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ORBIMAGE Prepares For Post-bankruptcy World

By | September 22, 2003

      Dulles, Va.-based Orbital Imaging (ORBIMAGE) is readying plans to emerge from Chapter 11 bankruptcy court protection by the end of October. The remote sensing company, fresh off the successful launch of a new OrbView-3 high-resolution satellite June 26, is looking to prove its mettle in a field of rival providers of imagery for commercial and government clients.

      The company took a step toward achieving that goal last week by resolving outstanding issues with Vancouver, Canada-based MacDonald Dettwiler & Associates (MDA) regarding the Canadian Radarsat-2 satellite program. In exchange for payments totaling $12 million during the next 2 years, ORBIMAGE agreed to end its dispute and return its limited licenses in Radarsat-2 back to MDA, the prime contractor for the program.

      Resolution of the Radarsat-2 tiff enables ORBIMAGE to finalize its plan to emerge from Chapter 11-bankruptcy court protection.

      Back to Basics

      “Our decision to sell our limited marketing rights in the Radarsat-2 program and return them back to MDA serves both organizations well. With the cash proceeds from the settlement, ORBIMAGE will now focus its efforts solely on our core business of expanding the worldwide markets for high-resolution data from our new OrbView-3 satellite, while MDA works to resolve the continued delays in the Radarsat-2 program,” said ORBIMAGE CEO Matthew O’Connell.

      Under the terms of the settlement, MDA will pay ORBIMAGE $10 million immediately and another $2 million over the next two years for the marketing rights.

      Proceeds from the settlement further strengthen ORBIMAGE’s financial position and allow management to direct its attention to putting OrbView-3 into revenue-generating service as soon as possible, said Armand D. Mancini, ORBIMAGE’s executive vice president and CFO. The result should be an improved balance sheet and long-term viability, he added.

      OrbView-3 Checks Out

      The check out and calibration of OrbView-3 is going “exceptionally well,” said Timothy J. Puckorius, ORBIMAGE’s senior vice president for worldwide marketing and sales. Early results on image quality look great, he added.

      The testing of OrbView-3 should be completed by the end of November; key customers may start to receive images before that date, Puckorius said.

      David Logsdon, executive director of the U.S. Chamber of Commerce’s Space Industry Council, said ORBIMAGE’s settlement with MDA over the Radarsat-2 program and its emergence from Chapter 11 should result in a more focused and streamlined company.

      The impact that OrbView-3 will have on the commercial remote sensing market remains to be seen, Logsdon said. A key factor will be the “robustness” of the contracts signed with the National Imagery and Mapping Administration (NIMA) for U.S. military and intelligence agencies, as well as contracts from various civil agencies, he added.

      Ownership Update

      ORBIMAGE’s founder, Dulles, Va.-based Orbital Sciences [NYSE: ORB], will retain no equity in the remote sensing company when it emerges from Chapter 11 protection.

      Orbital received notes from ORBIMAGE in a previous settlement between the two companies. All equity in the revamped ORIMAGE will go to its bondholders, with the exception of the company’s employee stock ownership plan, Puckorius said.

      ORBIMAGE operates a constellation of digital remote sensing satellites and an integrated image receiving, processing and distribution network. The company currently operates the OrbView-1 atmospheric imaging satellite launched in 1995, the OrbView-2 ocean and land multispectral imaging satellite launched in 1997, and the new OrbView-3 high-resolution satellite launched in June. The OrbView-3 soon will offer one-meter panchromatic and four-meter multispectral digital imagery on a global basis.

      –Paul Dykewicz

      (Timothy J. Puckorius, ORBIMAGE, 703/480-7527; Lisa Andrews, ORBIMAGE, 703/480-7502; David Logsdon, U.S. Chamber of Commerce’s Space Enterprise Council, 202/463-5479)

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