The chances of a bailout deal for Britain’s hypersonic aviation pioneer appeared to be set back over the weekend after it emerged that negotiations with the Gulf-based state fund had reached an impasse.
Sky News has learned that negotiations between Reaction Engines and the Strategic Development Fund, the investment arm of the UAE’s Tawazun Council, to recapitalize the company are starting to stall.
As of Sunday, it was unclear why talks with the SDF apparently broke down, but people close to the situation said the situation was fluid and could be resolved.
They added that Reaction Engines is actively pursuing several other investment options.
But time is running out to secure a financial package that will prevent the company from going into administration.
Reaction Engines is said to need multi-million pound financial support within days, with strategic shareholders BAE Systems and Rolls-Royce Holdings also being asked to agree more flexible terms with the company. It is said that
According to previous discussions, SDF will emerge as the single largest investor in Reaction Engines, which has developed a cooling technology aimed at flying aircraft to Mach 25, or 19,000 miles per hour, above Earth’s atmosphere. It was supposed to be.
Sky News revealed earlier this month that the company had begun discussions with the government about the deal, citing sensitive defense and security implications in the context of the National Security and Investment Act.
A two-part financing, which would involve major shareholders lending to the company before injecting further capital, had been the focus of discussions in recent weeks.
The nature of any alternative rescue options being pursued was unclear as of Sunday.
Accounting firm PricewaterhouseCoopers (PwC) is on standby to act as administrator if the search for new funding fails.
Many of Citi’s investors have reduced their stakes in the business in the past two months amid questions about its survival.
According to Reaction Engines’ shareholder update, the company grew commercial revenue by more than 400% last year and is believed to have a strong contract pipeline and research and development opportunities.
In January last year, Reaction Engines announced it had raised an additional £40m of equity, taking its total investor funding to around £150m.
The company was founded in 1989 and is chaired by former Defense Minister Philip Dunne.
Both Reaction Engines and Rolls-Royce declined to comment.
