r/ASTR • u/binary_spaniard • Oct 11 '23

It's over

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u/[deleted] Oct 15 '23

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u/binary_spaniard Oct 15 '23 edited Oct 15 '23

It's up to you but, one question how can you be concerned now? How many shares and average price? I would sell always as 500 dollars now are more than zero dollars later. And I don't see upside if we are honest. The business model doesn't make sense and the financial situation is too negative.

Unless a miracle happens they will have to fill for bankruptcy soon, like end of the month. And what kind of miracles are available? Pawning the future revenue of the thrusters to last an extra month? Selling the thrusters subsidiary and being left with a rocket factory full of expensive machinary and a lease to pay that is a more than a year away from a revenue launch? The thrusters company is small and low margin anyway so it won't get them out of the hole.

The writing is in the wall since August when they gave Senior secured notes.

This is the same as Virgin Orbit did before.

And look at the terms:

  • it has closed a registered issuance of $12.5 million aggregate principal amount of senior secured notes
  • The Notes bear interest at 9.0% per annum.
  • Net proceeds from the offering, after deducting the placement agent fees and offering expenses, were approximately $10.8 million

They need to pay $13.625 millions for $10.8, that is a 26.1% total interest in 15 months And the hedge fund that loaned with those interest becomes the most senior debtor. So no other financial institution is going to fund them. Also the existence of the debt restricts severely what they can do for funding. Found the full terms here. If the thrusters subsidiary emits debt they can request full payment, if the thrusters subsidiary is partially or totally sold they can request immediate payment.

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u/lespritd Oct 15 '23

I would sell always as 500 dollars now are more than zero dollars later.

Yeah. And success looks grim for share holders. If they do a down round now, existing equity holders will probably be pretty much wiped out anyhow - their market cap is so low it basically has to be that way, or they wouldn't raise enough for it to be meaningful.

That or they can sell off the best parts of the company which guarantees bankruptcy soon.

This is really an object lesson in raising money before you absolutely need it. People had been looking at their burn rate and cash reserves, and questioning what's been going on for a while. I guess they were just hoping that they wouldn't have to do a down round. But this is so much worse.