ATK Continues To Support Merger with Orbital Sciences

ATK Continues To Support Merger with Orbital Sciences

In an investors call this afternoon, ATK confirmed that its Board of Directors continues to support its merger with Orbital Sciences Corporation despite the October 28 Antares launch failure.  The shareholder vote has been postponed to January 27, 2015, but the ATK Board recommends that the merger go forward.

ATK has concluded that risks associated with Orbital’s recovery plan are “manageable,” and successful execution is “likely.” 

“ATK Board of Directors continues to support the merits of the transaction and recommends shareholders vote to approve issuance of ATK shares to Orbital shareholders in connection with the merger,” the company said in its presentation.

The two companies announced a “merger of equals” in April, but the explosion of Orbital’s Antares rocket on October 28 at Wallops Island, VA is a complicating event. Antares was launching a Cygnus spacecraft filled with cargo to the International Space Station (ISS) as part of Orbital’s Commercial Resupply Services (CRS) contract with NASA. 

Just one week after the accident, Orbital revealed its recovery plan to fulfill that contract, which requires Orbital to launch 20 tons of cargo to the ISS by the end of 2016.  To do that, Orbital will consolidate the remaining tonnage of cargo into four rather than five more launches, made possible by already planned upgrades to Cygnus and Antares.  The upgraded Cygnus was already scheduled to be introduced on the next launch, and Orbital will accelerate bringing a new version of Antares on line with a different rocket engine.  Until that new rocket is ready, expected in 2016, Orbital will use other companies’ rockets to launch Cygnus.  Those details are still pending.

What new engine will be used for Antares is a matter of considerable speculation.  Neither Orbital nor ATK has said what it is.  Antares has been using AJ26 engines, which are Russian NK-33 engines built more than 40 years ago, purchased and refurbished by Aerojet Rocketdyne.   During an investors call on November 5, Orbital Chairman, President and CEO David Thompson referred to ongoing technical and supply problems with the AJ26. 

Though there was no hard news today during the ATK investors call about what new engine has been selected, the presentation did note Orbital’s plan to “accelerate the introduction of a new Antares propulsion system upgrade in 2016” before summarizing its assessment of Orbital’s plan as being reasonable.  The company did add, however, that it would continue to “work closely with Orbital to monitor progress on the recovery and go-forward plan.”

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