Telesat to turn into a public company in the coming week in the middle of Lightspeed delay

Telesat to turn into a public company in the coming week in the middle of Lightspeed delay

Beginning of Public Trading for Telsat

TAMPA, FLORIDA — Telesat, a Canadian satellite operator, is to begin publicly selling shares next week. This will expand the pool of potential finance for its $5 billion low-Earth-orbit Lightspeed broadband network, which has been delayed.

Following a two-day closing process, Telesat plans to complete its merger with Loral Space & Communications, a major shareholder that currently trades on the Nasdaq, on Nov. 19.

If the transaction goes through as planned, the business will be listed on a US stock exchange. The Toronto Stock Exchange (TSX) has yet to confirm that it will be able to trade shares in Canada.

Although Telesat will not be raising funds through the process, being “publicly listed will provide us access to the public equity markets for expansion initiatives, like Telesat Lightspeed,” according to a Telesat official.

Commitments for Telsat

About two-thirds of Telesat Lightspeed‘s planned $5 billion cost has already been committed, including about $1.15 billion from the Canadian government.

Negotiations with export credit agencies to secure loans to fund the constellation’s remaining almost 300 broadband satellites are still ongoing.

In an email, a Telesat representative said, “We intend to complete the Telesat Lightspeed funding with the Export Credit Agencies in the near time.”

As pandemic-related component shortages cause delays at Europe’s Thales Alenia Space (TAS). It is the principal producer for Lightspeed under a $3 billion contract, diversifying finance sources is becoming increasingly vital for the operator.

TAS “just advised us that the global supply chain concerns out there will delay the construction of the Lightspeed satellites. This will eventually delay our entering into commercial operation,” Telesat CEO Dan Goldberg said during the company’s quarterly financial results call on Nov. 5.

“We’re working with Thales right now to get a clearer understanding of the extent of the delay. Whether there are steps we can take to alleviate the delays, and whether there are any more optimizations for the Lightspeed design we should consider if we have a little more time.”

He went on to say that the TAS hold-up is also preventing him from “completing our finance agreements with the export credit agencies.”

Potentials from the delay

Telesat’s risk of missing regulatory deadlines for operating Lightspeed is further increased by deployment delays.

According to a Telesat spokesman, the operator’s ITU filings will not cause any problems, but it will need to request an extension to meet promises made to the Federal Communications Commission.

“Concern for the FCC, Telesat has no intentions to deploy 50% of its presently-authorized satellites before the FCC’s 50 percent deadline of Nov. 3, 2023,” said the official.

Telesat’s total sales fell 2% to 192 million Canadian dollars ($154 million) in the three months ending September 30, compared to the same period in 2020.

For the quarter, adjusted EBITDA (profits before interest, taxes, depreciation, and amortization) dropped 1% to 157 million Canadian dollars.

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