Pipe told the ASX that its subsidiary, Pipe International had "withdrawn from proposed arrangements with financiers of the PPC-1 undersea cable project and is now negotiating with customers and suppliers as to the future of this project."
It said that it was "encouraged by the recent progress made regarding alternate funding arrangements," but at this stage they remain incomplete."
Pipe International said its decision to withdraw was the result of "the unacceptable delays in the credit approval process." Its parent company's annual report, released in late September, said it was in final negotiations with ANZ Bank in relation to debt funding for PPC-1 and expected a credit application to be made by the end of September 2008.
It expected that terms of any finance facility would include terms that would require, prior to draw-down, additional capacity sales and/or additional equity contribution, final cable landing permits (these have now been obtained) and final completion of any remaining due diligence.
Pipe said it was working towards satisfaction of these conditions and that it was "confident that it will receive an offer of construction finance in the near term."
The annual report also said that Pipe had secured a sales representing six percent of the potential capacity of the system and was "in various stages of negotiation with interested parties for over $US60 million of capacity sales."
The report noted that the project "is a major undertaking requiring significant financial support and that "availability of sufficient funds to meet payment terms of supply contracts is critical to the timely construction of the system."
Progress on the project is already well advanced and the cable has been manufactured and is ready to lay. Pipe has been keeping the world continuously updated via a dedicated web site.