A recent filing with the FCC suggests that Firefly could be merging with a special purpose acquisition company in order to become a public company.
The largest shareholder in Firefly was forced to sell his shares due to national security concerns, and that's when the agreement to acquire a significant stake in the company was reached. The deal involves a special purpose acquisition vehicle, according to a recent FCC filing.
The majority of Firefly's equity was acquired in the proposed launch of the second Alpha rocket from the Air Force Base in California.
The move would not be new. Adcole Space was acquired by the private equity firm that specializes in defense and power generation, and then combined it with Deep Space Systems to form Redwire. Redwire was taken public last September.
The filing was not comment on by the company. In the past, Firefly's CEO has talked about taking the company public. There could be a public offering as early as 2022. Neither Firefly, Noosphere or Polyakov responded to requests for comment.
Since the founding of Firefly, it has experienced many challenges. The Alpha rocket was developed by Firefly to be used as an air-launched rocket with Paul Allen's system. The company ran out of money in 2016 due to a trade secrets lawsuit, mounting costs and the withdrawal of a major investor.
A series of maneuvers followed, including a lightning asset sale and a brief Chapter 7 bankruptcy that are still the subject of litigation by the company's early investors. Polyakov's investment company, Noosphere Venture Partners, gained control of a new version of Firefly, including its intellectual property and many of its engineers.
Multiple satellite launch orders and a $93 million contract from NASA were some of the commercial success the company enjoyed. The Series A round of Firefly raised $75 million. Noosphere sold about $100 million of its Firefly holdings to Series A participants, which reduced its stake to less than 50%. Noosphere's remaining equity would be worth around $500 million.
Alpha's maiden launch was aborted when one of the rocket's engines shut down two and a half minutes into flight. It was in the process of negotiating a launch license for its second attempt when it was reported that Polyakov had agreed to sell Noosphere's stake in Firefly. The Committee on Foreign Investment in the U.S., or CFIUS, expressed concerns about the possibility of Firefly's technology making its way to Ukraine, Russia or other nations.
Polyakov accused the U.S. Air Force and other agencies of betraying him, and said that he was giving up his stake in Firefly for $1. The transaction was announced late last month. It was worth at least $101 million, as it triggered a regulatory review that kicks in at that amount.
The recent FCC filing gives more information about the transaction. A $75 million direct equity investment in Firefly was made through a Series B preferred equity round, as well as purchasing the entirety of Noosphere's stake. The combination means that it will own over 50% of Firefly and will have the right to appoint a majority of the Board of Directors.
In 2020 and 2021, Space SPACs were a hot commodity, with companies like Virgin Galactic and Rocket Lab seeing their stock soar. Only one of the dozen space startups that went public is trading above their typical launch price of $10, and only by pennies. Redwire is trading below its high.
The timing of Firefly's SPAC could depend on when it can prove its ability to reach a certain altitude. Firefly's application to transfer the communications authorization for its second Alpha flight was approved by the FCC last week, but the FAA has yet to issue the company with an actual launch license.
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