MDA Is ‘Canadian Forever,’ Chief Executive Says

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BERLIN — Space hardware and services provider MDA Corp. said May 1 it will not sell itself to a non-Canadian company even though it is facing the same problem it faced in 2008 as a Canadian manufacturer whose government does not share its commitment to space technology.

Richmond, British Columbia-based MDA’s reaction in 2008 was to agree and sell its space division to ATK of Minneapolis in a $1.3 billion transaction that was blocked by the Canadian government. Government officials said at the time that the Canadian Space Agency would be sufficiently financed to maintain Canada’s space industrial base.

MDA officials say the government has not made good on that promise, particularly in space robotics, a Canadian specialty on the international space station that has had terrestrial technology spinoffs in robotic medical surgery.

“Unfortunately, it’s pretty clear,” MDA Chief Executive Daniel Friedmann said in a conference call with investors when asked about the Canadian government’s space robotics program. “There’s nothing going on to speak of.”

Notwithstanding the lack of a robotics budget, and similar government funding constraints affecting the Canadian Space Agency’s proposed three-satellite Radarsat Constellation Mission, MDA is looking not to sell itself but to secure growth in part through acquisitions.

“We’re not going to open that book again,” Friedmann said. “We had no interest in selling the company. Our only interest was to avoid the dismantling of the Canadian robotics operation and the Canadian surveillance operation.

“Nobody has called us back and we haven’t called anyone back” to refocus on a sale of MDA. “It’s Canadian forever.”

MDA in early 2011 sold its property assurance business and is now fully focused on space technologies. The company has been looking for a major acquisition, preferably in the United States.

That work has not yielded results, but Friedmann said the number of possible deals, both big and small, has increased substantially in recent months. As of March 31, MDA had 256 million Canadian dollars ($256 million) in cash and access to sufficient bank financing to fund any likely acquisition, MDA Chief Financial Officer Anil Wirasekara said during the conference call.

Revenue for the first three months of 2012 was 172 million Canadian dollars, down 17 percent from a year ago mainly because of habitual timing issues for revenue associated with MDA’s work on providing payloads for one Ukrainian and two Russian telecommunications satellites, Wirasekara said. But while revenue was down, operating earnings were up 7 percent, to 29 million Canadian dollars. Backlog as of March 31 stood at 765 million Canadian dollars.

The telecommunications satellite industry globally has shown few signs of a downturn, with some companies saying 2012 and 2013 are shaping up to be years of high order flow. Friedmann said MDA expected at least one more major telecommunications satellite payload contract in the coming months.

MDA also has made proposals, via its U.S. subsidiary, to the U.S. Defense Advanced Research Projects Agency (DARPA) as part of the agency’s Phoenix program to visit dead in-orbit satellites to extend their lives by having a small free-flying satellite remove still-functional sensors for reuse.

That work follows on from an MDA proposal, now shelved, with Intelsat General of Washington to cooperate on refueling retired Intelsat telecommunications satellites. The idea was shelved when no U.S. government customer could be found to help finance the mission.

Friedmann said MDA’s proposal for DARPA would see much of the work performed in the United States, not Canada. The U.S. agency is expected to make a decision by this summer, he said.

MDA is the current prime contractor for the three Radarsat Constellation Mission radar Earth observation satellites, whose development has been slowed to a trickle as the Canadian Space Agency struggles to find the budget for it.

Phase C design for the mission continues at a low level; MDA received a contract supplement of 8.5 million Canadian dollars earlier this year. That will carry the project to its critical design review this fall. No funds to build the satellites have been allocated.

Friedmann took issue with reports in Canada that said the mission’s costs have risen. He said the company began work on the Radarsat Constellation Mission in 2005 and submitted its proposal for full construction in 2008. That proposal’s price tag of 200 million Canadian dollars has not changed since then, he said.

MDA’s current Earth observation business, which the company calls geospatial services, reported more than 24 million Canadian dollars in revenue from the U.S. government in the three months ending March 31. Friedmann said that while the U.S. government budget is under pressure, U.S. government agencies are shifting their focus from regional observations to global.

Friedmann said the shift in focus helps MDA’s business, which with U.S. government customers uses commercial and U.S. government satellite assets to provide value-added services. “The more that information is required from around the globe, the better it is” for MDA’s business, he said.