The removal of foreign ownership restrictions in Canada will help Telesat find additional sources of capital, the satellite operator has revealed.
Announcing its second quarter 2010 results, Telesat said that the Canadian government’s decision in July to…
The removal of foreign ownership restrictions in Canada will help Telesat find additional sources of capital, the satellite operator has revealed.
Announcing its second quarter 2010 results, Telesat said that the Canadian government’s decision in July to exempt Canada’s satellite operators from certain ownership restrictions offers the group “greater strategic flexibility to enhance our competitive position”.
US-based Loral Space & Communications, along with Canadian pension fund partner PSP, acquired Telesat in late 2007 via a C$3.25bn LBO. Under the now defunct foreign ownership restrictions, Loral took a 64% majority economic holding in the company but only 33.33% of the voting rights, with PSP owning the remaining rights.
When asked about the possibility of Telesat being taken over by a foreign firm in the wake of the removal of the foreign ownership rules, Dan Goldberg, the company’s CEO, said in a conference call on August 5 that such a move would still need to be reviewed under the Investment Canada Act.
According to Goldberg, this means any transaction would be subject to a public interest test, where Telesat would have to demonstrate that a change in ownership has a net benefit to Canada. He added that he could not comment on what the company’s board thought of the possibility of a foreign takeover.
For the three months ended June 30, 2010, Telesat reported a 2% rise in consolidated revenues to US$205m, primarily driven by increased revenues from Nimiq 5 and Telstar 11N.
However, the company posted a net loss of C$72m compared with a C$187m profit for the same period last year. The company blamed this loss on a non-cash foreign exchange loss on the large amounts of US dollar denominated debt it holds resulting from its LBO by Loral.
