NewSat's satellite project faces collapse after lender pulls out

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NewSat's satellite project faces collapse after lender pulls out

More funding issues put Jabiru-1 in doubt.

NewSat's Jabiru-1 satellite project is facing potential collapse after one of the company's lenders pulled its financial support.

The company has been battling to get the project off the ground for the past year after it revealed that financing had been put on hold over "alleged technical or documentary breaches of financial facilities" related to the drawdown of its loan from Ever Tycoon.

Debt funding from its US and French financiers was to recommence after NewSat met a number of conditions for a waiver of the breaches.

However, NewSat last month entered a trading halt over ongoing issues with the resolution of its funding issues.

The company today revealed that one of its lenders, COFACE, after lengthy discussions had decided not to support the waiver and would pull its remaining funding from the project, representing US$160 million (A$209 million) lost.

"The result of the COFACE position is that the COFACE Lender Group will not presently advance further funds under the COFACE-guaranteed credit facilities unless and until COFACE changes its position," NewSat said in a statement.

NewSat said it remained in ongoing discussions with its lenders, but the issues may not be resolved for some time.

It confirmed it would need as much as US$70 million in extra funding during the third quarter of this year to keep the project running, and has appointed the Peter J Solomon Company to help out with capital raising.

NewSat advised that the funding difficulties could have disastrous effects on the Jabiru-1 project.

If the current difficulties are not resolved in a timely manner, it said "Lockheed Martin could terminate its satellite manufacturing agreement ... [which] would result in a loss of the company's ability to carry on with the Jabiru-1 project".

The funding issues have also resulted in late payments to both Lockheed Martin, the company building the satellite, to the tune of US$21 million (A$26.5 million), and to satellite launch provider Arianespace.

Both companies have issued NewSat with termination notices should the payments not be made within a 30 day cure period.

NewSat will remain suspended from trading until it can achieve a solution to its funding dilemma.

The company said Jabiru-1 was on track to be launched in the first half of 2016, as long as it can recommence funding or source new capital.

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