[SatNews] NewSat Limited (ASX: NWT) has announced that the Board of the U.S. based export credit agency, Ex-Im Bank, has voted and approved...

...the referral to Congress of NewSat’s application for a ~US$280 million direct loan. The Board’s vote of approval to refer NewSat’s application to Congress is an indication that the transaction complies with Ex-Im Bank’s lending requirements, and follows more than six months of due diligence by Ex-Im Bank and its advisors. Following a 35 day Congressional notification and comment period, NewSat’s application is eligible for a final vote on approval.

An application is currently under consideration by COFACE and NewSat expects to be able to provide an update to the market in July. Lazard is acting as financial advisor to the Company on the transaction. Investment bank, Morgan Stanley, will be the lead capital markets advisor.

Additionally, the Jabiru-1 satellite project has entered the advanced stages, with key milestones to date as follows:

• Acquired eight orbital slots
• Secured US$601 million in binding pre-launch customer contracts
• Executed satellite manufacturer contract with Lockheed Martin
• Lockheed Martin is six months into satellite build and has completed Preliminary Design Review
Executed launch vehicle contract with Arianespace for launch
• in 2014
• Ex-Im Bank Board approved the referral to Congress for a ~US$280 million direct loan for notification and comment

The final stages on the path to launch include:

• COFACE approval for US$95-100 million debt facility guarantee (expected July)
• Ex-Im Bank Board final vote on debt funding of ~US$280 million (following 35 day notification period)
• Proposed equity capital raising of ~US$200 million
• Complete satellite construction and launch

Significant pre-launch customer commitments of US$601 million in take-or-pay contracts has enabled NewSat to increase the size and capacity of the Jabiru-1 satellite. The total cost of the Jabiru-1 satellite project is expected to be ~US$600 million, which includes a larger allowance for construction, launch and other associated costs. The provision of the debt funding from Ex-Im Bank and COFACE is conditional on the Company raising ~US$200 million in equity. NewSat intends to raise the funds by placing NewSat ordinary shares with institutional and sophisticated investors. The proposed placement will not be underwritten.

Due to the size of the placement (and the number of shares to be issued as a result), under the ASX Listing Rules NewSat must seek shareholder approval for the proposed share issue at a meeting of shareholders. A notice of meeting and explanatory memorandum will be published on the ASX and sent to shareholders separately.

In commenting on the Ex-Im Bank referral to Congress, Adrian Ballintine, NewSat Founder and CEO said, “We are now in the final stages of financing the Jabiru-1 project. To date, the demand for satellite capacity has exceeded our expectations, with pre-launch customer contracts now at US$601 million and a robust forward sales pipeline. This has given us the ability to build a bigger satellite with more capacity and greater coverage. The increased customer contracts signed and final satellite design are expected to result in an increase in the aggregate revenue stream from Jabiru-1 over 15 years from approximately US$2.5 billion to approximately US$3.0 billion^[1]. The Ex-Im Bank has a clear understanding and appreciation of the satellite industry. The vote and the availability of Ex-Im Bank Commercial Interest Reference Rate (CIRR) (currently 1.76 percent) funding for Jabiru-1 validates the project’s key strengths; recurring revenues and solid cash flow. NewSat is in a very exciting phase of growth and transformation, as we achieve yet another key milestone towards the launch of Jabiru-1.”

^[1] Based on approximately 65-70 percent average utilization rate.