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After a significant majority shareholder retreat, Firefly could head towards a SPAC – TechCrunch


Firefly Aerospace’s roller coaster ride could soon bring the rocket startup to the mass market through a merger with a special purpose acquisition, a filed with the FCC suggest.

Aerospace private equity firm AE Industrial Partners (AEI) announced last month that it had reached an agreement to acquire a “substantial stake” in Firefly after its largest shareholder, Max Polyakov. Ukrainian, was forced to sell his shares about national security concerns. A recent FCC filing provides new details of the deal, including that it involves a special-purpose acquisition vehicle.

The new FCC filingrelated to a proposed second Firefly Alpha rocket launch from Vandenberg Air Force Base in California this spring, adding that the acquisition involves “the majority of Firefly’s equity Aerospace” and is by “special purpose acquisition vehicles controlled by AE Industrial Partners.”

The move would not be unprecedented for AEI. In 2020, the private equity firm specializing in aerospace, defense and power generation purchased Deep Space Systems and then combined with the previously acquired Adcole Space to form the base company. space infrastructure called Redwire. AEI announced Redwire last September through the merger of SPAC.

AEI declined to comment on the filing to TechCrunch. Firefly’s CEO, Tom Markusic, has spoken publicly about taking the company public in the past. Markusic told CNBC last November that there could be a public offering as early as 2022. Neither Firefly, Noosphere nor Polyakov immediately responded to requests for comment.

Firefly has been through many challenges since Markusic, an Aluminum of SpaceX, Blue Origin and Virgin Galactic, founded it in 2014. In its original incarnation, Firefly began developing the Alpha rocket for use as a rocket Fire launched from the air with Paul Allen’s Stratolaunch system. But a trade secret lawsuit from Virgin Galactic, rising costs and the exit of a major investor left the company running out of money in 2016, before launching anything.

A series of moves that followed, including a flash sale of assets and a brief Chapter 7 bankruptcy remained the subject of litigation by the company’s early investors. As a result, in 2017, Polyakov gained control of the new version of Firefly, including its intellectual property and many of its engineers, through his investment firm Noosphere Venture Partners.

Thereafter, the company enjoyed considerable commercial success, including multiple satellite launch orders and a $93 million contract from NASA for a proposed lunar lander called Blue Ghost. Firefly raised $75 million in May 2021 in a Series A round. At the same time, Noosphere sold about $100 million of its Firefly stake to Series A participants, according to the report. reduce its total shares to less than 50%. Noosphere’s remaining equity will be valued at approximately $500 million.

In September, Alpha’s first launch failed to reach orbit when one of the rocket’s engines stopped working after two and a half minutes of flight. It is in the process of negotiating a launch license for a second attempt when Bloomberg reported that Polyakov has agreed to sell Noosphere’s stake in Firefly. His move was attributed to the Committee on Foreign Investment in the US, or CFIUS, which expressed concern about the possibility that Firefly’s technology would reach Ukraine, Russia or other countries.

In February, Polyakov put on Facebook accused CFIUS, the US Air Force, and other US agencies of betraying him and said he was “giving up” his stake in Firefly to Markusic for $1. In fact, the transaction, announced late last month, is ultimately with AE Industrial Partners. And it’s worth at least $101 million, since it triggered a regulatory review to start with that amount.

Recent FCC filings provide more details on the transaction. Along with the purchase of all shares of Noosphere, AEI made a direct investment of $75 million in Firefly Aerospace through a Series B preferred equity round. AEI notes that the combination means it “will own more than 50% equity and voting interest of Firefly Aerospace and shall have the power to appoint a majority on the Board of Directors of Firefly Aerospace.”

Space SPACs are the darling of the market in 2020 and 2021, with companies like Virgin Galactic and Rocket Lab seeing their shares soar. But of the dozens of space startups that have used SPAC to go public, only AST Space Mobile (which operates on a space-based mobile network) is trading above their typical launch prices. 10 dollars and only in cents. AEI’s Redwire is currently trading below half its 52-week high.

The duration of Firefly’s SPAC may depend on when it can demonstrate its ability to reach orbit – and that’s still very much in the air. While Firefly’s application to transfer communications rights for the second Alpha flight was approved overnight by the FCC last week, the FAA has yet to issue the company an actual launch permit.



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