Android app on Google Play

GeoEye (GEOY) Slammed on NGA Funding Cuts

June 25, 2012 9:36 AM EDT Send to a Friend
Shares of GeoEye, Inc. (Nasdaq: GEOY) are under massive pressure early Monday following a disclosure late Friday about funding cuts from the National Geospatial Intelligence Agency (NGA).

The stock last traded down 20 percent to $14.67.

From the filing:

On June 22, 2012, GeoEye, Inc. (the “Company”) received two letters from the National Geospatial Intelligence Agency (“NGA”) filed herewith as exhibits 99.1 and 99.2. The first letter advises that, due to funding shortfalls, NGA will not exercise the full year Enhanced View Service Level Agreement option with the Company for the Contract Year September 1, 2012 through August 31, 2013, but instead proposes a three month option which the NGA intends to exercise providing for service revenue to the Company from September 1, 2012 through November 30, 2012 of $39.75 million, and a further nine month option for the remainder of the Contract Year through August 31, 2013 providing for service revenue to the Company, based upon the availability of funding, of $119.25. Assuming the Company agrees to this proposal and NGA exercises both options, total service revenue to the Company for the full Contract Year would be $159.0 million. There can be no assurances, however, that funding will be available to NGA to exercise both options as proposed.

The second letter formally notifies the Company that NGA is electing not to obligate additional funding under the OTFPP Cost Share agreement for the development and launch of GeoEye- 2, scheduled for launch in the first half of 2013. NGA is currently obligated to fund the Company under that agreement $181.0 million, of which the Company has invoiced NGA $111.0 million and anticipates payment within the next 30 days. In the second letter NGA is proposing new milestones for payment of the remaining $70 million, three of which would occur before the launch of GeoEye-2, and no additional cost share funding would be provided.

The second letter requests the Company provide NGA with certain additional information with respect to the proposal for modification of the OTFPP Cost Share Agreement by July 6, 2012. Both letters request that the Company enter into discussions with NGA regarding these proposals. The Company intends to provide the requested information in a timely manner and engage in negotiations with NGA on these proposals.




You May Also Be Interested In


Related Categories

Corporate News, Guidance, Trader Talk

Add Your Comment