Astra defaults on debt agreement
The rocket startup Astra revealed on Friday that it was unable to meet the requirements of one of its investors that it maintain at least $10.5 million in cash reserves, and thus defaulted on that debt agreement.
Astra twice last month failed to meet minimum cash reserve requirements associated with a $12.5 million note issuance to New Jersey investment group High Trail Capital.
The debt raise first required that Astra have “at least $15.0 million of cash and cash equivalents” on hand. That liquidity requirement was adjusted after Astra failed to prove compliance a first time, to require “at least $10.5 million of unrestricted, unencumbered cash and cash equivalents.” Having fallen out of compliance a second time, Astra now owes $8 million on the aggregate principal investment.
Sadly, it appears the end for this company is coming.
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The rocket startup Astra revealed on Friday that it was unable to meet the requirements of one of its investors that it maintain at least $10.5 million in cash reserves, and thus defaulted on that debt agreement.
Astra twice last month failed to meet minimum cash reserve requirements associated with a $12.5 million note issuance to New Jersey investment group High Trail Capital.
The debt raise first required that Astra have “at least $15.0 million of cash and cash equivalents” on hand. That liquidity requirement was adjusted after Astra failed to prove compliance a first time, to require “at least $10.5 million of unrestricted, unencumbered cash and cash equivalents.” Having fallen out of compliance a second time, Astra now owes $8 million on the aggregate principal investment.
Sadly, it appears the end for this company is coming.
Readers!
Please consider supporting my work here at Behind the Black. Your support allows me the freedom and ability to analyze objectively the ongoing renaissance in space, as well as the cultural changes -- for good or ill -- that are happening across America. Fourteen years ago I wrote that SLS and Orion were a bad ideas, a waste of money, would be years behind schedule, and better replaced by commercial private enterprise. Only now does it appear that Washington might finally recognize this reality.
In 2020 when the world panicked over COVID I wrote that the panic was unnecessary, that the virus was apparently simply a variation of the flu, that masks were not simply pointless but if worn incorrectly were a health threat, that the lockdowns were a disaster and did nothing to stop the spread of COVID. Only in the past year have some of our so-called experts in the health field have begun to recognize these facts.
Your help allows me to do this kind of intelligent analysis. I take no advertising or sponsors, so my reporting isn't influenced by donations by established space or drug companies. Instead, I rely entirely on donations and subscriptions from my readers, which gives me the freedom to write what I think, unencumbered by outside influences.
You can support me either by giving a one-time contribution or a regular subscription. There are four ways of doing so:
1. Zelle: This is the only internet method that charges no fees. All you have to do is use the Zelle link at your internet bank and give my name and email address (zimmerman at nasw dot org). What you donate is what I get.
2. Patreon: Go to my website there and pick one of five monthly subscription amounts, or by making a one-time donation.
3. A Paypal Donation or subscription:
4. Donate by check, payable to Robert Zimmerman and mailed to
Behind The Black
c/o Robert Zimmerman
P.O.Box 1262
Cortaro, AZ 85652
You can also support me by buying one of my books, as noted in the boxes interspersed throughout the webpage or shown in the menu above.
It’s really not that sad. They were a woke San Francisco-based company that plastered “Black Lives Matter” on the side of their rocket and had a business plan that was only going to work if Uncle Sam gave them a steady stream of contracts.
Good riddance.
Concerned:
Thank you for these interesting details. I agree with you, it’s not really sad, except for Astra’s shareholders of course. I also found Chris Kemp not really convincing in the role of CEO of Astra, too distant, almost a little arrogant. No comparison to based Peter Beck, who worked in his workshop 15 years ago and made the parts for his small rocket engines himself. However, Astra’s main problem was that they had neither a really convincing business idea nor particularly innovative technical solutions for their rockets that could have secured them a place in the market.
They are back under a dollar, and have been for several weeks.
Their next quarterly results are on the 13th. I would not expect good news.
The original model included the flawed assumption that the market would accept low reliability. I seem to remember that that the original plan of 80% reliability would be acceptable. If someone is launching hundreds of small sats, that would be okay, because they are building the same sat in volume. But they contracts they won were one offs, or small constellations, like the 6-bird TROPICs mission. That kind of success rate no longer works.
And in testing, they failed to reach that.
I saw a discussion on Reddit that estimated they now have about $2.5M left in cash, barring a last minute investor willing to infuse cash. Granted, that is internet math, so take with a grain of salt. But the suggestion is that will not cover payroll through the month.
We shall see.
sippin_bourbon:
Yes, it’s true, their business philosophy (as a counter concept to the reusable rocket, which is expensive to develop and produce) was that of the cheap disposable rocket, produced in large numbers on an assembly line. Many who refer to such a concept cite the mass production of the German V2 (A4) from the Second World War or to Kayser’s OTRAG as an example. Whether this is an economically viable concept remains to be seen. It would definitely have required a very launch rate, perhaps up to a few thousand per year. But which market can it cover in the long term? Of course, a 20% loss in reliability is not acceptable in this case either, I would say a maximum of 2%.
The Astra boys were also a bit unlucky. In the end, she had a well-functioning first stage, but a not very reliable second stage engine that was technically unrelated to the first stage engines. It would have been smarter to give the first stage 7 to 9 engines (instead of 5) and use that engine on the second stage as well, as many other rocket companies do.
Well…that went sideways…
The A4 (“V2”) was not exactly a beacon of reliability either. But what do you expect from a project led by a war criminal SS major that employed slaves to build its rockets? Not much worker buy in.
“The Dutch resistance estimated the number of failed launchings at 8.4 %. This concerns only the failures exclusively at, or immediately after the take-off. Furthermore a number of the rockets didn’t survive the return into the atmosphere, as mentioned above. The flight of other rockets was beyond control, plagued by gyroscope problems. These disturbances appeared before the cutting off of the fuel supply. When the fuel supply ceased, the trajectory of the falling rocket could not be affected anymore, although the rudders provided some stabilization. The Czech researcher Jirzy estimates that 17% of the V2-rockets fired at Antwerp failed on launching due to technical failures. Another 18% experienced problems during the flight26 .Therefore merely 65% of the launched rockets landed onto the target dispersed over a large area.”
I do not think the Astra program had any relation to the mass production goals of the V1/V2 programs.
Mass production of weapons is an entirely different goal that mass production of a commercial launch vehicle. Namely, the goal of placing a product in orbit, not a warhead on a target.
Astra was hoping to cash in a large constellations of small sats, similar to what Planet launched using Indian rockets.
What they did not count on was a single rocket carrying many at once, as opposed to one of their rockets carrying 1 or 2, launching “daily”.
sippin_bourbon:
If you cannot easily make the link to the V2 yourself with a view to mass production of a complex liquid rocket, I recommend that you study the relevant section (page 70) of the book “LEO on the Cheap” (by USAF Lieutenant Colonel John R. London).
I have linked a PDF version of the book, which is actually known to all rocket enthusiasts, below.
http://foyle.quarkweb.com/lc93/leocheap_book.pdf
It is a nice research paper.
The relationship you give is a stretch at best.
Based on that paper , you can link any liquid rocket to the V-2. That is the limit of the comparison.
My point is that I do not believe Kemp was inspired by the V2. He was inspired by his friends in CA.
As expected, the stock price dropped today.
Opened at 0.78 and closed at 0.73.
They seem confident, but there has been no announcement of a new investor.
Either that or their sat engine business is really taking off.
We will find out on the 13th.
sippin_bourbon:
By the way, in the 1994 book, on page 80, you will find a very short section about Tom Mueller’s activities (first employee of SpaceX). So the man with the shortest mention (in this book) later had the greatest success, which of course would not have been possible without Elon Musk.