NewSat forced to halt trading over satellite funding

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NewSat forced to halt trading over satellite funding

Lenders refuse to recommence financing for Jabiru-1.

NewSat has been forced to halt trading on the Australian Stock Exchange as it continues to battle to have funding for its Jabiru-1 satellite project reinstated.

The company revealed mid-last year that financing for the satellite project had been put on hold over "alleged technical or documentary breaches of financial facilities" related to the drawdown of its loan from Ever Tycoon.

It was later able to negotiate a deal with its US and French financiers, under which it was required to meet several conditions before funding of Jabiru-1 would re-commence.

The company was required to review its accounts and implement new frameworks for reporting and processes; appoint three independent directors (approved by the financiers) to its board; and raise US$40 million in new equity before the end of 2014.

Debt funding was to recommence once NewSat met the terms of the waiver.

NewSat continued to fund the construction of the satellite - which is being built by Lockheed Martin - out of its cash reserves. 

However, the company on Friday requested a trading halt over ongoing issues with the resolution of its finance issues.

Today it told investors it would suspend trading until it made an announcement about developments in its ongoing negotiations with its US lenders.

NewSat said it was continuing to negotiate with the lenders to "find an appropriate solution" that would allow the funding to recommence.

It warned the solution would likely require an additional capital raising.

"NewSat is considering and pursuing various alternatives in that regard," the company advised shareholders.

The trading halt will remain in place until negotiations are concluded.

NewSat did not respond to request for comment by the time of publication.

It will not be the first time the Jabiru-1 project has needed an extra injection of capital. Last August NewSat revealed the $620 million job would need an extra $37 million to keep going.

The company has also run into trouble with Lockheed Martin, the company building the satellite, over a failure to make US$21 million (A$26.5 million) in payments.

Earlier this year NewSat revealed Lockheed had issued a termination notice for the contract in response to the overdue payments, placing NewSat into technical default.

The company blamed delays in the recommencement of debt funding for its inability to make the payments, and said it was meeting regularly with Lockheed to remedy the contract default.

It is currently unclear whether Jabiru-1 will make its planned March to May 2016 launch window.

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