A lawsuit filed by U.S. Space in New York Supreme Court could shed some light on the potential value of the on-orbit satellite servicing market.
U.S. Space alleges that its former joint venture with Orbital ATK [OA], Vivisat, secured $298 million in potential revenues for in-orbit satellite servicing from five companies over a two-year period. U.S. Space on April 29 sued Orbital ATK, claiming Orbital ATK broke an agreement the companies made to pursue customers for ViviSat, which was formed by U.S. Space and ATK prior to ATK merging with Orbital Sciences in late 2014.
U.S. Space said ViviSat; between April 2013 and March 17, 2015; started entering into agreements with satellite operators like Intelsat [I], Asia Broadcast Satellite, Measat, Hispasat and SES to provide on-orbit services at a pre-agreed schedule, duration and price. U.S. Space said, through its efforts, ViviSat signed a deal with Intelsat to provide two mission extension vehicles for five year terms at an annual lease cost of $24 million. This would generate $120 million in revenue over the lease term, U.S. Space said.
ViviSat signed Asia Broadcast Satellite to a deal that would provide one MEV for three years at a price of $13 million annually. The Measat deal, U.S. Space said, was one MEV for five years, at an annual lease cost of between $13 million and $15 million. The Hispasat deal was one MEV for three years at an annual lease cost of between $8 million and $14 million. Finally, U.S. Space said the SES deal was one MEV over three years at an annual price between $10 million and $12 million.
U.S. Space said it entered into the ViviSat joint venture with ATK in 2010 with the mutual goal of developing a new generation of satellites that could provide on-orbit serving and marketing that service to satellite operators. U.S. Space said Orbital ATK, in February, informed the company that it intended to take the project “in house,” in breach of the parties’ agreement that they would market and sell on-orbit services exclusively with U.S. Space through ViviSat.
U.S. Space alleges that Orbital ATK in April purported to “dissolve” ViviSat and eject U.S. Space from any further involvement in the parties’ joint venture. Orbital ATK within days created a new subsidiary called Space Logistics LLC that replicated ViviSat’s business and customers, according to U.S. Space.
The ViviSat venture seemed to be going well, U.S. Space said, until Orbital Sciences merged with ATK. U.S. Space alleges that as early as April 2014, Orbital ATK CEO David Thompson made public statements signaling his desire for major new programs that probably would not have been realistic for either Orbital or ATK to pursue on their own, including in-space satellite servicing. The lawsuit alleges that Orbital ATK slowly pushed U.S. Space out of the ViviSat joint venture, culminating with Feb. 8 correspondence from Orbital ATK leadership to U.S. Space that the Orbital ATK board had decided to take the ViviSat project “in house” and leave U.S. Space with an ownership interest in the “low single digits.”
Michael Listner, principal with Space Law and Policy Solutions in New Hampshire, said Wednesday he thought U.S. Space reported the MEV revenue figures in an effort to upset Orbital ATK. He said that type of information is so valuable it is usually provided in confidence to potential investors or sealed under court order.
Listner said Orbital ATK could respond to the lawsuit by asking to have it moved to federal court under “diversity jurisdiction” before filing a motion to dismiss. Or they could simply file a motion to dismiss in New York Supreme Court, he said.
Orbital ATK spokeswoman Sean Wilson said the company does not comment on pending litigation, but it believes the suit is without merit.