NewSat's Jabiru-1
satellite on track for 2015 launch
Geoff Long, Commsday
NewSat's ambitious $A611 million project to
launch its first satellite is back on track,
with the company raising the final $105
million needed to complete its funding
package. However, the delays in financing
will now see the launch date for Jabiru-1
pushed back from 2014 to the first half of
2015.
The company's shares have been in a
voluntary trading halt since November 29
last year, but that is expected to be lifted
later this week. The final equity raising,
which was done last week via a bookbuilding
process, was oversubscribed. The placement
offer price of 40 cents per share
represented a 23.1% discount on the 52 cent
closing price when NewSat last traded.
NewSat founder and CEO Adrian Ballintine
told Commsday that finalising the funding
for the $611 million project was a major
milestone. “That's a very significant
achievement for a company with a
market cap of $120 million,” he noted.
When NewSat received funding approval from
the US Export-Import Bank and its French
counterpart COFACE last year, it was
contingent on it raising a further US$200
million in equity towards the project. There
was speculation that the funding would not
be forthcoming, but according to Ballintine
he was never concerned that the money would
not be raised. And he said the voluntary
share trading suspension had bought valuable
time to renegotiate the terms of its
existing funding.
“The bottom line was that we used the time
that we've been in a trading halt to shave
$95 million off the number that was
required. And I think that when our
shareholders realise that that's what we
have achieved – and bear in mind we said to
people we were engaging in activities to
make it a better deal – I think people will
realise that's a great achievement. We
nearly knocked that amount in half,” he says
of reducing the equity needed to US$105
million.
The reduction came about through increased
amounts from the export-import banks, extra
funding through mezzanine debt and a
renegotiation of some fees. However, the
process did take longer than anticipated,
particularly as it coincided with holidays
in the US and the Christmas and Chinese New
Year breaks.
“There has never been a point where we have
thought that we wouldn't get the project up.
What we have learned is that the economic
times dictated that it's taken a bit longer
than we thought,” Ballintine said. As a
result, the launch date has moved from the
final quarter of 2014 to sometime in the
second half of 2015, although no precise
date has been set.
“Our launch is out by a few months – we took
time to renegotiate and to package up an
ultimately better financial result for the
shareholders and my view is that if we had
to suffer a delay in launch to get a better
overall result, that's a small price to pay.
We'll be launching other satellites and I
hope this is the start of an era where
NewSat is continually launching satellites,”
Ballintine explained.
With funding in place, the next step is to
focus on selling the capacity. To-date, 18
percent of the
whole satellite capacity is sold and it has
also sold 46% of its three-year target. The
aim is to have 70% of the total capacity
sold by launch. In dollar terms, the company
has announced binding pre-launch contracts
of US$618 million on Jabiru-1 to date.
JABIRU-3 PLANNED: NewSat is also planning
its next moves in relation to further
satellite launches. While the
so-called Jabiru-2 satellite is actually a
“hosted payload” with Malaysian operator
MEASAT on its MEASAT-3b launch later this
year, NewSat will build a new satellite for
Jabiru-3. Ballintine is confident that
building and launching a new satellite will
be easier the second time round. Jabiru-3 is
expected to be a smaller satellite and is
planned to sit in an orbit two degrees away
from Jabiru-
1, providing similar coverage and giving the
company redundancy options. Ballintine said
the company already has a sales pipeline of
some $175 million for Jabiru-3.
“I think it will be a vastly different story
when we do the next Jabirus because we're
just more experienced. And we will get a
little more latitude as well. The first one
is always the hardest. We don't want to get
ahead of ourselves, but we will take
advantage of the market's thirst for
capacity,” Ballintine concluded.
Geoff Long, Commsday
