Canada: Telesat sell-off slows

Canada’s major satellite operator Telesat – the 4th largest satellite operator globally – has stumbled in its attempts to sell the business.

Telesat is owned in a complex relationship between Loral Space & Communications and the Public Pension Investment Board of Canada (PSP). Loral owns 62.8 per cent of Telesat but only 32.7 per cent voting interest. The majority voting interest is held by PSP.

However – and to further complicate an already complex story – Loral’s satellite building arm, (Space Systems/Loral, SS/L) once wholly owned, is now owned by MDA Corp or Canada!

The general idea was that following the sale of SS/L (to MDA) then the concentration would shift to disposing of Telesat.

A year ago Telesat admitted that it had spent $1.6 million on exploring a strategic transaction, up from $371,000 the previous year. Telesat’s revenues last year were $734 million (C$923m), but only a net income of C$13 milliom.

Now, a story on Bloomberg Business suggests that Telesat’s debt costs have “ballooned” with no sight of a sale in prospect. And that debt tops $3.4 billion.  Worse – at least for the bond holders – is that Telesat is looking to pay a special dividend to its patient shareholders, but to do so means borrowing more money.

One other potential move is that Loral and Telesat come together again and mount an IPO, but those plans seem to have been scuppered.

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