SolAero Technologies Corp. raised $11 million in a sale-leaseback deal that sold about half the company’s 100,000-square-feet of space at the Sandia Science and Technology Park to an affiliate of Pontus Capital.
The transaction allows SolAero, which makes robust solar cells and panels for spacecraft, to remain in place under a long-term lease agreement with the new facility owner. It provides a needed cash infusion to sustain the company’s leading role in the rapidly-growing, low-earth-orbit satellite industry, said SolAero President and CEO Brad Clevenger.
“We could have raised private equity or debt, but we decided instead to execute a sale-lease transaction,” Clevenger told the Journal. “We got an above-market offer that put cash into the company to continue investing at the pace we need.”
The company sold one of its two buildings at the tech park in Southeast Albuquerque, where it’s been based since 1998.
“It won’t offset any of our operations,” Clevenger said. “We just pay rent now.”
Originally part of communications technology firm Emcore Corp., SolAero formed in 2014 after buying Emcore’s solar space division. Last year, a group of four institutional investors that included The Carlyle Group acquired a controlling equity stake in the company, which has grown fast in recent years as demand explodes for low-earth-orbiting satellites that can provide needed broadband connectivity across the globe.
In 2017, SolAero won a major contract to produce solar panels for about 700 satellites as part of a $3 billion project by Airbus OneWeb Satellites to extend high-speed Internet to underserved communities worldwide. That prompted SolAero to invest in a $10 million upgrade to its Albuquerque facilities to mass produce solar panels through a vertically-integrated, semi-automated production chain that reduced its output time cycle by 80%, according to the company.
OneWeb went bankrupt in March because of financial difficulties after its principal investor, SoftBank Group Corp., pulled its funding during the coronavirus. However, new investors agreed this month to acquire OneWeb for $1 billion, allowing SolAero – which already had produced 100 solar panels for the project – to restart production in the next few weeks, Clevenger said.
Apart from OneWeb, SolAero is signing up many more contracts for low-earth-orbit projects at an unprecedented pace.
“With so many companies now launching satellites, we have probably three times as many customers now as we had five years ago,” Clevenger said. “… We booked about $40 million in new business just in the past 90 days, even during the coronavirus.”
The company reported $100 million in revenue in 2017, but no longer publicly releases its financials. It now employs 346 people, up from 320 in 2017.
SolAero’s Albuquerque facility contains laboratory, clean room, and manufacturing space in close proximity to Sandia National Laboratories and the Air Force Research Laboratory at Kirtland Air Force Base, generating significant interest internationally with several offers from buyers, said Stu Sherman of the brokerage firm S.C. Sherman and Company, which mediated the deal in partnership with Keen-Summit Capital Partners LLC.
“The offering was very attractive to investors as the facility is in an extremely desirable area with competitive terms for the buyer,” Sherman said in a prepared statement. “The buyer is receiving a long-term lease with a quality tenant for their investment.”
The buyer, California-based Pontus Capital, is a private investment firm that acquires and manages real estate assets on behalf of other private and institutional capital partners.
“We decided to go with Pontus given their proven track record and certainty of close,” said Keen-Summit Principal and Managing Director Matt Bordwin.