03 June 2015

With Government Support, This Could Be NBN:
NewSat saga nears ending with satellite fire sale

NewSat is set to sell to a foreign player by early June as part of a $US200 million ($260 million) to $US250 million fire sale.

NewSat, the embattled Australia company that attempted to launch its own satellite, is set to see its assets sold to a foreign player by early June as part of a $US200 million ($260 million) to $US250 million fire sale.

Jabiru-1 was NewSat's $620 million project to own and operate its own satellite. It enjoyed powerful supporters including former Prime Minister Bob Hawke and Communications Minister Malcolm Turnbull but funding woes push the company into administration last month amid allegations of excessive spending.

We'll be calling a meeting ... in the next couple of weeks [to discuss the process].

Fairfax Media understands that the sales process, led by New York-based advisory firm Peter J Solomon Company, is set to be finalised by early June with the bids due by Friday. Malaysian satellite operator Measat is the frontrunner with a bid believed to be worth between $US200 million to $US250 million.

This would include payments to satellite builder Lockheed Martin to complete Jabiru-1, rocket launch provider Arianespace as well as the lenders – Export-Import Bank and French credit agency COFACE.

But shareholders from Singapore and Australia who have injected around $200 million in funding, including many smaller investors who were strong backers for patriotic reasons, will not see a return on their investment.

Lockheed Martin last week seized ownership of the satellite after NewSat's Australian receivers, McGrathNicol, declined to take on the liability for the remaining cost of construction.

This means the only secured NewSat-owned assets being put on sale are its teleport business, which involve ground stations that receive signals from space, and the launch window with Arianespace in late-2016.

Telstra, Singtel-Optus and Speedcast are all understood to be bidding for NewSat's existing teleport business, which experts have valued at between $US15 million and $US30 million. But they are likely to be trumped by a larger bid that would include all assets – including payments to Lockheed Martin.

Sources said NewSat founder Adrian Ballintine is attempting to form a consortium with the backing of shareholders and other lenders that would revive the company's chances. But sources said his efforts were being challenged by the reticence of key vendors whose support would be required for a deal.

PPB Advisory practice leader Marcus Ayres declined to comment on the potential bids but said he would continue supporting McGrathNicol in getting the best possible outcome.

"We'll be calling a meeting ... in the next couple of weeks [to discuss the process]," he said. "We've really been in a holding pattern waiting for what the receiver will do.

"But it will wrap up soon."

NewSat was previously touted by critics of Labor's national broadband network as a cheaper alternative for its $2 billion program to launch two dedicated broadband satellites for rural and remote homes and businesses.

But NBN chief executive Bill Morrow last week told journalists he was pleased about the company's decision to build and launch its own satellites in light of NewSat's issues.