Terran Orbital, a manufacturer of small satellites, has removed the broadband constellation it is developing for Rivada Space Networks from its backlog of future revenues. This comes despite the company still expecting to receive $2.4 billion from the contract.
The decision to remove the Rivada Space project from the backlog stems from Terran Orbital's shift to a cash-basis method of accounting for all commercial accounts. Marc Bell, CEO of Terran Orbital, explained that this change was made because commercial accounts pay in advance.
While Terran Orbital has received $13.2 million from Rivada Space since the contract was awarded 18 months ago, the company's decision to remove the project from its backlog has raised concerns about Rivada Space's ability to fund the constellation.
Analysts and investors have expressed doubts about Rivada Space's funding plans, especially considering the company's plans to launch 300 satellites next year. Declan Ganley, CEO of Rivada Space, has stated that the constellation's investors include at least one sovereign wealth fund and that they are seeking export credit agency backing.
Despite the concerns, Rivada Space maintains that it is current on all invoices and that the preliminary design review (PDR) for the constellation is on track to be completed soon. The PDR, which is a crucial step in the development process, has been a complex undertaking, involving over 1,000 pages of documentation.
Terran Orbital's decision to remove the Rivada Space constellation from its backlog highlights the financial pressure facing the company. The company's revenue and EBITDA loss have decreased, and its net debt has increased. Terran Orbital is actively exploring strategic options to address its near-term capital needs, which may include taking on more debt, selling the company, or engaging in some other strategic transaction.