S. State Department to discuss the project with AsiaSat. He said that the technology in question is covered under U.S. International Traffic in Arms Regulations (ITAR), meaning GMW faces a potentially laborious process to win final approval for any export.

Hosting the GMW payload means AsiaSat, which has not yet ordered the satellite in question, will be limited to U.S., European and Japanese manufacturers, and U.S., European or Russian launch service providers because of ITAR constraints.

Peter B. de Selding was the Paris Bureau Chief for SpaceNews.