Intelsat Given Go-Ahead to Bypass Sea Launch for 3 Planned Launches

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PARIS — The U.S. court handling the Chapter 11 bankruptcy proceedings of commercial launch provider Sea Launch Co. has granted Intelsat’s request to modify three launch contracts to permit Intelsat to bypass Sea Launch and deal directly with Sea Launch’s Russian partner.

Intelsat is one of several commercial satellite operators including EchoStar, Eutelsat and Sirius XM Radio that have been petitioning the Delaware Bankruptcy Court since Sea Launch’s June 22 Chapter 11 filing to force the launch services provider to formally assume or reject their launch service agreements. Both options are available to Sea Launch now that it is under the court’s protection.

Sea Launch has been resisting its customers’ demands, saying it needs more time to sort through its financial prospects before it decides which contracts it will honor, and which will be scuttled. Washington- and Bermuda-based Intelsat elected to pursue a separate line of reasoning, asking the court to effectively eliminate Long Beach, Calif.-based Sea Launch from contracts Intelsat has signed for launches using the new Land Launch system.

In a ruling published Aug. 25, the court said Intelsat could take the place of Sea Launch as the customer for three launches that Intelsat had contracted with Sea Launch but that rely on Moscow-based Space International Services (SIS).

SIS, which up to now has remained in Sea Launch’s shadow, represents the Russian and Ukrainian manufacturers responsible for Sea Launch’s Land Launch variant. Land Launch uses the same basic Zenit 3 vehicle that Sea Launch operates from a floating platform in the Pacific Ocean, but operates from Russia’s Baikonur Cosmodrome in Kazakhstan.

Located far north of the equator, the Land Launch operation cannot lift the 6,000-plus-kilogram telecommunications satellites that Sea Launch has made its core business. Instead, it is designed to place satellites weighing less than 4,000 kilograms into geostationary transfer orbit.

Intelsat has three Land Launch contracts for which payment is still due. The first is a final payment for the June launch of the Measat 1R satellite, a launch that Intelsat had sold to Malaysia’s Measat satellite operator.

The second contract is for the Intelsat IS-15 satellite, scheduled for launch late this year, with the third being for the IS-18 satellite to be orbited in late 2010 or early 2011.

In a written statement dated Aug. 21 and submitted to the court, SIS Deputy General Director Yuri Sergeev said Intelsat owes SIS $10.8 million for the Measat 1R launch, which was due no later than 30 days after the June 22 launch; $4.96 million in advance payments for the IS-15 launch and $10.6 million 30 days after the scheduled November launch; and $10.355 million for the IS-18 launch, to be paid no later than 30 days after liftoff.

According to Sergeev, Sea Launch is a Land Launch marketing agent that is paid a commission for finding customers but that never handles the monies that go to preparing the rocket and con ducting launch operations. These funds, he said, are placed into a separate account.

Intelsat officials told the court they were concerned that any money they paid Sea Launch now for the Land Launch missions might end up in Sea Launch accounts to pay off the company’s long list of creditors rather than being forwarded to SIS for launch preparations.

The court ordered that Intelsat be allowed to deal directly with SIS to pay the past-due Measat-1R fee and to finance preparations for the IS-15 and IS-18 launches. But it also ordered Intelsat to pay Sea Launch a $200,000 fee for the Measat-1R work.

For the IS-15 satellite, the court authorized Intelsat to make the SIS payments as described by SIS, and also to pay Sea Launch $2 million in commissions for that launch immediately, plus $1 million more within 30 days after the launch.

For IS-18, the court approved the full payment to SIS after the launch, and also ordered Intelsat to pay Sea Launch $1.25 million at the same time.

The order did not deal with a contract for one firm launch and four options that Intelsat and Sea Launch signed in October 2008 for the launch of the IS-17 satellite and four launch options. These contracts do not deal with SIS as they are for Sea Launch’s own ocean-launched operations.

Sea Launch officials have said that one of their problems that contributed to the Chapter 11 filing was the lack of rocket hardware available in Russia and Ukraine. But Sergeev, in his written testimony to the court, says SIS fully intends to launch the satellites on schedule.

As of Aug. 28, the court had not yet ruled on when to force Sea Launch to decide what contracts it will accept. Paris-based Eutelsat has scheduled the launch of its W7 satellite on the Sea Launch rocket late this year and also contracted with Sea Launch for the late-2010 launch of Eutelsat’s Ka-Sat all-Ka-band broadband spacecraft.

Littleton, Colo.-based EchoStar signed four launch options with Sea Launch, with the next to be available by July. EchoStar and Sea Launch have agreed to extend the deadline for this launch to November.

Sirius XM Radio is waiting for a ruling on whether Sea Launch confirms it will launch the XM-5 satellite.