What: Newsat Limited (ASX: NWT) shares today entered another trading halt, sending long-suffering shareholders into another bout of worry. The small cap satellite company's share price has plunged over 75% since May last year as anxious investors became more anxious about the company's future.
So What: First, some history: In late January Newsat advised shareholders that progress payments to Lockheed Martin for the company's flagship Jabiru-1 satellite had become overdue as a result of the ongoing discussions with financiers to recommence funding.
At the time, Newsat's management believed that up to $60 million in addition equity will need to be raised, which would significantly dilute existing shareholders in the $90 million company.
Today's trading halt was "requested pending a material announcement by NWT in relation to developments in its ongoing negotiations in the US with its lenders for its Jabiru-1 project financing".
What Now: Newsat shareholders can hopefully expect some resolution to the ongoing dispute by Monday. Options include a capital raising, refinancing, private placement of shares, re-negotiated terms or any combination of the above.
As I said in January, it would take a brave investor to buy Newsat shares before a resolution. Newsat has the potential to be a great long-term income generating stock when Jabiru-1 is launched and this period was always going to be the riskiest time to own the stock.
Depending on the announcement on Monday, it could be time to buy Newsat next week!
