WASHINGTON — Launch vehicle and spacecraft propulsion company Astra Space said Nov. 6 that it has secured interim financing from two investors that gives the company through the end of next week to find additional funding.
In a statement issued after the close of trading, Astra said that JMCM Holdings LLC and Sherpa Venture Funds II, LLP, which it described as affiliates of two early investors in Astra, agreed to provide $13.4 million in “initial financing” as part of a non-binding term sheet Astra announced Oct. 23 that sought to raise $15 million to $25 million.
As part of the agreement, the investors will purchase the $8 million loan that Astra had from an unnamed institutional investor from August. Astra had defaulted on the terms of the loan agreement last week when its cash reserves dropped below $10.5 million, triggering a $3.1 million payment at a higher interest rate. The investors will also provide a $3.05 million bridge loan due Nov. 17, and purchase warrants for Astra stock.
Astra said Oct. 23 that JMCM Holdings was the planned lead investor in a financing round valued at up to $25 million, with participation from Sherpa Venture Funds II. At that time Astra said that each investor planned to contribute $5 million to the financing. Sherpa Venture Funds II, also called Acme II, is affiliated with Scott Sanford, who is the lead independent director on Astra’s board.
Astra said the new investors agreed to waive the default terms on both the loan they purchased as well as the new loan through Nov. 17. Doing so, the company said, will “provide Astra with time to raise additional liquidity through various capital raising and cost cutting initiatives and strategic transactions.”
The company said in August that it had engaged an investment bank, PJT Partners, to identify “potential strategic investments in the Astra Spacecraft Engine business” that industry sources have said would involve a sale of part or all of that subsidiary, which makes electric thrusters.
Astra has prioritized its propulsion business, moving personnel to it in August amid layoffs elsewhere in the company, because of a backlog of business it valued at the time at $77 million. That has meant a slowdown in work on the new Rocket 4 launch vehicle, and Astra said it now expects a first test launch of that rocket some time in 2024.
Shares in Astra closed down more than 20% in trading Nov. 6 on Nasdaq at $0.73, although they rebounded somewhat in aftermarket trading once Astra announced the interim financing. The value of the company has dropped by more than 99% from its peak shortly after it went public through a special purpose acquisition company (SPAC) merger in July 2021.