Russian private aviation holding company CJSC S7 Group’s purchase of Sea Launch, a rocket launch company that operates out of the Port of Long Beach, is making waves in the Southern California aerospace industry, with a legal challenge by the Boeing Co. and concerns about the Russian company’s involvement.
“I would have hoped that our collective industry and government would join together to reject an offer from a foreign government, especially Russia, to acquire the Sea Launch assets at any price, much less a bargain price,” said David Blanco, co-chairman of industry group SoCal Aerospace Council.
Blanco worries the sale, for a reported $150 million, could hinder future growth of the local aerospace industry.
Calls to Sea Launch, formed in 1995 by a consortium of international companies to launch satellites for the commercial voice, data, and broadband industries, and S7, which owns Russian airliner S7, weren’t returned.
S7 also announced that it had reached an agreement with the majority owner of Sea Launch, RSC Energia, a manned space systems contractor owned in part by the Russian government, to develop space-based transportation infrastructure and help with the operations of Sea Launch.
The deal will give S7, which had revenue over $1.3 billion in 2015, entry into the space industry, the company said.
“Space infrastructure is developing rapidly,” Vladislav Filev, chief executive of S7, said in a statement. “In our view, it is a very exciting area of business, with good long-term prospects.”
The company said it expected to conduct up to 70 launches within 15 years; no launches have occurred at the platform, which is positioned in the Pacific Ocean to take advantage of the Earth’s rotation, since 2014.
The deal still has to be approved by the Directorate of Defense Trade Controls and the Committee on Foreign Investment in the United States, with S7 expecting the process to take six months.
The deal could also be complicated by a dispute related to Sea Launch’s declaration of bankruptcy in 2009. As part of the company’s reorganization, RSC Energia increased its stake in Sea Launch to 95 percent. Boeing, which initially owned 40 percent of Sea Launch, and Kvaerner Moss Technology, a Norwegian engineering and construction company, which initially owned 20 percent, decreased their stakes to the remainder.
Last year, Boeing won a summary judgment against RSC Energia and two Ukrainian partners after alleging that they owed Boeing for costs related to the bankruptcy. Boeing then tried to stop the Sea Launch sale in U.S. District Court in Los Angeles when it heard about reports of its sale in April. According to court documents, Boeing and RSC Energia were working on a settlement agreement as of Sept. 21.