Australian satellite operator NewSat has reached an agreement with the financiers for its Jabiru-1 satellite project over a formal waiver for breaches it made to the terms of its export credit agency backed facility.
On 12 June, NewSat borrowed a US$10m…
Australian satellite operator NewSat has reached an agreement with the financiers for its Jabiru-1 satellite project over a formal waiver for breaches it made to the terms of its export credit agency backed facility.
On 12 June, NewSat borrowed a US$10m unsecured short term loan from its shareholder Ever Tycoon Limited. This allegedly breached certain technical or documentary covenants in the US$399m export credit agency-backed financing that is funding the construction and launch of Jabiru-1.
Payments from the financing were subsequently suspended until a waiver was secured and the conditions met. In the interim, NewSat funded both the Jabiru-1 satellite project and its approved teleport expenses out of cash reserves.
Under the conditions for the agreed waiver, the company is required to raise an aggregate US$40m in new equity and/or mezzanine funding over the next three months.
The new capital required is just over 6% of the total project value and NewSat stated that, following discussions with multiple parties, it is confident that such capital is available from a range of sources.
The US$40m will be used to fund certain Jabiru-1 satellite project accounts, fund a reserve to support the working capital of the teleport business, and repay all outstanding debt under the June Ever Tycoon loan.
Other conditions to the waiver include the completion of an in progress review of accounts on behalf of the financiers, and a requirement that the company implement its previously announced Lancaster Report, designed introduce a more developed corporate governance structure.
More specifically, its implementation will see NewSat introduce new internal frameworks, processes and reporting as well as appoint two new independent directors. The latter will see the company’s board of directors comprise a majority of independent non-executive directors.
The satellite operator added that it has already satisfied some conditions in the waiver, including the appointment of an interim CFO in Michael Hewins, the announcement of Linda Dillon as a permanent fulltime CFO and company secretary from 8 September, and Roderic Sage as one of the new independent non-executive directors.
NewSat secured the US$10m 11% 6-month loan in June to support its teleport business as well as cover the costs associated with its ongoing restructuring strategy. The lender, Ever Tycoon, is a related party of NewSat director and shareholder Ching Chiat Kwong.
As part of the arrangement, NewSat agreed to amend the US$30m subordinated convertible PIK note that Ever Tycoon provided as part of the equity and mezzanine funding that was required to secure the ECA-backed facility.
Lockheed Martin is currently constructing Jabiru-1, which is based on Lockheed’s A2100 platform and will feature 50 Ka-band high-powered transponders. The satellite is due to be launched by Arianespace in 2015.
