​NewSat needs $70m to keep Jabiru-1 project alive

NewSat is on the verge of not being able to complete its Jabiru-1 satellite project, as negotiations with lenders continue.

NewSat has said that it must raise at least $70 million during the third quarter of 2015 in order for lenders to continue financing the Jabiru-1 satellite project.

NewSat entered into a trading halt in late March, after announcing that it was in negotiations with lenders in the United States to allow them to recommence financing the project. The company later requested for the halt to remain in place until negotiations had concluded.

In a statement to the Australian Securities Exchange (ASX) on Wednesday, the company revealed that as part of negotiations, one of its lenders, COFACE Lender Group, has decided to withdraw any further funding of the project.

According to NewSat, this will mean that the company will lose $160 million in funding for the project.

"The result of the COFACE position is that the COFACE Lender Group will not presently advance further funds under the COFACE-guaranteed credit facilities unless and until COFACE changes its position," NewSat said.

NewSat added that it continues to negotiate with other lender groups to pursue alternative lending and other capital sources.

The company has appointed Peter J Solomon Company as financial advisor to assist, and is exploring options to raise such amounts and possibly additional amounts that may be necessary in order for the lending group to resume financing the project.

"NewSat is reassessing the ideal form of capital raising and investors with the assistance of PJSC. This process may take several weeks. Although efforts are under way to secure needed capital in shorter order, there is no certainty that any capital raising will be successful," the company said.

Despite the suspension of funding, NewSat said the construction of the Jabiru-1 spacecraft continues to be carried out by Lockheed Martin in the United States, and is on track to be launched in 2016.

However, the company noted that if it is unable to source additional funding, Lockheed Martin will be able to terminate its contract, and therefore NewSat would no longer be able complete the Jabiru-1 project.

This is not the first time that NewSat has required further capital injection. Last August, the company said additional capital representing approximately 6 percent of the total project was required. 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.

If completed, 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.