SPAC stocks are falling in space as difficult merger target Momentus is unlikely to fly this year

An artist’s rendering of a Momentus Vigoride transfer vehicle deploying a satellite in orbit.

Momentus

The shares of Stable Road Acquisition Corp. fell in trading Monday after the company announced in a securities filing that its merger target, in-space transportation company Momentus, is no longer planning customer missions this year.

“Momentus announced to Stable Road that it is not expected to fly any missions in 2021 and that this determination was based on information from SpaceX that Momentus-related efforts have been suspended while Momentus is working to obtain approvals from the US government “wrote Stable Road.

Stable Road stock fell 13.4% in trading to close at $ 10.42.

The company was the first of several special purpose vehicles (SPACs) to announce contracts with space companies last year with the intention of listing Momentus valued at $ 1.2 billion. However, Stable Road’s merger with Momentus has stalled this year, largely due to national safety concerns voiced by several U.S. government agencies.

Mikhail Kokorich – the Russian founder of Momentus, who investors learned about US law banning the use of the company’s technology – resigned as CEO and director in January after the Pentagon said “Momentus is a risk to them.” National security”. In a statement at the time, Stable Road said Kokorich’s resignation was part of “efforts to expedite resolution” of concerns about the company’s overseas property.

The next month, the deal and Kokorich were under scrutiny by the U.S. Interinstitutional Committee on Foreign Investment in the U.S. (CFIUS). Stable Road announced in February that Kokorich and his wife will “dispose of all” property in Momentus by March 2024, “or as requested by CFIUS.” Also in February, Momentus took out a $ 25 million loan for “growth capital” with an additional $ 15 million loan option – subject to Federal Aviation Administration approval, payloads by the end June to start.

In April, Stable Road filed a motion to shareholders to extend the life of the SPAC by three months in order to have more time to complete the merger with Momentus.

A Falcon 9 rocket will launch the Transporter 1 mission in January 2021.

SpaceX

However, in early May, the company learned that the FAA had denied Momentus’ request to launch a payload for a SpaceX mission in June.

“During an inter-agent consultation, the FAA was informed that the launch of the Momentus payload raises national security concerns related to Momentus’ current corporate structure,” Stable Road wrote in a May 10 securities notification.

Despite the FAA’s recent setback, Stable Road received shareholder approval on May 13 to extend the merger deadline from May to August. The extension was completed by a narrow margin, with Stable Road backing 66.2% of shareholders and 65% required for approval.

The SPAC’s release on Monday is the latest blow to the deal. The company says Momentus is still seeking “US government approvals required for its missions.”

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