The sharemarket reacted positively to the announcement that NewSat Limited (ASX: NWT)has entered into an agreement to acquire valuable space assets in the form of orbital slots for accommodating satellites.
Currently licensed to AP Kypros Satellites Limited, a range of frequency assignments at several orbital slots will be exclusively sublicensed to NewSat.
The agreement covers seven orbital slots in locations that cover all continents of the globe and are ideal for NewSat’s focus on high value customers and growth markets.
The slots will be used to accommodate a fleet of Jabiru satellites, providing telecommunication services in the C Band, Ku Band and Ka Band spectrum.
The agreement, which will be governed within the International Regulatory framework, gives NewSat exclusive use of one slot, 50% of the frequencies of another two slots and options over a further four slots. The agreement is subject to customary regulatory and other closing conditions.
NewSat will pay consideration in the form of five cash instalments and a sixth and final instalment in ordinary shares on 1st December, 2011. The financial terms are confidential and are expected to be released at a later date. NewSat’s Board advises that cash consideration payable is well within the means of the company and can be satisfied via available cash and reserves. In addition, NewSat will share a portion of the cost of maintaining the orbital slot filings.
“The slots are extremely valuable assets with senior filing status, outstanding geographic footprint and certainly enough capacity to see NewSat’s long-term future assured. We are now in a position to launch multiple satellites, each of which could generate in excess of $100 million of EBITDA per year” said NewSat CEO Adrian Ballintine. NewSat delivered a $26,000 profit in 2010, up from a $2.96M loss in 2009.
He added, “Achievement of this milestone is more significant than the 2005 acquisition of NewSat’s teleports. Orbital slots are the lifeblood of satellite operators, and to have multiple slots is the goal of long-term entrants.”
NewSat (ASX:NWT) shares were trading at $0.009 up 14% on yesterday's close and well up on the company's 52 week low of $0.003