EO company Spire ($SPIR) announced a transformative deal on Wednesday to sell its maritime business line to Kpler, a Belgian trade intelligence firm, eliminating mounting debt and putting the firm on a stronger financial footing.
“It takes a company that has an attractive business, but it has a high debt load…and it transforms it into an entity that is getting rid of $16 million of [annual] interest rate payments, being completely debt free and with a substantial balance sheet, that makes it a far more attractive partner for high quality, high value, long-term contracts,” Spire CEO Peter Platzer told Payload.
The sale will allow the Spire to pay off more than $118M in debt and leave it with another $100M on its balance sheet. The company’s stock rose 15% on the news, closing yesterday at $13.45 a share.
Dollars and cents: Spire failed to file earnings reports with the SEC in the last two quarters. The company said the lack of results was due to changes in how it accounts for revenues from operating satellites for customers and government research contracts. It now faces an NYSE-issued deadline to do so by Feb. 2025.
However, its failure to submit quarterly disclosures by the end of October violated the terms of a $120M loan from Blue Torch Finance, which could have led to accelerated debt payments. Spire said it had just $37M in cash on its balance sheet on Nov. 4, after making a $10M payment to Blue Torch.
After the company delayed its Q2 earnings report in August, it received an unsolicited offer for its maritime business, Platzer said. Spire’s board conducted a bidding process that resulted in Kpler taking the business over for $233.5M, plus $7.5M in service contracts.
Ocean eyes: Kpler will obtain a portfolio of maritime monitoring contracts that earn about $40M a year, along with Spire staff and IP related to the business. The satellites that collect the ship transponder data will still be owned and operated by Spire.
The bulk of the business came from Spire’s 2021 acquisition of the company exactEarth for $161.2M, with $103.4M of that payment in cash.
While this week’s sale was opportunistic—Spire raised a $10M strategic investment from Signal Ocean, a maritime data company, as recently as February—the segment’s annual revenue roughly doubled over the past three years, and the ability to spin out that portion of the company speaks to the maturation of the EO industry.
“Six times is probably not quite the multiple that I would be hoping for eventually, but it certainly sends the right signal that, okay, here are repeatable, profitable business models, leveraging data from space to drive industries on Earth,” Platzer said.
