- Parabolic Arc
- September 21, 2023
Khrunichev Investigation Focuses on Acquisition of ILS Shares
In 2008, Khrunichev paid two and a half times more for a 51 percent share in the U.S.-based International Launch Services (ILS) than the company it bought it from had paid only two years earlier, according to Izvestia.
The disparity between the purchase prices has vexed Russian investigators, as have the identities of those who controlled the British Virgin Islands company that sold its shares in ILS to Khrunichev.
Prosecutors have launched an investigation into the transaction that has ensnared former Khrunichev Director General Vladimir Nesterov and former Roscosmos head Anatoly Perminov, who both approved the acquisition. Both men are facing accusations of abuse of office, charges which they deny.
ILS is the U.S.-based company that markets Khrunichev’s Proton rocket for commercial launches. In 2006, Lockheed Martin sold its 51 percent interest in the company for $108 million to Space Transport, Inc., which is registered in the British Virgin Islands.
Two years later, Khrunichev purchased the 51 percent share in ILS from Space Transport for $255 million, an increase of $147 million over the previous sales price. Prosecutors are concerned about the disparity in those numbers. They also have not been able to learn who owns ST due to strict secrecy laws in the British Virgin Islands.
Nesterov told Izvestia that the difference resulted from an increase in the number of Proton launches booked after Lockheed Martin sold its interest in the company. During those two years, ILS was able to conclude 17 additional launch contracts. With launches fees ranging for $100 to $110 million, that worked out to revenues of $1.7 billion to $1.87 billion. The additional orders raised the value of the ILS stake to more than $300 million.
Khrunichev has already received twice the $255 million it spent on the ILS shares in additional revenues as a result of owning more of the company, Nesterov said. The revenues justify the amount spent on the acquisition, he added.
Nesterov said he does not know who owns ST.
ILS recently laid off 25 percent of its workforce due to a reduction in the number of commercial Proton launches from seven to year per year to three or four annually. Company officials have cited three unrelated issues for the staff reduction:
- recent failures of the Proton, which have grounded the vehicle for months at a time and made it difficult to market;
- rising tensions between Russia and Western nations over Ukraine, which has made sales more difficult; and,
- a temporary shift toward lighter satellites, which has benefited providers such as SpaceX.
ILS also has the rights to market Khrunichev new Angara booster, which recently made a successful suborbital flight. Angara has been designed to eventually replace the Proton and other existing launch vehicles.