Problems have surfaced with the financing behind Pipe Networks' plan to lay fibre-optic cable on the bottom of the ocean from Sydney to Guam.
Inside Pipe Network's datacentre at the PPC-1 Sydney landing station
(Credit: Suzanne Tindal/ZDNet.com.au)
Last month, Pipe had said that it had received funding proposals from a syndicate of two leading Australian banks and was awaiting a final decision from them by the end of November. However, the board of the cable has now decided to walk away from these proposed arrangements, calling delays in the credit approval process "unacceptable".
Due to the credit market upheaval, Pipe Networks had already been talking to interested parties — which included customers and one large supplier for the cable — about alternate financing arrangements. These negotiations have now taken centre stage and Pipe Networks has requested that the trading halt on its shares commenced yesterday remain in place until they are completed, because the result will have an effect on the company's share price.
Pipe Networks believed that the demand for the sale of future capacity provided by the cable had remained "robust", quoting numbers from a consulting firm which stated that the cable should be able to gain a 22 per cent share of the international wholesale capacity market to Australia by 2012. The cable was set to carry 1.92 Tbps to Australia.