Canadian satellite company Telesat and the Nasdaq-listed Loral Space & Communications have announced plans to merge and form Telesat Corporation. The new company will be Canadian incorporated and controlled — which will be headquartered in Ottawa and led by Telesat Canada’s CEO Daniel S. Goldberg — but will be publicly listed on Nasdaq. Telesat Canada and Loral will become subsidiaries of the new company.
Privately held and headquartered in Ottawa, Canada with offices and facilities around the world, Telesat’s current principal shareholders are Canada’s Public Sector Pension (PSP) Investment Board and Loral Space & Communications Inc.
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The agreement allows public market investors, including Loral’s stockholders, to own Telesat shares directly. This will also allow Telesat the access to public equity markets for supporting its “compelling growth initiatives”, including its “revolutionary, highly advanced” 298-satellite LEO constellation.
About the agreement
The new development will see the shares of Telesat listed on the Nasdaq Global Select Market at the closing of the transaction. Telesat is also considering a listing on the Canadian stock markets following the closing of the transaction in 2021, according to a statement from the company.
“Today’s announcement rationalizes our corporate structure and is another important step in our efforts to execute our exciting growth strategy, deliver the most competitive and innovative services to our customers, and create value for our shareholders and other key stakeholders,” Goldberg said in the statement.
“Following the closing of the transaction, Telesat will have access to the public equity markets, providing increased flexibility and optionality to support our promising investment opportunities, including Telesat LEO, which will bridge the digital divide both at home in Canada and around the world, and give our customers the competitive advantage they need to be successful. We look forward to engaging with our expanded shareholder base as we implement our growth plans with a focus on generating strong equity returns,” he added.
The transaction is expected to close in the second or third quarter of 2021 following the required regulatory approvals, the approval of Loral’s stockholders (including a majority of Loral’s stockholders not affiliated with MHR Fund Management, PSP Investments or other transaction participants) and other customary conditions.
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Additional information with respect to the transaction will be available in filings made with the US Securities and Exchange Commission by Telesat Canada and Loral. Loral stockholders can obtain that information at www.sec.gov.
Wachtell, Lipton, Rosen & Katz and Stikeman Elliott LLP acted as legal counsel to Telesat, and Goldman Sachs & Co. LLC and BMO Capital Markets acted as financial advisors to Telesat.
Telesat has grown to be one of the largest and most successful global satellite operators, and it has been working on its LEO network to revolutionize global broadband connectivity by delivering a combination of high capacity, security, resiliency and affordability with ultra-low latency and fiber-like speeds.
Recently, the Government of Canada announced a partnership with the company to advance and ensure affordable high-speed Internet connectivity across rural and remote areas of the country. This includes a federal government contribution of up to CAD 600 million to support Telesat’s mission of deploying a transformational communications architecture.
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Additionally, the Government of Canada will contribute CAD 85 million to Telesat through the Government’s Strategic Innovation Fund (SIF). Telesat, in return, will support approximately 500 jobs in Canada, invest CAD 215 million in R&D over the next five years, and promote STEM jobs and education in Canada through a newly created scholarship, university partnerships and other initiatives, with a strong focus on creating opportunities for women.
The first Telesat LEO satellite was launched in early 2018 and the full constellation will be comprised of 298 satellites. The LEO constellation will be 35 times closer to Earth than traditional satellites, resulting in a shorter trip for Internet signals and making low-latency, fiber-like Internet accessible anywhere in the world.
Telesat has already signed some of its launch contracts, including leveraging Blue Origin New Glenn rocket and Relativity Space (world’s first autonomous rocket factory and launch services leader), and plans to announce launch contracts and schedules by the end of this year.