Canada’s Telesat to mount IPO?

Canada’s Public Sector Pension Investment Board (PSP) holds a majority voting share of Ottawa-based Telesat, the world’s fourth-largest satellite operator. PSP has flagged that it wants to see Telesat mount an Initial Public Offering of its shares to the public.

However, Telesat’s other major shareholder is New York-based Loral Space & Communications, which owns a majority economic stake in Telesat, but a minority voting position. This somewhat complex arrangement was deliberately designed to get around Canada’s ownership rules of Telesat. However, Loral says it does not want to see an IPO, but is happy to explore a more tax-efficient IPO method.

Michael Targoff, Loral’s CEO, speaking on an analysts conference call, did not go into detail on the tax implications faced by Loral if an IPO went ahead but the company has just paid out $29 a share to Loral shareholders having sold off subsidiary Space Systems/Loral to Canada’s MDA for $1 billion. One option is to see Telesat sell off one-third of Telesat’s equity in an IPO (which would match what PSP owns) which is being suggested as being a tax-efficient option as far as Loral Space is concerned.

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