NewSat proposes share consolidation

Satellite company Newsat (ASX:NWT) plans to conduct a 50 for 1 share consolidation to help improve its trading price.

The company on Friday proposed to shareholders to reduce its 8.8 billion shares on issue to a more tenable number. NewSat has a market capitalisation of around $88 million.

The large number of shares is keeping potential institutional investors away, as many would have policies precluding them from investing in companies with a share price in the region of a fraction of a cent, NewSat said.

Post-consolidation, the company would have around 176 million shares.

Fractional entitlements will be rounded up. As part of the plan, investors holding shares worth less than $2,000 will be given the chance to either sell off their stakes, or buy additional shares worth at least $500 and up to $5,000.

Shareholders will vote on the proposal at an EGM on October 17.

NewSat is in the process of transforming from a satellite services reseller to the operator of its own fleet of geostationary satellites. Its first craft, the Jabiru-1, is scheduled to launch in late 2012.

NWT shares grew 20 per cent in Friday's trading to $0.012.

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