May 25, 2022

Firefly Aerospace’s rollercoaster ride could soon take the rocket launch to the public market through a merger with a special purpose acquisition company, a recent filing with the FCC suggests.

Aerospace private equity firm AE Industrial Partners (AEI) announced last month that it had reached an agreement to acquire a “significant stake” in Firefly after its largest shareholder, Ukrainian Max Polyakov, was fired over national security concerns. stock. Recent FCC filings include new details of the deal, including that it is a special purpose acquisition vehicle.

A new FCC filing regarding the proposed launch of a second Firefly Alpha rocket from Vandenberg Air Force Base in California this spring says the acquisition included “the majority of Firefly Aerospace’s equity capital” and “special purpose vehicles.” Works for AE. ,

This move will not be unprecedented for AEI. In 2020, the aerospace, defense and energy private equity firm acquired Deep Space Systems and then merged previously acquired Adcol Space to form space infrastructure company Redwire. AEI took Redwire public last September through the SPAC merger.

AEI declined to comment on gaming-updates’s material. Firefly CEO Tom Markusic has spoken publicly about company disclosures in the past. Markusic told CNBC last November that a public offering could take place as early as 2022. Neither Firefly, Noosphere, nor Polyakov immediately responded to requests for comment.

Firefly has faced many challenges since founding Marcusic, an alumnus of SpaceX, Blue Origin and Virgin Galactic, in 2014. In its original incarnation, Firefly began development of the Alpha missile for use as an air-launched missile using Paul Allen’s Stratolaunch system. But Virgin Galactic’s trade secret lawsuit, rising costs and the exit of a major investor left the company without funding in 2016 before anything could launch.

A series of maneuvers followed, including a lightning sale of assets and a brief Chapter 7 bankruptcy that is still the subject of lawsuits from the company’s early investors. As a result, in 2017 Polyakov, through his investment company Noosphere Venture Partners, gained control of the new version of Firefly, including the intellectual property and many of its engineers.

The company subsequently achieved significant commercial success, including several satellite launch orders and a $93 million contract from NASA for a proposed lunar lander called Blue Ghost. Firefly raised $75 million in a Series A round in May 2021. At the same time, Noosphere sold approximately $100 million worth of its Firefly shares to Series A members, reportedly reducing its total holdings to less than 50%. The remaining capital of Noosphere is estimated at approximately $500 million.

In September, Alpha’s first launch failed to reach orbit when one of the rocket’s engines failed after two and a half minutes of flight. They were negotiating a launch license for their second attempt when Bloomberg reported that Polyakov had agreed to sell Noosphere’s stake in Firefly. Their move was reportedly spearheaded by the Committee on Foreign Investment in the United States, or CFIUS, which raised concerns about the possibility of Firefly’s technology penetrating Ukraine, Russia, or other countries.

In February, Polyakov took to Facebook to accuse CFIUS, the U.S. Air Force and other U.S. agencies of defrauding him, saying he had “give up” his stake in Firefly for $1. In fact, the deal that was announced late last month has finally been closed with AE Industrial Partners. And it was worth at least $101 million because it closed a regulatory review that started with that amount.

The most recent FCC filing contains more details about the deal. In addition to purchasing the entire stake in Noosphere, AEI has made a $75 million equity investment in Firefly Aerospace through a series B preferred stock round. have the right to appoint a majority on the board of directors of Firefly Aerospace.”

Space SPACs have been the darlings of the market in 2020 and 2021, with stocks like Virgin Galactic and Rocket Lab soaring. But of the 12 space startups that use SPACs to go public, only AST Space Mobile (which runs on the mobile network in space) is trading well above its typical $10 starting price and for cash only. AEI’s Redwire is currently trading below half of its 52-week high.

The timing of the launch of the SPAC Firefly may depend on when it can prove that it can reach orbit and that it is still in the air. While Firefly’s application to transfer communications clearance for Alpha’s second flight was cleared by the FCC last week, the FAA has yet to issue an actual launch license to the company.

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