Satellite Business Systems, the McLean based communications concern, has announced that the company's three partners have upped their contributions to the firm by $150 million, bringing total SBS funding to $525 million.
The money supplied by the three SBS partners -- Communications Satellite Corp. (Comsat), International Business Machines Corp. and Aetna Life & Casualty -- has been used in the development of the SBS satellite communications network.
Disclosure of the three firms' agreement late last year to increase the funding was made in the company's annual report, released late last week. Since SBS is a joint venture, the firm, unlike publicly owned companies, is not required to make detailed public disclosures concerning its operations, even though its partners are owned by shareholders.
When SBS was formed in December 1975, the three partners agreed to provide $55 million each. The company said a short time later, in an FCC filing, that they expected the contributions ultimately to exceed $400 million.
The new funding arrangement, the third incremental rise in the original agreement, is not surprising, since SBS officials have said they would need a larger funding base in light of inflation and several expansions in the company's planned customer services. The SBS staff has grown since the end of 1979 from 565 to 1,000, a figure reached in late February.
In fact, the company expects to require further financing before making a profit, money either obtained from the partners or obtained from public or institutional fundraising.
But SBS said in the annual report that it essentially has met its operations schedule. "Given the uniqueness and complexity of the SBS System, implementation substantially on a schedule fixed four years earlier has little parallel in private industry," the company said.
The company's mission is to provide high speed voice and data satellite communications services to businesses, government agencies and other organizations. The system will allow corporations to use SBS technology for conventional telephone transmission and for more complex computer-to-computer communications, electronic mial and document distribution and for teleconferencing, or the use of television as a means to conduct long distance business meetings.
On Nov. 15, the company launched its first satellite at Cape Canaveral, Fla., and subsequent tests of the satellite have been successful, a spokesman said. SBS plans to launch a second satellite later this year. This month, the company plans to initiate service to its first customer, a spokesman said.
Even before formally beginning services, SBS has signed 19 customers, including General Electric Co., General Motors Corp., Crocker National Bank, Boeing Computer Services Co. and Dow Chemical Co., the report said.
Before the recent decision to raise the funding level by $150 million, the three companies had each allocated $125 million to SBS, with the partners each raising $50 million of that as convertible subordinated debt.
Both Comsat and IBM had provided $61.5 million as a "capital contribution," with another $13.5 million each contributed through convertible subordinated debt. Aetna, on the other hand, provided $25.9 million as a "capital contribution," and raised another $49.1 million through convertible subordinated debt.
The most recent contribution of $50 million per partner consisted of $50 million in convertible subordinated debt for each. The report said that Comsat and IBM each have an ownership interest of 41.3 percent, while Aetna owns 17.4 percent. SBS' ultimate profits and losses will be shared based on those interests, although each company shares equally in running the company.