Canada’s Telesat seeking sale

Reports out of New York and Ottawa suggest that Canada-based satellite operator Telesat – itself majority owned by Loral Space & Communications – is looking for a sale. Telesat is the world’s fourth-largest satellite operator.

Loral, whose biggest shareholder is reportedly hedge fund investor Mark Rachesky’s MHR Fund Management LLC, is working with Credit Suisse Group AG to explore possible options.

Simultaneously, Loral is said to be in discussions with another Telesat investor, Canada’s giant  Public Sector Pension Investment Board (PSP) pension  fund (which is also a major investor in the UK’s Arqiva) about jointly selling their stakes.  PSP is reportedly being advised by Morgan Stanley about its options.

This is not the first time that Telesat has been on the sales forecourt. Loral and PSP looked at a sale three years ago, but their $7 billion asking price was too rich for a number of potential buyers.  Loral/PSP acquired their Telesat stakes in 2007, paying $3.42 billion for the asset.

Any number of investment fund or private-equity players might consider a purchase. As far as consolidation with another satellite operator is concerned, Intelsat already covers the regions operated by Telesat although the Canadian revenue stream would be useful to any player.

The same argument could be applied to SES which also has full coverage over Telesat’s region. The only large operator who might lay claim to needing to increase coverage is Paris-based Eutelsat, although again the asking price might be high. Besides, Eutelsat is still digesting its purchase of Satmex and the market sees the Latin American region as offering much better expansion prospects.

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