Spire Global Signs Waiver and Amendment to Financing Agreement with Blue Torch Capital

Rhea-AI Summary

Spire Global (NYSE: SPIR) has entered into a waiver and amendment with Blue Torch Capital on August 27, 2024, addressing financial covenant issues. The agreement waives events of default related to the debt-to-EBITDA ratio and delayed financial statements for Q2 2024. It also amends financial covenants, providing immediate relief from leverage ratios. An amendment fee of 3.5% of the outstanding term loan principal will be added to the loan balance. The company must make a $10 million principal payment by August 31, 2024. As of June 30, 2024, Spire had approximately $46 million in cash and equivalents. The company is currently reviewing its accounting practices for revenue recognition in its 'Space as a Service' business and potential embedded leases in certain contracts.

Positive

• Secured waiver for events of default, avoiding potential financial penalties
• Obtained immediate covenant relief from leverage ratios, providing financial flexibility
• $46 million in cash and equivalents as of June 30, 2024

Negative

• Required to pay $10 million towards outstanding principal balance by August 31, 2024
• 3.5% amendment fee added to the principal balance of term loans
• Ongoing review of accounting practices may delay financial reporting
• Potential issues with revenue recognition in 'Space as a Service' business

Insights

Financial Analyst

The waiver and amendment to Spire Global's financing agreement with Blue Torch Capital is a critical development for the company's financial stability. The waiver of default events and amendment of financial covenants provide much-needed breathing room, but at a cost. The $10 million principal payment and 3.5% amendment fee added to the loan principal highlight the company's financial strain. With only $46 million in cash and equivalents as of June 30, the $10 million payment represents a significant portion of their liquid assets. This could potentially impact their operational capabilities and future growth initiatives. The ongoing review of accounting practices adds another layer of uncertainty, potentially signaling deeper financial issues. Investors should closely monitor the company's ability to meet future obligations and its progress in resolving accounting concerns.

Legal Expert

The waiver and amendment agreement is a double-edged sword for Spire Global. While it provides temporary relief from default events and covenant breaches, it also imposes additional financial burdens. The company's failure to meet leverage ratios and deliver financial statements on time raises governance concerns. The ongoing review of revenue recognition practices and potential embedded leases in certain contracts could have significant legal and financial implications. This situation may expose the company to regulatory scrutiny and potential shareholder actions. The delay in financial reporting further complicates the legal landscape, potentially affecting compliance with NYSE listing requirements. Investors should be cautious and watch for any developments regarding the accounting review and its outcomes, as these could have material impacts on the company's legal standing and financial reporting.

Market Research Analyst

Spire Global's financial maneuvers reflect broader challenges in the space technology sector. The company's struggle with debt ratios and cash flow management is not uncommon among growth-stage space firms. However, the need for covenant relief and the ongoing accounting review may erode investor confidence in the short term. The space-as-a-service business model, while innovative, appears to be causing complexities in revenue recognition and potentially in asset classification. This situation underscores the need for clearer accounting standards in emerging tech sectors. The market's reaction to this news will likely be cautious, potentially impacting not just Spire but also peer companies in the commercial space industry. Investors may start demanding more transparency and stricter financial controls from companies in this sector, potentially slowing down the influx of capital into space tech startups.

VIENNA, Va.--(BUSINESS WIRE)-- On August 27, 2024, Spire Global, Inc. (NYSE: SPIR) (“Spire” or the “Company”) entered into a waiver and amendment to its current financing agreement with Blue Torch Capital.

The waiver and amendment:

• waives events of default under the financing agreement arising out of the maximum debt to EBITDA leverage ratio on June 30, 2024 being greater than the required ratio and the failure to deliver the financial statements for the fiscal quarter ended June 30, 2024;
• amends the financial covenants to provide immediate covenant relief from the leverage ratios in the financing agreement;
• provides for an amendment fee, which is 3.5% of the aggregate outstanding principal balance of the term loans on the effective date of the waiver and amendment and shall be paid-in-kind and added to the principal balance of the term loans; and
• allows for a reduction in the amendment fee under certain refinance or pre-payment scenarios.

The waiver and amendment also requires the Company to make a $10 million payment toward the outstanding principal balance of the term loans under the financing agreement on August 31, 2024. As of June 30, 2024, the Company had cash, cash equivalents and short-term marketable securities of approximately $46 million.

This estimate of cash, cash equivalents and short-term marketable securities as of June 30, 2024 is preliminary and represents the most recent current information available to Company management. The Company’s condensed consolidated balance sheet as of June 30, 2024 and condensed consolidated statement of cash flows for the six months ended June 30, 2024 are not currently available due to the Company’s ongoing review of (i) accounting practices and procedures with respect to revenue recognition related to certain contracts in its “Space as a Service” business (the “Contracts”) under applicable accounting standards and guidance and (ii) the potential existence of embedded leases of identifiable assets in the Contracts, each as further described in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on August 27, 2024. The Company is working to issue full financial results as of and for the three and six months ended June 30, 2024 as soon as practicable.

About Spire Global, Inc.

Spire (NYSE: SPIR) is a global provider of space-based data, analytics and space services, offering unique datasets and powerful insights about Earth so that organizations can make decisions with confidence in a rapidly changing world. Spire builds, owns, and operates a fully deployed satellite constellation that observes the Earth in real time using radio frequency technology. The data acquired by Spire’s satellites provides global weather intelligence, ship and plane movements, and spoofing and jamming detection to better predict how their patterns impact economies, global security, business operations and the environment. Spire also offers Space as a Service solutions that empower customers to leverage its established infrastructure to put their business in space. Spire has nine offices across the U.S., Canada, UK, Luxembourg, Germany and Singapore. To learn more, visit spire.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws, which statements involve substantial risks and uncertainties. Forward-looking statements generally relate to future events or the Company’s anticipated financial or operating performance. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expect,” “plan,” “anticipate,” “could,” “would,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “project,” “potential,” “seek” or “continue” or the negative of these words or other similar terms or expressions that concern the Company’s expectations, strategy, plans or intentions. Forward-looking statements contained in this press release include, but are not limited to, statements about the Company’s ability to satisfy the updated covenants and other obligations in the financing agreement.

The Company cautions you that the foregoing list may not contain all of the forward-looking statements made in this press release. You should not rely upon forward-looking statements as predictions of future events. Factors that may cause future results to differ materially from the Company’s current expectations include, among other things, the Company’s future financial results and any further delay in the filing of required periodic reports. For other risk factors affecting the Company, see “Risk Factors” in the Company’s Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. Moreover, the Company operates in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time and it is not possible for the Company to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this press release. The Company cannot assure you that the results, events, and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events, or circumstances could differ materially from those described in the forward-looking statements.

Neither the Company nor any other person assumes responsibility for the accuracy and completeness of any of these forward-looking statements. Moreover, the forward-looking statements made in this press release relate only to expectations as of the date on which the statements are made. The Company undertakes no obligation to update any forward-looking statements made in this press release to reflect events or circumstances after the date of this press release or to reflect new information or the occurrence of unanticipated events, except as required by law. The Company may not actually achieve the plans, intentions or expectations disclosed in the forward-looking statements and you should not place undue reliance on the forward-looking statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240829731832/en/

For media:

Kristina Spychalski

Head of Communications

Comms@Spire.com



For investors:

Benjamin Hackman

Head of Investor Relations

Benjamin.Hackman@Spire.com

Source: Spire Global, Inc.

FAQ

What were the key terms of Spire Global's waiver and amendment with Blue Torch Capital on August 27, 2024?

The key terms include waiving events of default related to the debt-to-EBITDA ratio, amending financial covenants for immediate relief, adding a 3.5% amendment fee to the loan principal, and requiring a $10 million principal payment by August 31, 2024.

How much cash and equivalents did Spire Global (SPIR) have as of June 30, 2024?

Spire Global reported approximately $46 million in cash, cash equivalents, and short-term marketable securities as of June 30, 2024.

What accounting issues is Spire Global (SPIR) currently reviewing?

Spire Global is reviewing its accounting practices for revenue recognition related to certain contracts in its 'Space as a Service' business and the potential existence of embedded leases of identifiable assets in these contracts.

When will Spire Global (SPIR) release its full financial results for Q2 2024?

Spire Global stated it is working to issue full financial results for the three and six months ended June 30, 2024, as soon as practicable, but no specific date was provided due to ongoing accounting reviews.