OneWeb, the British-headquartered satellite communications company, announced on 27 March 2020 that it has filed for Chapter 11 protection from creditors under the provisions of the Bankruptcy Code in the US Bankruptcy Court in New York’s Southern District.
According to a company press release, OneWeb intends to use the Chapter 11 protections to pursue a sale of the company in order to maximise as much value of the venture.
The bankruptcy filing came after OneWeb executives failed to secure an additional US$2 billion in funding from one their biggest backers, Softbank. According to the Financial Times, the talks between OneWeb and Softbank ended because of an inability to agree terms to further funding just before the latest batch of 34 OneWeb satellites were launched from Baikonur Cosmodrome on 21 March 2020.
Previously, OneWeb had successfully raised US$3.4 billion from investors such as Airbus Defence and Space, Virgin Group, Qualcomm, Bharti Enterprises, Grupo Salinas, as well as Softbank.
It would appear that a combination of Softbank’s heavy debt burden and collapsing market confidence due to the Coronavirus pandemic sealed the fate of OneWeb’s fortunes.
Adrian Steckel, the CEO of OneWeb, partially acknowledged this reality in his 27 March 2020 public statement, “OneWeb has been building a truly global communications network to provide high-speed low latency broadband everywhere. Our current situation is a consequence of the economic impact of the COVID-19 crisis. We remain convinced of the social and economic value of our mission to connect everyone everywhere. Today is a difficult day for us at OneWeb. So many people have dedicated so much energy, effort, and passion to this company and our mission. Our hope is that this process will allow us to carve a path forward that leads to the completion of our mission, building on the years of effort and the billions of invested capital. It is with a very heavy heart that we have been forced to reduce our workforce and enter the Chapter 11 process while the Company’s remaining employees are focused on responsibly managing our nascent constellation and working with the Court and investors.”
OneWeb is laying off the majority of its workforce with the exception of several dozen engineers who will maintain the operation of the 70 OneWeb satellites already in orbit so that the company can maintain its spectrum licence.
The challenge for OneWeb, however, is to sell its current on-orbit and ground assets as well as any intellectual property to a prospective seller. With just 70 satellites in orbit, half of its 44 ground stations constructed or under development, and no user segment ready for market, any buyer will have to invest considerable capital in order to get the constellation to a point where it might become commercially viable.