NewSat shareholders
want mining magnates
to rescue company
A group of
shareholders in
embattled satellite
company NewSat is
making an
eleventh-hour plea
to Australia's
rich-list to inject
funding into the
company to prevent a
sell-off of its
assets.
A spokesperson for
the shareholders,
who requested
anonymity, said they
would appeal
directly to the
likes of mining
executives Gina
Rinehart, Ivan
Glasenberg and
Andrew Forrest to
take a controlling
stake in the
company. They are
also planning to
push the idea to the
company's
administrators.
NewSat, which was
planning to launch
its Jabiru-1
satellite in 2016,
went into
receivership earlier
this month. CommsDay
understands that
creditors of the
company will have
their first meeting
in Melbourne
tomorrow to gain
preliminary
information from
administrators PPB
Advisory. They can
also decide to
appoint a committee
of creditors to
assist the
administrators, and
also have the right
to remove the
administrators from
office and appoint
replacement
administrators.
A second creditor
meeting is then due
to be held by 22 May
2015. At the second
meeting creditors
will decide among
three options:
whether
administration
should end and
control handed back
to directors, the
group enter into a
deed of company
arrangement, or the
company be wound up
and placed into
liquidation.
It is the last
option that concerns
the shareholders who
contacted CommsDay.
They believe any
sell-off of the
company's assets
would see no returns
to small to
medium-size
shareholders.
However,
shareholders are not
allowed to vote or
voice their concerns
directly at the
creditor meeting.
A spokesperson for
the group, which
represents an
estimated 10% of the
company's shares,
said that a funding
injection of just
A$150 million would
save the project and
provide a handsome
return to the
potential investor
in return.
“Australia's first
public satellite,
seemingly after a
series of poor
decisions, is now in
the situation where
an astute business
person can save the
day and pick up a
controlling interest
for a fraction of
what it should
cost,” the investors
told CommsDay. “The
banks want more
money put into the
project or they'll
sell it off. All
this when launch is
in sight after years
of work.”
“This project will
be lost to Australia
and countless
investors will see
their dream
destroyed,” the
shareholder
spokesperson added.
NewSat's main
shareholder is Ching
Chiat Kwong, one of
Singapore's
wealthiest men.
Fellow Singaporean
businessman and Daun
Consulting CEO Bryan
Yap is also a major
investor; Yap told
CommsDay that he was
hopeful that the
Jabiru-1 project
could be salvaged,
but declined to
comment on the
current efforts to
raise extra capital
for the company.
PPB Advisory
administrator Marcus
Ayres previously
told CommsDay that
he was hopeful of
salvaging something
from the company's
A$620 million Jabiru-1
project, noting that
the company had
“fantastic assets”
and that the
satellite build was
well underway.
As well as going
into voluntary
administration in
Australia, NewSat
has filed for
Chapter 15
bankruptcy in the
United States. It
was granted a
restraining order
and a preliminary
injunction; however,
the preliminary
injunction needs to
be renewed by the US
courts this week.
The Jabiru-1 project
has been beset with
financial issues for
some time. In 2012
NewSat went into a
trading halt for
three months while
it sought to raise
$105 million
necessary to secure
government backed
export-import loans
from France and the
US. That process
pushed back the
launch target date
from 2014 and 2016.
NewSat eventually
gained a combined
US$390.1 million of
debt funding from
the US Export-Import
Bank and France's
Compagnie Francaise
d'Assurance pour le
Commerce Exterieur.
However, its
troubles started
again last year when
it was found to be
in breach of its
lending conditions
and at the same time
was called out for
various corporate
governance issues.
The company again
went into a trading
halt at the end of
March after failing
to come to terms
with lenders. It had
been working to
negotiate a waiver
with its entire
lending group, but
earlier this month
it announced that
Coface would not
support that waiver.
The US Export-Import
Bank then stated it
too will not advance
further funds until
a substitute funding
source emerges that
is acceptable to the
other lenders.
The drawn-out
funding issues
resulted in US
satellite
manufacturer
Lockheed Martin in
January issuing the
company a
termination notice
in relation to the
construction of the
Jabiru-1 satellite.
At the time it had
overdue payments
totalling US$21
million. It also
received
notification from
Arianespace, which
is due to launch the
satellite, that it
is reserving all
rights and remedies
with respect to
US$42.4 million in
outstanding
invoices.
Despite, the
termination notice,
Lockheed Martin is
believed to have
continued with the
satellite build,
which is estimated
to be 70% complete.
In the case of
Arianespace, the
non-payment gave
rise to a 30 day
cure period. As a
result, unless
payments to
Arianespace
recommence on or
before 3 May 2015,
Arianespace will
have a right to
terminate the launch
agreement.
