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Sea Launch’s reentry

Long Beach-based Sea Launch Co., once a major part of Boeing Co.'s rocket launch ambitions, could emerge from bankruptcy protection with a Russian firm as its largest shareholder.

Rocket engine maker Rocket & Space Corp. Energia, based in Moscow, has proposed investing $140 million to take an 85% stake in the unusual rocket venture that was founded by Chicago-based Boeing as a way to more efficiently launch satellites into space.

The investment is part of a plan to bring the firm out of Chapter 11, possibly by August.

But the proposed ownership change is raising questions about Sea Launch’s future in Long Beach and whether it will continue to operate the floating platform from the Pacific Ocean.

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“If Energia is going to be the primary stakeholder, then Sea Launch’s days in Long Beach are likely to be numbered,” said Marco Caceres, senior space analyst for Teal Group Corp. “It just doesn’t make financial sense for them to launch from the Pacific.”

Sea Launch uses a converted oil-rig to launch rockets near the equator, which allows the rockets to reach orbit faster while burning less fuel because they use the Earth’s rotation for momentum. The rockets, which are made in the Ukraine, are carried out to sea in a specially designed ship. Both the ship and the platform are docked in Long Beach.

The company also launches rockets from its land-based facility in Kazakhstan, an option that the proposed new Russian owner may prefer.

Sea Launch could save time and money by not having to ship the rocket -- and the technicians that work on it -- halfway across the globe to Long Beach, Caceres said.

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But Kjell Karlsen, the president of Sea Launch, said that despite the possible new ownership structure, the company has no plans to abandon Southern California. In fact, Karlsen said, the company plans to double the number of employees to 100 as it ramps up for more launches next year.

“Staying in Long Beach gives us the easiest access to space and a better ability to tap the heavy-lift market,” he said, referring to the ability to launch larger satellites. “Now that we secured the investment from Energia, there’s light at the end of the tunnel.”

When Sea Launch was formed in 1995, it was seen by Boeing as an alternative to launching its satellites from land, many of them built in nearby El Segundo. Under the initial plan, the aerospace giant held a 40% stake, with the remaining shares held by Energia, a Norwegian shipbuilder, and two Ukrainian rocket component makers. All told, the consortium poured about $1 billion into the project, most of it to build the ship and the floating platform.

The company has been running on a skeleton crew since it entered bankruptcy last June after it could not pay a $52-million judgment against it in connection with a terminated launch contract.

The judgment came shortly after a platform explosion in early 2007 destroyed a commercial satellite and set operations back about a year.

Sea Launch, which counts DirecTV Inc. and satellite services provider Intelsat as customers, has a backlog of four launches. At least four other launches have been canceled since it entered Chapter 11.

The company has no launches scheduled for this year but has two scheduled for next year.

“We need about four sea launches a year to stay profitable,” Karlsen said. “But we are confident that our customer base will return as we come out of bankruptcy.”

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Analysts said Sea Launch faces an uphill battle, considering how the demand for rocket launch has been slowing. The world’s top three satellite service providers -- SES, Intelsat and Eutelsat Communications -- have said they expect fewer satellites launches over the next three years.

“I couldn’t imagine a worse time to enter the launch market than right now,” said Clayton Mowry, president of French-owned Arianespace Inc., a Sea Launch competitor. “Everybody’s bracing for a downturn.”

Joseph Tedino, a Boeing spokesman, declined to say why it was reducing its stake in the venture but noted that it hasn’t made money since its inception.

william.hennigan@latimes.com


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