NewSat falls into bankruptcy administration

by | Apr 17, 2015 | Satellites | 0 comments

The Australian prospective satellite operator, NewSat, has filed for Chapter 15 US bankruptcy protection after financing problems and being put into administration in Australia.

The court application in Delaware, US, is an attempt to keep contracts going that will ensure completion of the firm’s Jabiru-1 spacecraft, currently being built by Lockheed Martin, and its launch on an Ariane 5 ECA operated by the European launch provider Arianespace. Arianespace had announced that it planned to terminate its launch contract with NewSat following non-receipt of payments.

NewSat has reportedly also been in discussions with the manufacturer, Lockheed Martin, about delayed payments.  The firm also had a 15-year deal, worth US$60 million, with Measat to provide satellite telecommunications capacity over South East Asia.

Newsat has previously received financial backing from the French export agency, Coface, and the US Ex-Im bank. It was the failure to make covenant payments to these organisations that triggered the move to administration.  Both concerns now look likely to lose money if NewSat fails completely.

Comment by David Todd:  While having sympathy for the workers and investors involved, this column has been warning about the danger of export-credit outfits getting burned for some time. Actually, a failure of one of the LEO communications constellations looked likely to hurt the export-credit outfits first, rather than the failure of a small regional GEO operator.

We still expect a business failure in this sector to happen. In a way, export-credit agencies and their national governments deserve to be burned by such bankruptcies.  They have been striving to achieve short-term national advantage (industrial contracts, jobs etc), but have lost sight of the business fundamentals. It was the space bankruptcies of Iridium and Globalstar et al that made space a dirty word in the investment community for a time.  Easy and biased credit for such potential failures, via loans backed by export-credit agencies, might yield the same thing again.

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