is SpaceX OK?

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JF Mezei

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Dec 4, 2021, 10:42:23 PM12/4/21
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This week, Musk warned of possible bankruptcy if teams couldn't finish
design and ramp up Raptor 2 production ,and one senior VP was fired.

Everyone knows that Starship is just a hobby right now. Bringing up the
word "bankruptcy" stains the reputation of the whole compamy and a hobby
should not endanger the company. You stop buying Falcon9 launches if
you are not sure the compamy will still be around at time of your
scheduled launch.

If a company warns of "bankruptcy", it shouldn't be starting to build
new launch pads/stage 0 in Florida when its first one isn't complete
yet, let alone having had first launch and landing.

Starship is a bigger project than anyone has ever done before let alone
a compamy the size of SpaxeX. Such projects always take longer than
expected and cost much more than expected. And with iterative design,
there is still uncertainty whether it will work since the final design
is not published (and perhaps there is no final design yet)

This past week's warning is sign that money may run out because project
takiung longer than expected. Considering the project is nowhere near
finished, this is worrysome. And the last thing Musk should have done is
spread uncertainty about viability of not only the proejct but the whole
company.


I would assume Shotwell was busy with damage control with investors this
week. But the cat is out of the bag: the msssage was sent that the
project is at risk of failure.


It is significant though that Musk's message was spefific to Raptor
engines because that is the one component of value that could be spun
off into consortium with Boeihg or others. The Boca Chica plant might be
sold and retasked to build grain silos, but that isn't high value.

Putting SpaceX in jeoperdy will likely have reverberations within NASA
who would start planning for a plan B should spaceX falter.

Irrespective of reality of finances, it was extremely dumb of Musk to
use the word "bankruptcy" in any communications.

Snidely

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Dec 5, 2021, 2:27:13 AM12/5/21
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On Saturday or thereabouts, JF Mezei asked ...
Don't expect SpaceX to go bankrupt. Don't expect big shock waves to
ripple through the markets because of the email. And even more, don't
equate "bankruptcy" with "disappearing". Certainly didn't mean that
for GM.

/dps

--
"I'm glad unicorns don't ever need upgrades."
"We are as up as it is possible to get graded!"
_Phoebe and Her Unicorn_, 2016.05.15

JF Mezei

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Dec 6, 2021, 2:21:26 AM12/6/21
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On 2021-12-05 02:27, Snidely wrote:

> Don't expect SpaceX to go bankrupt. Don't expect big shock waves to
> ripple through the markets because of the email. And even more, don't
> equate "bankruptcy" with "disappearing". Certainly didn't mean that
> for GM.


Chapter 11 generally (almost always) involves existing shareholders
seeing their shares either voided or highly diluted. (they are
unsecured creditors)

So if the project is late and needs more capital (as is common for such
a large project), any new investor, fearing bankruptcy, will only invest
in form of secured bonds with strict restrictions which will cost SpaceX
more.

Here is an example:
When Bombardier ran out of funds because its C-Series (and other
projects) was late, various portions of the compay were recapitalized
without going through formal canadian equivalent to Chapter 11 (called
CCAA).

The "Transportation" division (trains) was spun off into a separate
company, and new shares issued to Caisse de Dépôt du Québec (CDPQ)
(pension find) in exchange for a few billions of $. There was a caveat:
the money losing division had to provide garanteed dividends on the shares.

Bombardier, still struggling to survive, could not afford to buy back
the shares issued to CDPQ. And it could not afford to continue paying
dividends, so its only option was to sell the company to Alstom ( a deal
conveniently arranged by CDPQ who then negotiated a stake in Alstom
which made it its largest shareholder).


One never jokes about bankruptcy with a public company because it hurts
the company's ability to raise capital and then ability to exist as
independant company.

What Musk did was shout to the world of potential investors is that he
is no longer siure he can see the project to completion.

Snidely

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Dec 6, 2021, 4:09:38 AM12/6/21
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JF Mezei used thar keyboard to writen:
>
> What Musk did was shout to the world of potential investors is that he
> is no longer siure he can see the project to completion.

You're welcome to bet on that. I wouldn't.

/dps

--
Ieri, oggi, domani
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