NewSat asks shareholders for $26m to fund Jabiru-1 satellite

Stuart Corner
Tuesday, 20 December 2011 14:44

IT Industry - Listed Tech

Satellite service provider NewSat (ASX: NWT) is seeking $26m from its shareholders to help fund the construction and launch of its Jabiru-1 satellite planned for launch in 2014.

It is conducting a non-renounceable entitlement offer of shares on a one for four basis at $0.60 per share to raise up to approximately $26 million before costs. Shareholders will also be able to apply for shares in excess of their entitlement.

The move comes in the wake of NewSat awarded a construction contract to Lockheed Martin and a launch contract to Arianespace after securing pre-commitments for capacity from customers worth a total of $US346m.

The offer is partially underwritten by EL&C Baillieu Stockbroking, to $10m, and the directors have reserved the right to place any shortfall. The offer price of $0.60 represents a discount of 13.0 percent on the five day volume weighted average price of NewSat shares as at the close of trading on 15 December.

NewSat says it intends to use the proceeds to strengthen its balance sheet, provide financial capacity for deposits on key satellite and rocket components and provide working capital to ramp-up phases to satellite launch.

"Lockheed Martin is procuring the critical components of the satellite on an accelerated basis, hence the need to raise capital earlier than expected," the company said.

It adds that it has "already commenced contributing funds to the procurement, and will continue to contribute in accordance with the satellite procurement agreement." NewSat will also make a payment to Arianespace for their provision of launch facilities for the satellite.

NewSat has applied to the French and US based export credit agencies for fundding for Jabiru-1. It says: "Recently preliminary advice was received indicating the project qualifies and is on track for funding commitments from both COFACE and US Ex-Im Bank. Final approvals are expected early in the second quarter of 2012."

NewSat founder and CEO, Adrian Ballintine, said: "The construction of the Jabiru-1 satellite is underway with Lockheed Martin and funds raised will ensure the project stays on track for launch in the second half of 2014 with Arianespace.

"So far we have secured $US346m in prelaunch customer contracts and have a promising $US575m sales pipeline, all of which have assisted us to successfully move to the next stage of export credit funding with US Ex-Im Bank and Coface."