Loral Is Not Sold on Telesat Public Offering

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PARIS — Loral Space and Communications will not participate in an initial public offering (IPO) of stock in satellite fleet operator Telesat of Canada as proposed by Telesat co-owner PSP but is willing to explore ways to make an IPO less unattractive from a tax standpoint, Loral Chief Executive Michael B. Targoff said Nov. 9.

In a conference call with investors, Targoff said New York-based Loral, which has just sold its Space Systems/Loral satellite manufacturing arm to MDA Corp. of Canada, is “exploring options that could make a Telesat IPO attractive.”

Canadian pension fund PSP Investments has served notice that it wants to explore taking Telesat public. Ottawa, Ontario-based Telesat is the world’s fourth-largest satellite fleet operator by revenue. PSP owns a majority voting stake in Telesat, but a minority economic stake. Loral is Telesat’s other major shareholder, with a majority economic stake and minority voting rights.

Loral and PSP in the past attempted to sell Telesat but were unable to attract a buyer willing to meet the two owners’ minimum requirements. They have since agreed to a Telesat dividend recapitalization that rewarded both shareholders with cash, but added to Telesat’s debt load.

In the Nov. 9 conference call, which was mainly devoted to the tax treatment of the $29 per-share cash payment to Loral shareholders from the Space Systems/Loral sale, Targoff did not detail the tax penalties that make a Telesat IPO problematic for Loral.

It was not immediately clear whether an IPO of just one-third of Telesat’s equity, which is what PSP owns, would be viewed as attractive by prospective Telesat shareholders.