NewSat has announced that it continues to negotiate with lenders an appropriate solution to allow them to recommence financing the Jabiru-1 satellite project.
NewSat entered into a trading halt last Friday, after announcing that it is in ongoing negotiations with lenders in the United States. On Monday, the company requested in a statement to the Australian Securities Exchange (ASX) for the trading halt to remain in place until negotiations are concluded.
The company has advised that a potential solution will be "likely to require an additional capital raising, and NewSat is considering and pursuing various alternatives in that regard".
This is not the first time that NewSat has required further capital injection. Last August, the company said the additional capital required is expected to be approximately 6 percent of the total project value. This is in spite of NewSat's CEO Adrian Ballintine reassuring the market in 2013 that the company had secured all AU$611 million it required for the Jabiru-1 satellite launch, including the AU$105 million it secured in equity in February 2013.
The satellite will be a hybrid Ku- and Ka-band satellite, and will provide coverage over South-East Asia, the Middle East, and North Africa. Construction of the Jabiru-1 spacecraft is being carried out by Lockheed Martin in the United States.
It was initially due to launch in mid-2012, but reports by Fairfax Media in February indicated that the satellite will not be launching until the middle of next year.
The report also suggested that external auditors informed the Australian Securities and Investments Commission (ASIC) that they were concerned with the questionable and lavish spending by the company. For instance, there were alleged payments involving hundreds of thousands of dollars by NewSat to a Gold Coast motor yacht company, which were claimed as "marketing" expenses and billed to the Jabiru project.
During December 2013, NewSat offered to buy two of NBN Co's Ka-band satellites off the Australian government, according to a submission (PDF) from the satellite company to the government's broadband cost-benefit analysis panel. Currently under construction in the United States with Loral, and due for launch sometime in 2015, the satellites are expected to service 3 percent of premises in Australia where broadband services will continue via the satellites.
An update on NewSat's negotiations with its US lenders will be provided after Easter.