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Receivers sue NewSat boss Adrian Ballintine and chairman Richard Green for $270 million

NewSat founder and former chief executive Adrian Ballintine in Phuket. NewSat director Adrian Ballintine.
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Former NewSat CEO Adrian Ballintine in corporate jet with the CFO of his yacht company, Jason Cullen.

Liquidators to failed satellite company NewSat are seeking more than $270 million in damages from its former managing director Adrian Ballintine and former chairman Richard Green.

If successful, the action could lead to bankruptcy actions being taken against both former directors who have also been referred to the n Securities and Investments Commission for investigation by the group’s bankers.

Receivers to the company from McGrathNicol filed the action in late January in the Federal Court alleging both Mr Ballintine and Mr Green breached their directors’ duties on several occasions while managing the group.

The company was once touted as being “pretty capable” by Prime Minister Malcolm Turnbull who as the then communications minister believed NBN Co should be considering using NewSat’s satellites instead of building its own.

NewSat collapsed in 2015 owing the US government’s ExIm bank $280 million and European financier COFACE $108 million as its key creditors. Its collapse wiped out $200 million of investor money.

In the months ahead of its collapse, Fairfax Media exposed the turmoil and alleged governance issues within the company that was hoping to be ‘s first international satellite provider.

NewSat entered administration after being unable to secure more debt to fund the satellite project.

The company was effectively left asset-less following its collapse, despite having spent more than $270 million on construction, due to breaches in its financing and construction contracts.

US engineering giant Lockheed Martin, which was contracted by NewSat to make the Jabiru satellite, retained the asset when NewSat was placed into administration as per its contract with NewSat. This was after NewSat had made $207 million in payments to Lockheed Martin.

The launcher for NewSat’s satellite was likewise kept by French rocket launching company Arianespace under its contract with the group after NewSat also failed to complete its payments for work done. NewSat paid $56 million to Arianespace for the launcher ahead of its collapse.

NewSat also forked out $7 million to Cypriot-owned AP Kypros Satellites for licences that were never used.

McGrathNicol is seeking damages for the total amount of those payments alleging Mr Ballintine and Mr Green embarked on a massive expansion project without a business plan or a financial model.

“Neither NewSat, [its subsidiary] Jabiru nor any of their directors had any experience in undertaking a project of the type, size and magnitude of the expansion project,” McGrathNicol alleges.

The receivers also allege Mr Ballintine and Mr Green placed the company at risk by failing to take into account formal advice.

The receivers allege Mr Ballintine and Mr Green signed off on NewSat entering into three separate major deals relating to the construction of the satellite and two funding agreements while knowing the company did not have the financial capacity to complete the deal.

“At the date of the entry into the Lockheed agreement and the Arianespace agreement, NewSat and Jabiru did not have either cash or uncommitted finance facility to fund its financial obligations,” McGrath Nicol allege.

When financing was secured with ExIm and COFACE, Mr Ballintine and Mr Green were aware “it was likely that Jabiru and NewSat would not be able to comply with the terms of the finance agreements”, the receivers allege.

The two men also signed the agreements without giving a full presentation to the other members of the board and also failed to consider the financials of the deals, it is alleged.

Fairfax Media was unable to make contact with Mr Ballintine or Mr Green. They have previously denied any wrongdoing in regards to the management of the company.

Among the alleged governance breaches revealed by Fairfax were a series of payments from the company to Mr Ballintine’s luxury yacht business – a company that counted Mr Ballintine and other NewSat directors as board members.

Fairfax Media’s investigation also revealed the toxic culture within the company’s board room that included the leaking of a video of a boardroom meeting where one director appearing to physically stand over another during a heated argument.

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