Jabiru-1 Launch Slips Further as NewSat, Creditors Haggle over New Financing
PARIS — Startup satellite fleet operator NewSat of Australia appears to be entering a make-or-break year as it struggles to raise the cash its lenders are demanding in return for restarting payments to its satellite and launch service providers.
Southbank-based NewSat, which has been a high-wire act for several years, has already been forced by financial constraints to delay the launch of its first fully owned satellite, Jabiru-1, from the original date of 2014 to mid-2016 at the earliest, according to the company’s latest estimates.
NewSat said in 2014 that it was in “technical default” of the nearly $400 million in loans underwritten by the U.S. and French export credit agencies, which as a result froze further payments to continue work on Jabiru-1, a large Ka-/Ku-band spacecraft under construction at Lockheed Martin Space Systems of Sunnyvale, California.
The lenders had set a Nov. 30 deadline for NewSat to raise $40 million in equity or other cash. NewSat told its shareholders in late November that it had received commitments in this amount and had submitted the package for approval by the U.S. Export-Import Bank and France’s Coface. The Coface loan guarantee is for Jabiru-1’s launch aboard a European Ariane 5 rocket.
For unexplained reasons, NewSat and its lenders have been unable to agree on the new financing in the past two months, and the Jabiru-1 project remains in suspension. In a Jan. 27 statement to shareholders, NewSat acknowledged that it had fallen behind in payments to Lockheed Martin in the amount of $21 million.
But the company said it had nonetheless secured “conditional proposals to invest or underwrite 60 million Australian dollars ($56.5 million) in equity and is considering these proposals with its lenders. … The Jabiru-1 satellite project financing facilities may not be currently drawn upon.”
The Ex-Im Bank, whose share of the NewSat financial package is around $300 million, has said in the past that it usually has a backup plan in mind in the event the original customer’s business plan goes sour. That could include taking ownership of the satellite and selling it. The question then would be whether Ex-Im would see more value in Jabiru-1 in orbit, with a secured orbital slot, or on the ground when its antennas could be retailored for a new owner.
On at least one front — access to orbital slots and broadcast frequencies — NewSat said it has secured breathing room. On Jan. 23, the company announced it had renewed its agreements with AP Kyrpos Satellites Ltd. of Cyprus, known as Kyprosat, for eight positions in geostationary orbit for which the Cypriot government has filed reservations with international regulators.
NewSat Chief Technical Officer David Ball said in a statement that the agreement with Kyprosat “protects NewSat against the expiry of orbital slot filings,” and increases NewSat’s spectrum rights at the eight positions. NewSat and Kyrposat signed an initial agreement on the eight slots in 2011.
NewSat said it is paying Kyprosat an undisclosed amount “in fees and shares” in return for the new orbital slot arrangement.
Orbital slot and frequency reservations typically include deadlines by which the slots must be occupied, and the frequencies used. Extensions are sometimes granted, and governments adept in using the international regulatory system — Cyprus would appear to be among them — sometimes can make multiple reservations to extend their rights beyond the usual seven-year period.
Kyprosat announced in September that instead of waiting for customers to ask for orbital rights, it would team with British small-satellite builder Surrey Satellite Technology Ltd. to proactively offer turnkey systems that included the slot and an accompanying satellite.
In addition to Jabiru-1, NewSat and fleet operator Measat of Malaysia have agreed to purchase about $180 million in capacity on each other’s satellites. NewSat’s purchase is for Ku-band bandwidth on Measat-3b, which NewSat calls Jabiru-2, with a footprint mainly over Australia. The satellite entered service in November and NewSat said it had begun to load customers onto it.