Australian satellite operator NewSat has secured US$138m of equity and mezzanine funding for its Jabiru-1 Ka-band satellite project.
The placement fulfils the equity component requirement under the company’s two export credit agency loan agreements…
Australian satellite operator NewSat has secured US$138m of equity and mezzanine funding for its Jabiru-1 Ka-band satellite project.
The placement fulfils the equity component requirement under the company’s two export credit agency loan agreements and enables NewSat to complete the overall US$611m Jabiru-1 financing package.
The equity portion of the funding was substantially reduced from the original plan, with NewSat having secured amendments from both the US Export Import Bank and its French counterpart Coface to increase both their commitments and the mezzanine debt component.
To that end, NewSat raised A$105m (US$108m) in its share placement, US$95m less than under the initial equity requirements. The offering saw the satellite operator issue 262.5 million shares at A$0.40 per share to international and local institutional investors. Credit Suisse and Baillieu Holst co-managed the issuance.
In parallel, NewSat raised US$30m in subordinated convertible debt from a single unnamed Singaporean investor. This investor is understood to have also participated in the share placement.
With these complete, NewSat can now receive the US$399m of ECA funding it has agreed with ExIm Bank and Coface.
The US ECA is providing a direct term loan of close to US$290m to support the construction of the spacecraft by US-based Lockheed Martin Commercial Space Systems. Coface has agreed to guarantee a loan of around US$110m, principally provided by Standard Chartered, which will help fund Jabiru-1’s launch by Arianespace in 2015, having been pushed back from the originally planned launch of Q4 2014. According to NewSat, both loans pay an interest rate of approximately 2%.
As part of the adjusted financing, Standard Chartered has also agreed to provide a US$25m reserve facility.
Commenting on the completion of the financing, NewSat founder and CEO Adrian Ballintine said: “Closing the US$611m funding for the Jabiru-1 satellite is an enormous achievement for our company. It signals the evolution of NewSat into a global satellite operator from a teleport services provider, and is the culmination of hard work and a profitable base business, needing more capacity than is currently able to be purchased elsewhere.
“In particular, I would like to thank our existing loyal shareholders who will be rewarded with a step-change in earnings and profits in the near future. Jabiru-1, at 70% utilisation is expected to generate in excess of US$3bn of revenue over its 15 year life at 85% EBITDA margins.
“Revisiting the required equity was a prudent step, resulting in cost savings of US$95 million. Investment support from internationally recognised investors was very pleasing and encouraging.”
As part of its negotiations to reduce the equity commitment, NewSat voluntarily suspended its shares on the Australian Stock Exchange on 10 December 2012. The company argued that due to the uncertainty caused by these discussions, it did not want its shares to trade on an uninformed basis. Following the completion of the financing, the company’s share will begin trading again.
According to NewSat, Lockheed has completed the preliminary design review for Jabiru-1 and will now embark on the spacecraft’s critical design review. The company has so far pre-sold US$618m of the satellite’s capacity, while its customer sales pipeline stands at US$454m.
Lazard is NewSat’s financial adviser on the financing while ArgoSat Advisers has been hired for advice on the Jabiru-1 project. Daun Consulting has also provided advice on the Singapore investor.
