WASHINGTON — A fund led by Steven Mnuchin, former treasury secretary, will invest $150 million into Earth imaging company Satellogic, helping close a delayed merger with a special purpose acquisition corporation (SPAC).
Satellogic announced Jan. 18 that Liberty Strategic Capital, a private equity fund established last year by Mnuchin, would invest $150 million into the company. Mnuchin, who served as treasury secretary in the Trump administration, will become nonexecutive chairman of the board of directors of Satellogic once the deal closes, which the companies expect to be in mid-February.
The investment will be in addition to a $100 million private investment in public equity, or PIPE, round announced in July as part of a merger of Satellogic with CF Acquisition Corp. V, a SPAC sponsored by financial firm Cantor Fitzgerald. The companies said in the Jan. 18 announcement that there is now more than $265 million of capital committed to Satellogic as part of the merger and PIPE round.
The PIPE was originally intended to be supplemental to the proceeds of the SPAC itself. When Satellogic announced the merger with CF Acquisition Corp. V in July, the companies said they expected $250 million from the SPAC and $100 million from the PIPE that, after debt repayment and expenses, would leave Satellogic with $271 million in cash. The company plans to use that money to build out a constellation of high-resolution imaging satellites.
In December, Satellogic expected the merger with CF Acquisition Corp. V to close that month. Emiliano Kargieman, chief executive of Satellogic, said at Euroconsult’s World Satellite Business Week Dec. 16 that he believed the company would start trading on the Nasdaq Dec. 22, two days after a shareholder vote.
However, that vote, which had already been delayed from Dec. 8, was postponed to Dec. 30, then postponed again to Jan. 24. In a Dec. 30 statement, CF Acquisition Corp. V said it had delayed the shareholder vote again to allow the companies “and a potential third-party investor additional time to finalize the terms on which such potential investor may complete a significant additional PIPE financing for the benefit of the post-combination company.”
The additional investment appears to be a hedge against redemptions, where shareholders of the SPAC seek a refund rather than hold stock in the merged company, reducing the capital available to the merged company. Redemptions have been a growing issue for SPAC mergers in general, and contributed to the diminished proceeds Virgin Orbit got from its SPAC merger that closed last month.
The companies have also scaled back their financial projections for Satellogic. When the deal was announced in July, an investor presentation included a forecast that projected Satellogic would have 300 satellites in orbit in 2025, generating $787 million in revenue and $473 million in adjusted earnings before interest, taxes, depreciation and amortization (EBITDA).
However, a forecast included in a Jan. 18 filing with the Securities and Exchange Commission stated Satellogic would have 202 satellites in orbit in 2025. It projected revenues of $480 million that year, with adjusted EBITDA of $297 million.
The companies did not discuss the revised financial forecast in their announcement of the Liberty Strategic Capital investment, instead remaining upbeat about Satellogic’s long-term prospects to provide low-cost high-resolution imagery. “As Satellogic builds out its network to provide daily remaps of the Earth’s surface at a low cost, we believe the company is well positioned to provide governments and businesses with the information they need to make better, more well-informed decisions with respect to a host of pressing problems,” Mnuchin said in the statement.
