[SatNews] The Melbourne Herald Sun, Australia, has filed a story that indicates all is not lost for Australia's NewSat, the satellite communications company that was handed a setback with the loss of a key contract last week.
Turnaround efforts continue, according to Ken Coleman, the lawyer representing insolvency officials trying to hold the company together after it was forced to terminate a contract with Lockheed Martin, which has been building a new high-powered satellite for NewSat, the Jabiru-1. NewSat's been in business for years, managing communications networks on satellites owned by others. In 2011, the company embarked on a campaign to transform itself into an operator and owner of satellites, with hopes of launching a fleet to serve high-growth markets.
A $US300 million ($A392m) project, the Jabiru-1 is supposed to launch next year and will boost coverage in the Middle East, Asia and Africa. It was an important component of NewSat's business plan but moved out of reach this month after the company missed a deadline to come up with more money to pay Lockheed Martin to continue work on the project. Lockheed Martin has indicated it would be willing to discuss new terms for the completion of the Jabiru-1, Mr. Coleman said at a hearing Friday in U.S. Bankruptcy Court in Delaware.
"We are currently reviewing our options for the future," Matt Kramer, spokesman for Lockheed Martin, said.
Speaking at a court hearing, Mr. Coleman said NewSat still has contracts with existing customers and continues to move forward on plans to get out of its financial difficulties. While it was trying to put together a deal to prevent the Lockheed Martin contract from being terminated, NewSat was working with a long-time contracting partner, MEASAT Satellite Systems Sdn. Bhd. This week, MEASAT made a proposal for "a comprehensive restructuring" of NewSat's debts, Mr. Coleman said.
Lenders pushed NewSat into court-supervised insolvency proceedings in Australia earlier this year after it defaulted on loans. Cost overruns on the Jabiru-1 and management issues were also cited as the reasons for NewSat's financial problems. Administrators put in charge of NewSat sought U.S. court aid to save the construction contract for the Jabiru-1. However, the money didn't come through in time, and last week, NewSat surrendered its rights under the contract with Lockheed Martin.
The Australian insolvency proceeding will be the main forum of action for NewSat's turnaround bid, the U.S. court said Friday, in a formal recognition order signed by U.S. Bankruptcy Court Judge Laurie Selber Silverstein. The recognition order was uncontested, and it was the main goal of NewSat's chapter 15 bankruptcy filing, which followed shortly after the Australian insolvency action commenced.