US bankruptcy court
quashes NewSat’s
satellite contract
A US bankruptcy
court has cancelled
the satellite
construction
contract between
Lockheed Martin and
Australian satellite
company NewSat,
which is now in
voluntary
administration.
Lockheed Martin was
contracted to build
NewSat's Jabiru-1
satellite, estimated
to be between 75-80%
complete.
Earlier hearings in
the bankruptcy court
in the US state of
Delaware had granted
the Australian
administrator, PPB
Advisory, temporary
orders that
prevented creditors
including Lockheed
Martin from
cancelling contracts
as it looks to
refinance the
project.
The decision to
cancel the satellite
construction
contract followed an
emergency meeting by
teleconference
between the court,
the administrators
and Lockheed Martin
representatives. The
court heard that the
administrators were
not in a position to
assume the
construction
contract because
they did not have
“absolute certainty”
regarding the close
of a transaction
that would refinance
NewSat.
The court has also
granted Lockheed
Martin an
administrative
priority claim for
all of the satellite
construction work
done since the
earlier temporary
orders that
prevented its
cancellation. The
satellite
manufacturer first
issued a termination
notice to NewSat in
relation to the
construction of its
Jabiru-1 satellite
in January. At the
time it had overdue
payments totalling
US$21 million.
Lockheed Martin can
now negotiate
directly with
potential buyers of
the satellite asset,
although it has
previously expressed
an interest in
seeing the Jabiru-1
project revived with
the help of new
finance.
Sources have told
CommsDay that
Singaporean majority
shareholders of
NewSat have
approached Lockheed
Martin directly
about a possible
deal for the
satellite. Ching
Chiat Kwong, one of
Singapore's richest
men, is the majority
shareholder of
NewSat while
countryman and
financier Bryan Yap
also has a
significant stake.
As reported
exclusively by
CommsDay previously,
Malaysian satellite
operator Measat has
also made an
official offer to
buy all or some of
the NewSat assets.
Measat already has
significant ties to
NewSat's Jabiru
satellite programme:
the Jabiru-1
satellite, which was
due to launch next
year, was being
built to carry a
Measat payload of 18
Ku-band transponders
that would provide
back-up services and
support its core
direct-to-home
markets in Malaysia
and India. As part
of the original
US$197 million
transaction, NewSat
agreed to locate the
satellite in an
orbital slot held by
Measat at 91.5°E.
Measat is one of a
number of companies
that have been
provided with
detailed information
on NewSat's finances
and assets. Others
include a number of
global satellite
operators as well as
potential
financiers. NewSat
went into
administration last
month after failing
to come to terms
with financiers of
its A$620 million
Jabiru-1 satellite
project. In an
earlier submission
to the US bankruptcy
court, Richard
Brail, MD and head
of the technology,
media and
communications
advisory practice at
New
York investment bank
Peter J Solomon
Company, told the
court that there was
a “reasonable
prospect of
achieving additional
financing” to revive
the Jabiru-1
satellite project.
However, NewSat
shareholders
contacted by
CommsDay were less
optimistic about the
company's prospects
of being revived.
The administrators
are expected to
announce a decision
on the company's
future by the end of
this week.
Geoff Long, Commsday
