WASHINGTON — RocketplaneKistler (RpK), one of two U.S. companies receiving financial assistance from NASA to build launchers capable of cheaply delivering cargo to the international space station, says it expects to have $500 million in private financing lined up by late July.
disclosure follows NASA’s acknowledgement that the Oklahoma City-based company missed a May 31 deadline for showing the U.S. space agency that it had secured the rest of the money it needs to complete the K-1 reusable launcher and to demonstrate by 2010 that it is ready to make cargo runs to the space station.
Under the terms of the Commercial Orbital Transportation Services (COTS) Space Act Agreement that NASA awarded RpK in
, RpK must show NASA it is making technical, programmatic and financial progress in order to continue receiving financial assistance with the K-1.
To date, NASA has given RpK some $32 million of the $207 million it is entitled to receive under COTS if it completes three K-1 demonstration flights, including two to the space station, before 2010.
NASA gave RpK the first $7.3 million installment in September after the company passed its program implementation plan review. A second $7.3 million payment was made after RpK completed an initial $40 million financing round in October –
a month later than planned. Completing the K-1 systems requirement review in February earned RpK an additional $15.5 million in NASA cash.
would have received $7.5 million more from NASA in February if it had stuck to its original timetable for raising
$120 million in the second round of financing.
But as the February deadline approached, RpK renegotiated its Space Act Agreement milestones, convincing NASA to give it more time in exchange for getting all $500 million of its promised private financing in place, not just the $120 million that was coming due.
President Randy Brinkley said the change of plans was made at the urging
of its investment banker, Jeffries Quarterdeck, to take advantage of the current
favorable investment climate and go for full financing this year rather than wait until 2008 to complete a third and final $380 million round.
“They felt like we would be better off having one round …
rather than have two separate funding efforts,” Brinkley said in a June 20 telephone interview from New York. “We’re well into that effort now. We haven’t completed it, but we’re well into it.”
Alan Lindenmoyer, manager of the Commercial Crew and Cargo Program at NASA’s Johnson Space Center in Houston, said the revised Space Act Agreement signed
Feb. 28 gave RpK until the end of May to complete “a single, final round of financing.” The NASA payment for achieving the revised milestone, Lindenmoyersaid, would be $7.5 million –
no more and no less than RpK would have
received if it had raised the originally promised $120 million by February.
When May came and went without RpK closing on the financing, NASA said it was willing to give the company more time to raise the money, but the two sides have yet to sign a revised agreement.
Brinkley said RpK
was making progress lining up investors and expected to meet its financing obligations “in the next few weeks.”
If RpK succeeds in lining up the full $500 million before the end of July, the company will be seven months ahead of the timeline it originally gave NASA last year for achieving full financing.
But if RpK misses the new deadline, it would be the fourth time the company has had to go back to NASA and request an extension
beating out four other COTS finalists. The other company
COTS award recipient
Space Exploration Technologies (), an
El Segundo, Calif.-based rocket startup,
has yet to miss any of its five milestones to date, according to NASA officials. As a result, RpK
already has earned
about $87 million of the $278 million it is entitled to under its COTS agreement.
President Elon Musk would not disclose how much money his company must raise to meet three agreed-upon financial milestones, the
last of which is due in
March 2009. “I’d prefer not to give specific numbers for SpaceX financing milestones, except to say that each one is several tens of millions,” Musk said June 21. “The first round I funded personally.”
Brinkley said that while raising the money for the K-1 has taken longer than expected,RpK continues to make technical progress, aided in part by bridge loans from its first round of investors.
Brinkley said RpK has met all of its technical and programmatic milestones to date, a point NASA confirmed, and remains on track to complete its next technical milestone –
a critical design review of the K-1’s pressurized cargo module –
in September, about a month later than originally planned. The critical design review for the unpressurized cargo module is now slated for November, or about two months later than originally planned. Assembly of the K-1’s mid
section is on track
for completion in September, he said.
Despite RpK’s financial setbacks, NASA seems to remain confident in the company.
Scott Horowitz, NASA associate administrator for exploration systems, told Space News in a June 21 e-mail the space agency “intends to support this partnership [with RpK] fully unless and until it is determined that there is no longer a reasonable chance of success.”
Horowitz said that when a company misses a COTS milestone, as RpK has done twice by his count, NASA will assess the reasons why and decide whether it is in the best interest to continue the agreement or end it.
“That is precisely what NASA is doing in this instance,” Horowitz wrote. “There is not a magic number of milestones a company can miss and be terminated automatically.”
A Close Call
In picking RpK last August from a field of 21 contenders, Horowitz decided his concerns about the company’s ability to raise money were outweighed by his confidence in its technical solution to NASA’s space station resupply woes.
Horowitz detailed his thinking in a five-page
statement signed Aug. 18, 2006. The document, a copy of which was provided by NASA, shows Horowitz had no reservations about anointing SpaceX its “first choice.” Selecting a second winner from the five remaining finalists, however, proved tougher.
After Horowitz set aside proposals from Seattle-based Andrews Space, Houston-based Spacehab and Reston, Va.-based Transformational Space Corp. as “not an optimum fit for the portfolio,” the competition for the second available COTS award came down to RpK and Poway, Calif.-based SpaceDev.
“The trade-off between these last two finalists essentially involved comparing RpK’s technical strength and financial uncertainty against SpaceDev’s technically complex design and relatively more stable financial situation,” Horowitz wrote at the time. “The executive council was evenly divided between these two finalists.”
In the end, Horowitz decided RpK was the better fit: it promised to have its comparatively more mature system ready sooner than SpaceDev and it was not asking for as much COTS money –
no small consideration. “The selection of an optimized portfolio consisting of RpK and SpaceX was within the COTS budget, while the selection of SpaceDev with SpaceX exceeded the COTS budget,” Horowitz wrote at the time.
Mark Sirangelo, SpaceDev’s chairman and chief executive, told Space News in a June 20 interview
he wanted $250 million of the COTS money –
about half what he figures he needs to develop the Dreamchaser crew and cargo vehicle.
Work on Dreamchaser continues with private money. While Sirangelo said he was pleased to sign an unfunded COTS Space Act Agree
ment with NASA in June, he would not turn down NASA money should either RpK or SpaceX default on their funded agreements.
“Our hope is that since we were in the third position, NASA would let us sit down and show them that we still have a viable concept,” he said. “Signing an unfunded Space Act Agreement was a step in the right direction.”