PARIS — Loral Space and Communications, in the latest attempt to monetize its majority-stake investment in Canadian satellite fleet operator Telesat, is pressuring co-investor PSP Investments to allow Telesat to perform an initial public offering (IPO) of stock, Loral said.
In an Aug. 7 filing with the U.S. Securities and Exchange Commission (SEC), New York-based Loral said it continues to butt heads with PSP on a Telesat strategy. Loral said PSP, a Canadian pension fund, refused Loral’s most recent proposal that Telesat and Loral be combined into a single publicly traded entity, with Telesat’s two shareholders receiving a one-time cash distribution.
“PSP has informed us that it currently does not wish to proceed with a combination transaction,” Loral said. While the two sides continue to discuss options, Loral is looking for alternative “strategic initiatives to alter the status quo in our ownership of Telesat.”
Loral said that in July it exercised its rights to require Telesat to conduct an IPO not to exceed 25 million shares. The problem is that, for this to occur, the current Telesat shareholder agreement binding PSP and Loral would need to be terminated. In addition, Telesat’s articles of incorporation may need to be modified.
The end result would see Loral converting its current nonvoting Telesat rights into voting rights, thereby becoming Telesat’s principal owner.
Loral currently has a 62.8 percent economic interest in Ottawa-based Telesat, but only a 32.7 percent voting interest, with PSP the majority voting shareholder.
New York-based Loral has been trying for years to conclude a sale or other transaction with Telesat. Past attempts have failed as prospective buyers and Telesat’s two owners could not agree on terms.
Telesat operates a fleet of 14 geostationary-orbit telecommunications satellite, with one under construction. In a July 30 conference call with investors, Telesat Chief Executive Daniel S. Goldberg said the company had again delayed a decision on a replacement for the Telstar 18 satellite.
Co-owned with APT Satellite Holdings of Hong Kong, which calls it Apstar 5, Telstar 18 was launched in 2004 with a contracted 15-year service life. Telesat had said it would contract for a successor by late 2014, then by mid-2015. During the conference call, Goldberg said a decision likely would occur by the end of this year.
For the three months ending June 30, Telesat reported revenue of 227 million Canadian dollars ($183.7 million), flat from the same period a year ago on a decline in sales on its international fleet. Backlog was 4.6 billion Canadian dollars.
Telesat said its dominant North American fleet, which includes direct-broadcast television spacecraft fully booked before launch, was 94 percent full as of June 30. The international fleet was 80 percent full.