v3.26.1
Long-Term Debt and Other Financing Arrangements
 6 Months Ended
Jun. 30, 2026
Debt Disclosure [Abstract]  
Long-Term Debt and Other Financing Arrangements
7. LONG-TERM DEBT AND OTHER FINANCING ARRANGEMENTS 
Long-term debt consists of the following (in thousands): 

As of:
June 30, 2026December 31, 2025
Principal
Amount
Unamortized Premium (Discount) and Deferred Financing Costs
Carrying
Value		Principal
Amount
Unamortized Premium (Discount) and Deferred Financing Costs
Carrying
Value
2024 Debt Repayment$221,625 $(54,343)$167,282 $221,625 $86,045 $307,670 
2023 Funding Agreement202,067 (10,560)191,507 182,147 (12,164)169,983 
2021 Funding Agreement— — — 6,250 (115)6,135 
Total debt$423,692 $(64,903)$358,789 $410,022 $73,766 $483,788 
Less: current portion51,400 — 51,400 31,950 (115)31,835 
Long-term debt$372,292 $(64,903)$307,389 $378,072 $73,881 $451,953 

The carrying value of debt reflected above is net of deferred financing costs and any premium or discount to the loan amount at issuance, including accretion. As of June 30, 2026, the current portion of long-term debt relates to the 2023 Funding Agreement; these amounts are expected to be paid under the Updated Services Agreements through service fee offsets from the Customer during the next twelve months. The Company's obligations under its debt agreements included in the table above are secured by a first-priority lien over substantially all of the assets of the Company and its domestic subsidiaries.

2024 Debt Repayment

As discussed in Note 3: Special Purpose Entity, pursuant to the Updated Services Agreements, the Customer funded $235 million (including $13.3 million of make whole premium payments, which were recorded to deferred revenue) for the Company to retire its outstanding 2023 13% Notes. As of June 30, 2026, the outstanding principal balance of the 2024 Debt Repayment was $221.6 million. The 2024 Debt Repayment is expected to be fully repaid by offsetting against amounts payable by the Customer to the Company on a quarterly basis over a period of 32 quarters commencing on a fixed repayment date in the future that is not tied to the launch of services. The 2024 Debt Repayment is classified as debt because the Company's repayment obligations will commence on such date regardless of when services are provided under the Updated Services Agreements. The 2024 Debt Repayment accrues annual fees, which would be reduced or eliminated entirely if the Company meets certain defined milestones (as amended in April 2026) associated with the completion of the Extended MSS Network, at which time prior accruals will be reduced or eliminated. These accrued fees are included in noncurrent liabilities on the Company's balance sheet and totaled $38.2 million as of June 30, 2026. When the Company achieves milestones, the associated fees are no longer due to the Customer, resulting in a non-operating gain recorded in the Company's statement of operations. During the second quarter, the Company achieved two milestones under the 2024 Debt Repayment and recorded a non-operating gain totaling $4.2 million.

In connection with the January 1, 2026 adoption of ASU 2025-07, the Company evaluated the features within the 2024 Debt Repayment under ASC 835, which required recognition of the underlying rights and privileges associated with the interest reduction mechanism embedded in the 2024 Debt Repayment. The fair value of the 2024 Debt Repayment was $162.8 million. The difference between the face value and the fair value of the debt was $58.8 million, which was recorded as a debt discount with an offset to deferred revenue, representing the value of the rights and privileges within the 2024 Debt Repayment resulting from the customer relationship. Refer to Note 4: Revenue for further information.
On the issuance date, the Company recorded the 2024 Debt Repayment at fair value. The difference between the principal amount of the 2024 Debt Repayment and the fair value was recorded as a debt premium. Additionally, the Company was required to bifurcate the fair value of the interest reduction mechanism and record a derivative asset upon issuance equal to the debt premium. The Company adopted ASU 2025-07 on January 1, 2026, which resulted in the derecognition of the derivative asset and the associated debt premium. Prior to the adoption of ASU 2025-07, the debt premium was amortized as an offset to interest expense using the effective interest rate method. Refer to Note 8: Derivatives and Note 9: Fair Value Measurements for further information.

2023 Funding Agreement

In 2023, the Service Agreements were amended to provide for, among other things, payment of up to $252 million to the Company (the "2023 Funding Agreement"), which the Company has used and intends to use to fund 50% of the amounts due under its 2022 agreement with MDA Space, as well as launch, insurance and ancillary costs incurred in connection with the construction and launch of replacement satellites purchased under such agreement. As of June 30, 2026, the outstanding principal balance under the 2023 Funding Agreement was $202.1 million, which increased by $19.9 million from the balance at December 31, 2025 due to the Company's receipt of additional funds under the 2023 Funding Agreement during the second quarter of 2026.

The total amount paid to the Company under the 2023 Funding Agreement, including fees, is expected to be fully repaid by offsetting against amounts payable by the Customer pursuant to the Service Agreements beginning in the third quarter of 2026 and continuing for no longer than 16 consecutive quarters. Compounded fees are accrued at a fixed rate based on the average outstanding balance of the 2023 Funding Agreement. The balance accrued for these fees was $30.6 million as of June 30, 2026, of which $16.5 million is included in "Accounts payable and accrued expenses" and $14.1 million is included in "Other non-current liabilities" on the Company's balance sheet.

For as long as any amount funded under the 2023 Funding Agreement is outstanding, the Company will be subject to certain covenants, including (i) maintenance of a minimum cash balance of $30 million, (ii) interest coverage and leverage ratios, and (iii) other customary negative covenants, including limitations on certain asset transfers, expenditures and investments. Thermo guaranteed certain of the Company’s obligations under the 2023 Funding Agreement and Service Agreements. See Note 11: Related Party Transactions for further information regarding Thermo's guarantee.

As the Company makes draws under the 2023 Funding Agreement, the amount of each draw is recorded at fair value using a discounted cash flow model. The Company records a debt discount or premium for the difference between the fair value of the debt and the proceeds received and accretes the debt discount or amortizes the debt premium with an offset to interest expense through the maturity date using the effective interest rate method. The total proceeds of the draw made during the second quarter of 2026 were $19.9 million with a fair value of $20.8 million. The Company attributed this difference to the timing of cash flows for the draws and interest payments to be made pursuant to the 2023 Funding Agreement, resulting in an internal rate of return higher than the discount yield utilized in the valuation. Refer to Note 9: Fair Value Measurements for further discussion on the fair value of this draw.

2021 Funding Agreement

During 2021, the Company received payments totaling $94.2 million (as amended, the "2021 Funding Agreement"). This funding was repaid by offsetting against amounts payable as services were performed by the Company. The final repayment of $6.3 million was recouped during the first quarter of 2026 pursuant to the terms of the 2021 Funding Agreement. As of June 30, 2026, the outstanding principal balance under the 2021 Funding Agreement was zero. The debt discount associated with the 2021 Funding Agreement was accreted to interest expense through the maturity date using the effective interest rate method. No interest accrued on amounts outstanding under the 2021 Funding Agreement.

Series A Preferred Stock

In 2022, the Company issued 149,425 shares of its 7.0% Perpetual Preferred Stock, Series A, liquidation preference $1,000 per share (the "Series A Preferred Stock") with a fair value of $105.3 million and total outstanding amount of $149.4 million. The shares of Series A Preferred Stock do not possess voting rights, other than with respect to certain matters specifically affecting the rights and obligations of the Series A Preferred Stock.

Holders of Series A Preferred Stock are entitled to receive, when, as and if declared by the Board or a committee thereof, cumulative cash dividends based on the liquidation preference of the Series A Preferred Stock, at a fixed rate equal to 7.00%
per annum, payable quarterly in arrears on January 1, April 1, July 1 and October 1 of each year. During the six months ended June 30, 2026, the Company made dividend payments to the holders of the Series A Preferred Stock, which were approved by the Board totaling $5.3 million.

The Series A Preferred Stock may be redeemed by the Company, in whole or in part, at any time. The holders of the Series A Preferred Stock do not have any rights to convert or require the Company to redeem such stock. The holders of the Series A Preferred stock have customary liquidation preferences.
Refer to Note 2: The Merger Agreement for discussion of the Mergers, including the proposed cancellation of the Series A Preferred Stock in exchange for the liquidation preference upon consummation of the Mergers.