Shares of Stable Road Acquisition Corp. fell in trading on Monday after the firm disclosed in a securities filing that its merger target, in-space transportation company Momentus, no longer plans to conduct any missions for customers this year.
“Momentus informed Stable Road that it does not expect to fly any missions in 2021 and that this determination was based on information from SpaceX that it was suspending its Momentus-related efforts while Momentus works to secure approvals from the U.S. government,” Stable Road wrote.
Stable Road’s stock fell 13.4% in trading to close at $10.42.
The firm was the first of several special purpose acquisition companies, or SPACs, which announced deals with space ventures in the past year, saying it planned to take Momentus public at a $1.2 billion valuation. But Stable Road’s merger with Momentus has been bogged down this year, largely due to national security concerns raised by multiple U.S. government agencies.
Mikhail Kokorich – the Russian founder of Momentus, who investors learned was barred by U.S. law from using the company’s technology – resigned as CEO and director in January, after the Pentagon declared “Momentus posed a risk to national security.” In a statement at the time, Stable Road said Kokorich’s resignation was part of “an effort to expedite the resolution” of the company’s foreign ownership concerns.
The next month, the deal and Kokorich was under review from the U.S. inter-agency Committee on Foreign Investment in the United States (CFIUS). Stable Road said in February that Kokorich and his wife “will fully divest” ownership of Momentus by March 2024, “or as required by CFIUS.” Also in February, Momentus took a $25 million loan for “growth capital,” with an additional $15 million loan option – contingent upon the company receiving approval from the Federal Aviation Administration to launch payloads by the end of June.
In April, Stable Road submitted a request to shareholders to extend the lifetime of the SPAC by three months to allow more time to complete its merger with Momentus.
But, early in May, the company learned that the FAA denied Momentus’ application to launching a payload on a SpaceX mission in June.
“During an interagency consultation, the FAA was informed that the launch of Momentus’ payload poses national security concerns associated with Momentus’ current corporate structure,” Stable Road wrote in a securities filing on May 10.
Stable Road, despite the recent FAA setback, on May 13 received shareholder approval to extend the merger’s deadline to August from May. The extension passed by a slim margin, with Stable Road receiving support from 66.2% of shareholders, needing 65% for approval.
The SPAC’s disclosure on Monday comes as the latest blow to the deal. The firm says Momentus continues to seek “approvals from the U.S. government that are required for its missions.”