EXIM shutdown threatens Orbital's bid for Azerbaijan deal

Orbital ATK competes with European and U.S. manufacturers, including Boeing Co (BA.N), which sources said this week has already lost one large satellite contract due to the ongoing uncertainty about the bank's future.

Orbital ATK built Azerbaijan's first satellite launched into orbit in February 2013, a telecommunications satellite known as the Azerspace/Africasat-1a satellite, which was based on Orbital's flight-proven GEOStar-2 platform.

That satellite was financed in large part by the EXIM bank.

Azerbaijan is now soliciting bids for  a second telecommunications satellite, and wants to wrap up the process this year, but Orbital and other U.S. manufacturers will be at a disadvantage if they cannot offer financing guaranteed by the U.S. bank, the source said.

"You've got to be responsive to the whole request for proposals, and that includes export credit financing arrangements. Without it, you can't be competitive since others will have that financing available," said the source.

Orbital spokesman Barry Beneski declined comment on the specific competition, but said his company was pushing for reauthorization of the trade bank, which has financed a number of satellites built by Orbital for customers in other countries.

He said losing access to trade credits would be hard for the company, but the impact would be even greater on its suppliers, who account for 50 percent of every Orbital satellite built.

Orbital could not finance the satellite deals itself, Beneski said. "That's not that business we're in. It's not an efficient use of our capital."

Tea Party conservatives in the U.S. Congress have attacked the trade bank as a promoter of "crony capitalism" for multinationals such as Boeing and General Electric Co (GE.N).

The bank's backers argue that it actually provides revenues for the U.S. government, and helps level the playing field for U.S. exporters given similar trade credits available for other manufacturers around the world, and supports U.S. jobs.

Earlier this week, MDA Corp (MDA.TO), the Canadian parent of U.S. based Space Systems/Loral, told investors the shutdown of the bank, the stronger U.S. dollar, and a series of rocket failures drove satellite orders across the industry in 2015.

It said it had already used some financing provided by the Canadian export control agency, but there was not enough funding available for the larger market without EXIM.

 

(Reuters)