NEW YORK - Satellogic Inc. (NASDAQ: SATL), a company specializing in high-resolution Earth Observation (EO) data, has secured $30 million in financing through secured convertible promissory notes. The transaction, led by Tether Investments Limited, was completed by Satellogic's wholly-owned subsidiary, Nettar Group, Inc.
The proceeds, netting approximately $27.6 million after transaction costs, are aimed at bolstering Satellogic's operations, particularly its U.S. strategy, national security market, and global space systems initiatives. According to Emiliano Kargieman, CEO & Founder of Satellogic, this investment from Tether will significantly support the company's mission. Rick Dunn, CFO of Satellogic, indicated that the funds would facilitate continued expansion throughout 2024.
The convertible notes come with an initial interest rate of SOFR plus 6.50% per annum, which may increase by an additional 4.0% under certain default conditions. The notes are guaranteed by Satellogic and its material subsidiaries, excluding Nettar Group, and are secured by the company's assets, including intellectual property.
These notes are convertible into Satellogic's Class A ordinary shares at a rate of $1.20 per share, subject to standard anti-dilution adjustments and contingent upon approval by the Committee on Foreign Investment in the United States (CFIUS). The notes mature on April 12, 2028, and the agreement allows for the issuance of additional notes, provided the total does not exceed $50 million.
The funding arrangement includes certain covenants restricting Satellogic's financial and operational activities, such as incurring additional debt, creating liens, and making asset sales outside the ordinary course of business. In the event of a change of control or asset sale, the notes may be subject to prepayment or repurchase at specified terms.
Additionally, the agreement grants Tether pre-emptive rights to maintain its ownership percentage and requires Satellogic to register the shares for resale upon conversion of the notes. The offer and sale of the notes were not registered under the Securities Act of 1933 and were subject to exemption from registration requirements.
This financial move is based on a press release statement and does not constitute an offer to sell or a solicitation of an offer to buy Satellogic's securities.
InvestingPro Insights
As Satellogic Inc. (NASDAQ: SATL) navigates its strategic expansion, financial metrics and market performance provide a critical backdrop for understanding the company's position. With a market capitalization of $140.65 million, Satellogic's size in the industry is modest, but its financial activities are of significant interest to investors and analysts alike.
The company's Price to Earnings (P/E) ratio stands at -2.24, indicating that Satellogic is currently not profitable, with its net income expected to drop this year. This aligns with an InvestingPro Tip that analysts do not anticipate the company will be profitable this year. Moreover, the company's Price to Book ratio as of the last twelve months ending Q3 2023 is 2.18, suggesting that investors are willing to pay a higher price for what the company is intrinsically worth according to its balance sheet.
An InvestingPro Tip also highlights that Satellogic holds more cash than debt on its balance sheet, which can be a positive sign for the company's financial health and its ability to fund operations without relying heavily on external financing. However, another tip points to the company quickly burning through its cash, which could be a cause for concern regarding its long-term sustainability.
InvestingPro offers additional insights, with a total of 16 tips available for Satellogic, which can help investors make more informed decisions. For those interested in a deeper analysis, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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