Theia Group Inc. says in court documents that funding agreements for its satellites, which it plans to build at a multibillion-dollar campus in Albuquerque called the Orion Center, have fallen through. The revelation was made in response to an August lawsuit from FCS Advisors, which operates as part of New York City investment firm Brevet Capital Management.
FCS seeks to recover almost $290 million it claims were due on two promissory notes as of July 22. The lender also asks that someone be appointed to oversee Theia Group's Federal Communications Commission (FCC) license that gives the company permission to launch 112 earth-imaging satellites. The suit comes as the company’s lease for the Aviation Center of Excellence land, where the Orion Center would be constructed, awaits final signatures. A 30-to-50-year lease agreement was unanimously approved by city council in April but since then, various lawsuits alleging unpaid rent and other bills have been filed against the company.
In presenting the Orion Center to the community in late 2020, Theia Group made representations for a minimum of 1,000 jobs and millions of square feet of development with financing already in place.
Allegations fly as funding falls through
A Sept. 10 declaration of Theia Group chief financial officer James Reid Gorman filed in U.S. District Court for the Southern District of New York, alleged that Brevet adviser Robert Leeds illicitly obtained a total of $4.2 million from the startup with false representations of equity in the company. The declaration was filed in opposition to a motion by FCS to have a court-appointed official oversee Theia Group's assets. The declaration says the findings were uncovered in a "forensic review" of the startup's finances by Gorman, who is the local lead for the Orion Center.
Scroll to the bottom to read Gorman's full declaration.
In response to an inquiry about allegations against Leeds, a spokesman for Brevet, Jonathan Gasthalter who is with public relations firm Gasthalter & Co., said "we stand by our claims and look forward to having them heard by the court." Brevet Capital is attempting to recover nearly $290 million, however a memorandum of law filed by Theia Group on Sept. 10 claims the startup only received $117 million.
Gorman's declaration says Brevet's loan budget had "no allocation whatsoever for the design, construction and launch of satellites" and instead focused most of the money on aircraft purchases and operations. The startup planned to provide "nation-states" with data and analytics using aircraft equipped with hardware and sensors that would emulate the function of its Theia Satellite Network (TSN) to garner funding for the constellation, according to a declaration of Theia Group CEO Erlend Olson filed last year in an ongoing trademark suit.
And while the company had secured such agreements, they were put on hold due to the pandemic, according to Gorman's declaration. If Theia Group is unable to make progress in developing its satellites, its Federal Communication Commission license may be in jeopardy. Per the FCC, Theia Group must have 56satellites in the air by no later than May 9, 2025.
In its original court complaint filed Aug. 19, FCS Advisors asked the court to appoint an official to oversee the FCC license, which FCS Advisors claims is Theia Group's most valuable asset. In Gorman's declaration, Theia Group opposes the request and claims in the Sept. 10 memorandum that the obtaining of the license demonstrates the startup's competency.
Late payments and a second satellite constellation
Gorman's declaration also says Theia Group tried to finance two satellite networks, one of which was supposed to help pay for the other.
The second constellation, the TSN, would provide surveillance and other types of monitoring services. The first, offering satellite communications, would support an "Internet-of-Space" line of business that "had the potential to" build the startup's reputation and attract financing for the more costly TSN, Gorman's declaration says.
To put that plan into place, Theia Group says it executed an agreement with Barclays, a multinational bank based in the United Kingdom, to act as an agent in the sale of at least $300 million in debt securities. However, "due to Brevet’s and Leeds’ lack of support and engagement, Theia was not able to move forward with this opportunity that could have raised sufficient capital," Theia's Sept. 10 memorandum states.
Satellites are to be built and tested at the Orion Center, but it is unclear if the TSN and the "Internet-of-Space" satellites, referred to in Gorman's declaration as "The Cypherian Network," would both be developed there. When Business First interviewed Gorman in November 2020, following the Orion Center's approval by the Environmental Planning Commission, he said "we have to get the full approval of the project in order to unlock financing which is lined up."
Since then, Theia Group has posted job openings for tech positions in Albuquerque, including openings for a spacecraft systems engineer and software operations lead. It has also fallen behind on payments, according to a January 2021 email from CEO Olson. A copy of the email, filed as an exhibit with Gorman's declaration, says the company was working to "understand who is owed backpay or other obligatory payments."
In May, the firm gave notice that it was exiting a lease for a hangar at the Statesville Regional Airport in Statesville, North Carolina, after not paying rent, according to airport manager John Ferguson. Last month, Theia Group was also sued by a private landlord that alleged the startup did the same for an office space in Greenwood Village, Colorado.
Orion Center update
As the legal battle for Theia Group's loan proceeds continues, the startup's Albuquerque expansion and the Orion Center remain in flux. The city is still in discussions with Theia Group, although neither party has signed the lease for the land where the Orion Center would be located.
“We are obtaining all relevant documents and information, and looking at any issues that may arise throughout the process so that we can make informed decisions in the best interest of the city," Sunport spokesman Jonathan Small told Business First in a Sept. 1 statement.
The proposed development, the first phase of which is estimated to encompass about 4.1 million square feet, would be located on the land that houses the decommissioned north-south runway for the Sunport. According to a 2020 research report from real estate firm Colliers International, the Orion Center is estimated to cost between $8 billion and $10 billion to construct throughout a decade.
Under the lease approved by city council, Theia Group would pay the city a total of $2 million to cover the first four years of the lease. Monthly rent payments totaling $1.24 million per year will begin after that, and rent will increase at 2% per year for four years until being set by appraisal. The proposed agreement also says the company would have to develop about 95 acres by 2029 and all remaining acres by 2031.
If those milestones are not met, the city could reclaim undeveloped parts of the site and adjust the cost of rent.
