PONTE VEDRA, Florida — Startup Australian satellite fleet operator NewSat Ltd. has told Australian stock-market regulators that financing of its Jabiru-1 satellite has been suspended pending a renegotiation of loan covenants with its creditors and that it is likely to need to replace its chief financial officer and hire independent directors as a result.
In an Aug. 1 response to a query from the Australian Stock Exchange following an unexplained drop in NewSat’s share price, NewSat Secretary Michael Hewins said the loan-covenant renegotiations, which are ongoing, are also likely to oblige NewSat to return to the equity markets to raise new equity.
Hewins stressed that, to date, NewSat has met all its payment requirements to its lenders and that cash reserves set aside for the Jabiru-1 project are available to support continued work on the satellite.
Chief among NewSat’s financial backers are the U.S. Export-Import Bank, which is financing the construction of the Jabiru-1 satellite by Lockheed Martin Space Systems of Sunnyvale, California; and France’s Coface export-credit agency, which is supporting the launch of Jabiru-1 aboard a European Ariane 5 rocket.
The launch is scheduled for 2015.
NewSat had told investors in June, ahead of the close of the company’s fiscal year on June 30, that the decline in revenue from U.S. government customers using NewSat’s teleports would cause a material drop in revenue for the year. In response, the company said it was reining in spending and cutting the compensation packages for its management.
NewSat is making a transition from a regional teleport operator into a satellite fleet operator. It has struck major deals with fleet operator Measat of Malaysia for capacity on the Measat-3b satellite, which NewSat calls Jabiru-2, that commit NewSat to purchasing capacity in exchange for Measat’s purchase of equivalent capacity on Jabiru-1.
After delays relating to launch vehicle availability caused by delays to the co-passenger for its launch, Measat-3b is now scheduled for launch in September. NewSat’s capacity-lease obligations will start once Measat-3b is declared operational in orbit. It was not immediately clear from the NewSat statement to Australian stock market regulators whether Jabiru-1 construction had been stopped for any length of time, and whether the suspension would remain in place until NewSat had completed a fresh solicitation of equity.
NewSat reported revenue of 39.3 million Australian dollars ($36.5 million) for the year ending June 30, 2013, and told investors in June that for the year ending June 30, 2014, revenue likely will fall by 20 percent.