The Electro Optic Systems Hldgs Ltd (ASX: EOS) share price is on the rise during Wednesday afternoon trade. This comes after the defence contractor provided investors with an update on its discussions with European space company OHB Systems AG (OHB).
At the time of writing, Electro Optic Systems shares are up by 2.25% to $3.64 apiece.
Electro Optic Systems secures contract
In today’s statement, Electro Optic Systems and its wholly-owned Unites States subsidiary, SpaceLink, advised that advanced negotiations have concluded with OHB. Their discussions related to the manufacture and launch of the initial constellation of four high-capacity optical relay satellites, announced last week.
Following the meeting, both Electro Optic Systems and SpaceLink have signed an “Authorization To Proceed” for the satellite manufacturing contract.
The total value of the agreement is expected to exceed US$300 million, subject to relevant terms and conditions.
OHB will be required to deliver four high-capacity relay satellites in Q1 2024. Payments for the work completed are to be based on the company achieving specific milestones over the 30-month term.
Electro Optic Systems noted that the OHB-manufactured satellites will include multiple subsystems and components. These include digital payload processing, electric propulsion, and state of the art optical inter-satellite links.
Furthermore, the four medium-earth orbit (MEO) spacecraft must meet United States cybersecurity requirements. SpaceLink is aiming to provide a secure transport layer for critical communications between the satellites and ground stations.
OHB intends to invest US$25 million into SpaceLink in the first tranche of financing for the project. It is anticipated that this will be in the form of a SpaceLink Pre- IPO Convertible Note.
Electro Optic Systems share price snapshot
It has been a difficult year for Electro Optic Systems shareholders with its share price tumbling by around 40%. The company’s shares reached a 52-week high of $6.92 late last year before positive investor sentiment wore off.
Electro Optic Systems commands a market capitalisation of more than $541 million and has approximately 151 million shares on issue.
The post Electro Optic Systems (ASX:EOS) share price launches on satellite manufacturing contract appeared first on The Motley Fool Australia.
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Motley Fool contributor Aaron Teboneras owns shares of Electro Optic Systems Holdings Limited. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Electro Optic Systems Holdings Limited. The Motley Fool Australia owns shares of and has recommended Electro Optic Systems Holdings Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
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