Satellite company future up in the air
The future of Australian satellite company, NewSat Limited, is unclear following an announcement to the Australian Stock Exchange today requesting that it remain suspended from trading because of financing difficulties.
NewSat, which operates teleports in Adelaide and Perth, advised the ASX that while “extensive and positive discussions” had occurred, it had been verbally advised by a key lender that it will not agree to a waiver of previous breaches of NewSat’s financing facilities nor advance further funds at this time.
More than US$220 million in funding is at stake for the company which planned to launch a major communications satellite, Jabiru-1, next year.
“The other lenders have stated that they also will not advance further funds so long as the COFACE Lender Group does not advance funds, or until a substitute funding source emerges that is acceptable to the other lenders,” the ASX announcement says.
NewSat said construction continues on the Jabiru-1 satellite and Lockheed Martin “remains on schedule to support an expected launch in the first half of 2016” subject to funding being available.
But the company adds: “In the event the current difficulties are not timely resolved, Lockheed Martin could terminate its satellite manufacturing agreement with NewSat … which termination would result in a loss of the Company’s ability to carry on with the Jabiru-1 project.”
NewSat also revealed that it has been “unable to make interim payments to Arianespace, the company which will launch the Jabiru-1 satellite”.
“As a result, Arianespace has issued a termination notice and suspended activities under its launch services agreement with (NewSat subsidiary) Jabiru Satellite Limited,” the company says.
“This notice gives rise to a 30 day cure period under such agreement. Therefore, unless payments to Arianespace recommence on or before 3 May 2015, Arianespace will have the right to terminate the agreement with Jabiru Satellite Limited,” it says.
NewSat advised the ASX that “it should remain in voluntary suspension until there is clarity on the position of the lenders, Lockheed Martin and Arianespace. That is, until historical breaches are waived or the parties take further action in accordance with their contractual rights”.
“The successful resolution of negotiations with its counterparties is likely to require additional investment and capital. This may take some weeks,” it says.
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NewSat has previously discussed with its lenders a US$30 million rights issue and an additional capital raising of US$50-70 million during the third quarter of 2015. Following the termination of employment of its Chief Financial Officer last week, it has appointed an interim CFO and engaged a new financial adviser, Peter J Solomon Company, and is examining other financing options.
“Although efforts are underway to secure needed capital in short order, there is no certainty that any capital raising will be successful,” NewSat told the ASX.
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