Credit crunch may force Pipe Networks to revisit cable plans

Kordia partner ponders turmoil in global credit markets

The chief executive of Pipe Networks, Kordia's partner in a planned trans-Tasman telecommunications cable build, says the company may have to consider partners for its make-or-break project to lay an under-sea fibre between Australia, the US and Asia, if bridging finance fails to materialise.

Bevan Slattery said the application for the funding, which was previously considered the final formality in the project, was currently with ANZ Banking Corporation's credit committee.

"Obviously we are fully aware of the disruption in the credit markets and in spite of this we are hopeful of receiving an offer in the near future. Given the current market conditions any offer may come with more stringent drawdown conditions than would previously been the case," Mr Slattery said.

Directors would consider the implications of any funding offer based on improving earnings per share at the time the project comes on stream. The project currently remained on track, but these new considerations were necessary in the current economic climate, Slattery said.

"Obviously we are hopeful of proceeding as planned, the other possibilities are that modifications to our previous plans will be required, for example, we may talk to partners. Or quite simply we will not be able to meet our own stated criteria. We expect to be able make these assessments within a relatively short time frame."

In April, Kordia signed a memorandum of understanding with Australia’s Pipe Networks to build a new, private fibre-optic cable to link New Zealand and Australia. The cable will be known as PPC-2 and its construction will follow the building of its PPC-1 cable, linking Sydney and Guam.

The Kordia/Pipe cable will leverage PPC-1, Pipe Networks said in a release announcing the project.

— MIS Australia, with additional reporting by Computerworld NZ

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