A British technology start-up that aimed to build the world’s first space plane is currently in discussions to secure new financing after two of its backers devalued their investment.
Founded in 1989, Reaction Engines is in detailed talks with the UAE-backed Strategic Development Fund (SDF), one of its current shareholders, regarding a potential capital injection, according to sources familiar with the matter. The SDF led a £40mn funding round in January of last year.
The British start-up also counts on support from major aerospace companies like BAE Systems and Rolls-Royce, as well as financial investors Artemis and Schroders.
While Reaction has previously raised over £150mn and saw its commercial revenues grow by over 400% last year, the company recently indicated the need for additional financing. In the event that funding talks fall through, PwC has been lined up to step in as administrator.
Sky News originally reported that PwC is on standby. However, the accountancy firm declined to comment on the matter over the weekend. Reaction also chose not to provide a statement.
Other current investors are closely following the situation, according to one individual close to the negotiations.
Last week, both Artemis and Schroders announced significant write-downs of their stakes in Reaction. Artemis slashed the value of its 2.3% holding by 75%, with Artemis Alpha Trust now pricing it at £1.2mn compared to £6.4mn in April.
Recent efforts at Reaction have concentrated on the development of the Sabre hybrid jet and rocket engine. Originally intended to power the Skylon space aircraft also created by Reaction, Sabre’s advancement hinges on the company’s pioneering pre-cooling technology, crucial for preventing engine overheating and potentially enabling hypersonic space planes.
More recently, Reaction has shifted focus towards developing near-term aerospace and commercial applications for its pre-cooling technology. A partnership was established with US industrial group Honeywell to work on thermal management technologies aimed at reducing aircraft emissions.
Chaired by former UK defense minister Philip Dunne, Reaction is led by Mark Thomas, previously with Rolls-Royce.
