WASHINGTON — Astra Space, a company that makes spacecraft propulsion and launches, has decided to accept a suggestion from its founders to turn the company into a private entity. This decision comes after the company had earlier indicated that its only other choice was to declare bankruptcy.
The company revealed on March 7 that it accepted a modified proposal put forth by Chris Kemp and Adam London, who respectively hold the positions of chief executive and chief technology officer. These executives had originally offered to privatize the company at $1.50 per share in a proposal made in November 2023. However, their revised proposal, which Astra has agreed to, set the price at $0.50 per share, a significant reduction.In a statement, Astra mentioned that a special committee of the company’s board of directors, which was responsible for assessing the proposal and any alternatives, unanimously recommended the revised proposal. This committee, consisting of independent or otherwise impartial directors, evaluated the proposal considering the company’s financial situation and concluded that it was in the company's best interests.
Subsequently, Astra’s board of directors approved the proposal, with Kemp, London, and Scott Stanford abstaining. As part of the deal, SherpaVentures Fund II, an affiliate of Stanford, who has supported the company's finances in recent months, agreed to contribute its stake in the company.
In their revised proposal, Kemp and London indicated that an estimated $40 million to $45 million would be required to fund the deal, covering the purchase of shares and other expenses, as well as providing at least $20 million of cash to fund operations. They reported that they had secured financing for the deal, including $8.6 million from unnamed customers to support future orders.
They did not disclose specific details about the financing, such as the identities of the companies financing future orders. Astra mentioned in the statement that, once it becomes private, the company will be owned by “a number of long-term investors” including Kemp and London.
Kemp and London's proposal appeared to be the sole option to sustain Astra. According to a filing with the Securities and Exchange Commission on March 1, the company stated that the special committee evaluating the privatization proposal had explored other options, “none of which have come to fruition.” It concluded that, if the proposal fell through,
its only option would be to file for Chapter 7 bankruptcy, leading to the company's liquidation. Astra anticipated that the deal would be finalized in the second quarter, with no additional shareholder approvals necessary. The company did not reveal whether it planned to disclose financial results for the fourth quarter and all of 2023 before becoming private..
The value of Astra's shares had plummeted by over 99% since it went public in July 2021 through a special purpose acquisition company (SPAC) merger, with the shares closing at $0.584 after Astra announced its decision to become private.
Astra previously warned that its only other choice was to file for bankruptcy before agreeing to take the company private.
