[FPSPACE] MirCorp casts a wider net

Dwayne Allen Day wayneday@gwis2.circ.gwu.edu
Thu, 12 Oct 2000 11:17:57 -0400 (EDT)

On Thu, 12 Oct 2000, Chris Jones wrote:

> http://www.mirstation.com/news_news18.html is a press release titled "MirCorp
> to Make Historic Initial Public Offering".

They give no date for this IPO.  Originally, they were talking about the
second quarter of 2001.  This raises several possibilities:

-they are still on schedule for a second quarter IPO
-they have moved up the IPO to the first quarter, in order to raise money
-this press announcement is solely intended to convince the Russians to
keep Mir in orbit

Because this press release is VERY short on details, I suspect the first
and last explanations.

The press release states:

"There has been strong international support for Mir, and the IPO will
raise capital that will demonstrate to both the Russian government and the
world that we have a solid business plan that is fully backed by
financing," Manber said. "As MirCorp is 60 percent Russian controlled, we
look forward to working with the Russian government while we pursue the
full commercial opportunities with Mir." 

This indicates that they want the IPO to prove to the Russians that they
have a strong business plan.  The problem is that they have had 8 months
to demonstrate a strong business plan and have failed to do so.

> They're trying to raise $117 million to fund Mir's operations

Original estimates were that they could raise over $400 million in an
IPO.  MirCorp has an amazing ability to issue press releases that revise
earlier press releases, hoping that nobody notices.  How many people
remember that they were going to launch a manned mission this fall?  How
many people remember that they were going to fly two long (not
short) duration missions next year?  How many people remember that they
were going to establish their "internet portal" this fall?

> MirCorp is 60% Russian controlled).  Given that the IPO documentation for a
> more traditional company always comes off as unbelievably pessimistic when it
> describes potential problems, it should be interesting to see what MirCorp's
> says.

I have never seen IPO language.  I think that will be interesting.  The
press release contains a lot of fluff:

"Dr. Chirinjeev Kathuria, a director and major investor in MirCorp, said
the company has significant asset value, and is unique in offering true
commercial access to space. 
"MirCorp has been valued at between $1.3 and $1.5 billion by KPMG, which
recognized the worth of Mir as the only orbital platform of its kind in
service today," Dr. Kathuria said."

I would like to see that KPMG report.  A colleague in the business world
described KPMG as "investment whores" who will tell clients whatever they
want to hear.  I imagine that the KPMG report told MirCorp what the cost
of the individual modules were, but not what the earning potential of the
station is.  It is like buying an abandoned factory--it might have cost a
lot to build, but if you cannot manufacture anything there, then what good
is that cost?

"The Dennis Tito and 'Destination Mir' flights have confirmed the revenue
potential of the station with non-traditional users of
space," Dr. Kathuria added. "We also foresee a major revenue stream from
the more traditional sectors  including space science, remote sensing and
manned missions with national or governmental space agencies." 

The problem is that they have not generated any revenue from these latter
sectors.  And it is clear that the "non-traditional users" cannot supply
enough capital to keep them going.

MirCorp said that one of its strengths was that it could offer a cheap
experimental platform for a couple of years before ISS came on line.  But
ISS is coming on line and MirCorp has not gotten anyone to sign up yet.

MirCorp's latest press release reduced to its simplest form:  nothing has