UrtheCast, amid restructuring, acquires analytics firm from Land O’Lakes

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WASHINGTON — Canadian remote sensing company UrtheCast says it has sufficient resources to cover the $20 million purchase of analytics firm Geosys from U.S. dairy giant Land O’Lakes.

Urthecast, which is in the midst of a restructuring in pursuit of becoming profitable, lost $10 million for the three months ending June 30.

Geosys, a Minneapolis-based geoanalytics firm billing itself as the “largest purchaser of agricultural satellite imagery worldwide,”  should have greater success serving other agriculture customers who view Land O’Lakes as a competitor, and will serve as a conduit for UrtheCast satellite imagery,  Donald Osborne, UrtheCast’s new CEO, said during an Aug. 15 earnings call.

Osborne, who joined UrtheCast five weeks ago from Maxar Technologies where he was president of the company’s MDA Information Systems Group, said two-thirds of Geosys revenue comes from Land O’Lakes, a member-owned agricultural cooperative.

UrtheCast is paying a fraction of Geosys’ $20 million price tag up front, according to UrtheCast Chief Financial Officer Sai Chu, with the majority due in later installments. The company expects the bulk of the acquisition to finalize in November, with full completion two years later. Chu said the final closing date is connected to UrtheCast’s payment schedule, but the company will gain Geosys personnel and intellectual property immediately in November.

UrtheCast reported 3.4 million Canadian dollars ($2.6 million) in revenue for its second financial quarter, less than a third of the CA$11.9 million recorded for the same three months of 2017. The company’s net loss also deepened from CA$3.9 million to CA$13.3 million.

Despite those challenges, Chu said UrtheCast has “a lot of different, creative financing solutions” it can use for Geosys.

One such option is a $20 million revolving credit line, he said.

Chu said the remainder of 2018 “will see a significant focus on restructuring the business and it’s operations,” including shedding “unprofitable activities and excess capacity,” and “exploring the potential sale of certain assets.”

“While we are disappointed in our operating results — they are unacceptable for the quarter — it is our view that the company is taking appropriate steps to face these challenges and is beginning to turn the corner,” Chu said.

UrtheCast provides satellite imagery through the Deimos-1 and -2 satellites, and has partnerships with other operators to tap into another 20 satellites. The company has a $142 million loan to build and launch six more optical satellites for a constellation called UrtheDaily, but drawing on the credit line is conditioned upon customer commitments to the constellation.

Osborne said UrtheCast is in negotiations with several prospective customers that combined would fulfill the loan access requirements.

“We are pleased with how things are progressing and we are confident that the first draw is within reach,” he said. “However, these are complicated negotiations and final terms, and timing cannot be certain until negotiations are concluded.”

UrtheCast is also working on a cloud-penetrating synthetic aperture radar constellation called OptiSAR that paired with UrtheDaily would provide coverage regardless of weather.

UrtheCast received a multimillion-dollar contract from Airbus Defence and Space in July for imagery that the company described as one of its largest contracts won to date. Osborne said UrtheCast is looking at more near-term opportunities to grow its business and become profitable.