Boeing sues Sea Launch partners for $350 million

Mon Feb 4, 2013 1:11pm EST

* Suit targets Russian, Ukrainian partners

* Satellite launch service filed for bankruptcy in 2009

By Nate Raymond

NEW YORK, Feb 4 (Reuters) - Boeing Co has sued its Russian and Ukrainian partners in satellite launch service Sea Launch, saying they refused to pay it more than $350 million following the joint-venture's bankruptcy filing in 2009.

The lawsuit, filed in U.S. District Court in Los Angeles on Friday, targeted RSC Energia, a company partially owned by the Russian government, and two Ukrainian state-owned companies, PO Yuzhnoye Mashinostroitelny Zavod and KB Yuzhnoye.

Boeing said it partnered with the companies, as well as Norway's Kvaerner Moss Technology, in 1995 to create Sea Launch, which focuses on launching commercial satellites into space.

The U.S. aerospace company said it provided substantial funding for the venture, and the partners agreed that, if it failed, they would reimburse Boeing their share of the funding.

Sea Launch sent its first satellite into space in 1999, but filed for bankruptcy in 2009 because of weaker demand, mounting debt and a failed launch that led to a $53.2 million arbitration award against the company, Boeing said in its complaint.

Sea Launch emerged from bankruptcy in 2010. As part of the plan of reorganization, a subsidiary of RSC Energia increased its ownership to 95 percent from 25 percent, the lawsuit said. Boeing and Kvaerner, now called Aker Maritime Finance AS, split the remaining 5 percent.

In its complaint, Boeing said RSC Energia, also called S.P. Koroley Rocket and Space Corporation Energia, tried to avoid liability to Boeing and Aker.

LOAN GUARANTEES

When Sea Launch filed for bankruptcy, the banks that financed the company made calls on loan guarantees, forcing Boeing to pay out $449 million.

Boeing said RSC Energia and the Ukrainian companies are required to pay their share of that sum. It initially pursued reimbursement through an arbitration filed in 2009 with the Stockholm Chamber of Commerce, but in 2010 the arbitrator said it lacked jurisdiction. The case is now before the Swedish Court of Appeal.

Boeing said in its new lawsuit that RSC Energia owed at least $222.3 million and the Yuzhnoye companies owed at least $133.4 million.

Boeing said in its most recent quarterly report in October that, in the event it cannot recover the money, it will incur pre-tax charges of up to $356 million.

John Dern, a spokesman for Boeing, declined to comment. A spokesman for Sea Launch also did not respond to a request for a comment. A spokeswoman for the Yuzhnoye companies declined to comment on Monday and representatives for RSC Energia were not available for a comment.

The case is The Boeing Company v. KB Yuzhnoye, et al., U.S. District Court, Central District of California, 13-00730.

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Comments (1)
SeniorMoment wrote:
It was illogical for Boeing to have lent its partners in the venture the money for their share of the enterprise. It is likely it will have no success collecting in either Russia or the Ukraine is my best guess, particularly with the state owning part of the obligation.

Feb 04, 2013 4:27pm EST  --  Report as abuse
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