Home | Databases | WorldLII | Search | Feedback Edited Legal Collections Data

Sundahl, Mark --- "Financing space ventures" [2015] ELECD 262; in von der Dunk, Frans (ed), "Handbook of Space Law" (Edward Elgar Publishing, 2015) 874

Book Title: Handbook of Space Law

Editor(s): von der Dunk, Frans

Publisher: Edward Elgar Publishing

ISBN (hard cover): 9781781000359

Section: Chapter 16

Section Title: Financing space ventures

Author(s): Sundahl, Mark

Number of pages: 36

Abstract/Description:

As private space activities expand on a number of fronts and the applications of space technology increase, the need for capital to fund these extremely expensive ventures will also grow. The international (and supranational) nature of space activities, coupled with the idiosyncratic features of transactions related to these activities, make the financing of space ventures a particularly complex and challenging area of law. Due to the nature of the new private actors in space, the finance structures used to fund their activity will likely depend increasingly on the reliability of the lender’s security interest in the space asset that is being financed. As a result, the law of secured transactions will play an ever more critical role in the financing of space ventures. Chapter 16 explains the nature of finance transactions involving space assets and highlights the unique characteristics of these transactions. The existing landscape of secured transactions law is also described with particular attention paid to the current state of US law under Article 9 of the Uniform Commercial Code and to the challenges that exist under current law. This is followed by a description of the recently concluded UNIDROIT Space Assets Protocol to the Convention on International Interests in Mobile Equipment (the Cape Town Convention), along with a discussion of how this new international treaty intersects with the existing international law of outer space. The construction, launch and operation of satellites and other space objects require tremendous financial resources. The construction and launch of a single telecommunications satellite, for example, can easily run into the hundreds of millions of dollars. The value of a single transponder on a satellite can range from five to 20 million dollars. Given the capital-intensive nature of the space industry, financing is invariably a critical component of a successful venture. The types of transactions involved in financing space ventures vary. Equity finance, secured and unsecured lending, and project finance structures have all been utilized to raise capital. Equity finance refers to the raising of funds by the sale of a company’s shares of stock. This stock can be sold through public offerings in a stock exchange or through private offerings to individuals or companies. Funds can also be raised by borrowing money from a bank or a syndicate of banks. Such loans can be unsecured so that banks have no right to the borrower’s assets if the borrower fails to repay or, more typically, the loans can be secured on the assets of the borrower in order to provide the banks with some protection in the event of default. Project finance is a more complicated method of financing capital-intensive ventures in which the lenders financing the project rely on the revenue generated by the project for repayment of the debt obligations without recourse to the company sponsoring the project.