Fresh from announcing the completion of the sale of its satellite manufacturing subsidiary Space Systems Loral to MacDonald, Dettwiler and Associates, Loral Space & Communications has declared a special dividend of up to US$899.3m to its…
Fresh from announcing the completion of the sale of its satellite manufacturing subsidiary Space Systems Loral to MacDonald, Dettwiler and Associates, Loral Space & Communications has declared a special dividend of up to US$899.3m to its shareholders.
The distribution, which equates to US$29 per share, is payable on 4 December 2012. As of 6 November there were 21.25 million shares of Loral voting common stock outstanding, 9.5 million shares of non-voting stock and 256,098 stock options and restricted stock units.
Following the closing of the sale on 2 November, Loral’s chairman Mark Rachesky commented: “The transaction reflects the Board’s continued commitment to delivering significant value to all Loral shareholders, and the Board will evaluate the opportunity to return capital to shareholders through a cash distribution of the net cash proceeds from this sale transaction.”
Loral received a total of US$968m in cash from the transaction, US$774m from MDA Holdings and US$193.9m from SS/L through the payment of closing notes.
MDA also issued a US$101m 3-year promissory note to Loral for the purchase of Land LLC, the newly formed limited liability company that owns SS/L’s real estate. The note bears interest at the rate of 1% and is guaranteed by Royal Bank of Canada.
The dividend annoucement comes approximately seven months after Loral paid its shareholders US$420m in another special distribution. That payment was funded from the proceeds it received from subsidiary Telesat’s US$2.55bn recapitalisation transaction in March.
Loral’s shareholders could potentially be in line for even greater returns if Telesat undertakes a possible initial public offering next year. On 25 July, the Canadian satellite operator’s other shareholder, the pension fund Public Sector Pension Investment Board, exercised its right under an existing shareholder agreement to require Telesat Holdings to conduct an IPO. However, when or indeed whether this takes place is still to be determined.
