Telesat Secures $2.55B in New Credit, Pays Loral
Satellite operator Telesat Canada has secured new credit facilities with a total combined value of approximately $2.55 billion that enables it to refinance its outstanding debt and pay a special dividend to majority shareholder Loral Space and Communications, the companies announced March 28 in separate press releases.
The special dividend for Loral totals $421 million, or $13.60 per share, Loral said.
“Our investment in Telesat has provided Loral with handsome book returns and growth since our acquisition,” Michael Targoff, chief executive of New York-based Loral, said in a prepared statement. “Receipt of this significant dividend from Telesat is a partial realization of this investment, and we are pleased to be able to share that with Loral’s shareholders.”
Telesat’s agreement consists of four separate credit facilities of varying amounts that will mature in 2017 and 2019, the company said. The credit was arranged by a consortium of banks led by JP Morgan Chase Bank and the Canadian Imperial Bank of Commerce, Telesat said.
The proceeds will be used to pay off $2.1 billion in debt under a previous credit agreement that has now been terminated. Proceeds also will be used to pay interest, closing costs and other transaction-related fees, Telesat said.
Ottawa-based Telesat is the world’s fourth-largest satellite operator by revenue, with a fleet of 13 on-orbit satellites, two on order, and 2010 revenue of $821 million. Canada’s PSB Investments pension fund holds a minority financial interest in Telesat but a controlling voting stake.
“I am particularly gratified that Telesat was able to raise approximately $2.5 billion of bank financing with an average annual interest rate of approximately 4.4 percent, another testament to the strength of the Telesat business,” Targoff said.