Spacecom seeks damages after SpaceX explosion

Israel's Spacecom has said it will seek $50m (£38m) compensation or a free flight from Elon Musk's SpaceX after its communications satellite was destroyed last week by an explosion.

On Thursday, a Falcon 9 rocket run by SpaceX exploded during a pre-launch test at Cape Canaveral, destroying the satellite that it was due to deliver to orbit.

SpaceX attributed the explosion to ‘an anomaly’ without giving any further details. It has not disclosed its insurance arrangements and has not said what insurance it had for the rocket or to cover launch pad damages beyond what was required by the Federal Aviation Administration, which oversees commercial US launches, for liability and damage to government property.

SpaceX has more than 70 missions on its manifest - worth more than $10bn - for commercial and government customers.

Spacecom has faced a £30m decline in equity following last week’s incident to $123m, described as a significant impact by the company. Its shares dropped nine per cent on Thursday, with the explosion occurring late in the last trading day of the week.

Trading in the shares was suspended on Sunday morning and the stock plummeted another 34 percent when trading resumed.

Officials with the company have also said they could collect $205m from Israel Aerospace Industries, which built the AMOS-6 satellite.

Beijing’s Xinwei Technology Group agreed to buy Spacecom for $285m last month although it said the deal was contingent on the successful launch and operation of the AMOS-6 satellite.

Spacecom's general counsel Gil Lotan has admitted that the incident has put doubt on the deal and doesn’t know if it will proceed.

"We hope to continue fruitful communications with the prospective buyer," Lotan said.

Xinwei officials on Monday declined to comment on whether the incident would impact the terms of the deal.

The firm said in a statement on Friday it was in close communication with Spacecom about how the incident would impact the merger. It added the accident would not impact its broader strategy to establish an integrated space information network.

AMOS-6 was to be used by a number of key clients, including Facebook and Eutelsat Communications which leased the satellite's broadband services to expand internet access in Africa. Both firms are pursuing other options, the companies said in separate statements after the accident.

The cause of the accident is under investigation, but neither SpaceX nor the FAA, which is overseeing the investigation, have said how much damage the explosion caused.

SpaceX said on Friday that it would shift flights to a second launch site in Florida, which is nearing completion and which was last used to launch NASA's space shuttles.

Thursday's accident, which occurred as the company was fueling its rocket as part of a routine prelaunch test firing, was the second failed mission for Musk's space company in 14 months.

In June 2015, a Falcon 9 rocket exploded about two minutes after liftoff from Florida, destroying a load of cargo headed to the International Space Station and resulting in extended delays for further flights.

The company’s ultimate aim is to significantly bring down the cost of sending rockets into space by reusing them and announced just before last week’s crash that it planned to launch a previously flown rocket at the end of 2016.

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