Astra secures new debt agreement with assets as collateral

astra team at nasdaq

Astra has been thrown a critical lifeline in the form of new debt financing, which provides the company with a little more time to find funding to stave off catastrophe.

The company said on Monday that it had closed $13.4 million in initial debt financing with JMCM Holdings LLC and Sherpa Venture Funds II, connected to a non-binding term sheet Astra filed with the U.S. Securities Exchange Commission in October. Per that document, Astra said it was working with the investors, including JMCM and Sherpa Venture, to raise $15 to $25 million.

The new investors also agreed to provide Astra with a $3.05 million loan that will come due on November 17. Sherpa Venture Funds II is associated with Scott Stanford and his firm Acme. Stanford was an early investor in Astra and sits on its board of directors.

The new debt financing replaces an earlier agreement that Astra had with investment group High Trail Capital from August -- an agreement that Astra defaulted on last week. These new investors agreed to purchase the remainder of that outstanding loan and waive a key requirement that Astra have at least $10.5 million of cash and cash equivalents on hand.

Critically, that earlier agreement was secured by first priority interests in all of Astra’s assets -- which is to say, the debtor would have first priority access to Astra’s machinery, equipment and other assets in case of default -- and this new agreement is secured by that same collateral.

The financing is “to provide Astra with time to raise additional liquidity through various capital raising and cost-cutting initiatives and strategic transactions,” the company said in a statement on the news. Astra has been seeking strategic capital to stay afloat for weeks, including searching for “strategic investments” in its spacecraft engine business it acquired in 2021.

While sources tell TechCrunch that Astra all but bungled that acquisition, it remains Astra’s only path to revenue given that the company has delayed development on its Rocket 4 launch.