Loral Space & Communications has called time on talks to sell Canadian satellite operator Telesat after being unable to meet its leading suitor on price. The US-based group said discussions with its “high bidder”, which SatelliteFinance understands…
Loral Space & Communications has called time on talks to sell Canadian satellite operator Telesat after being unable to meet its leading suitor on price.
The US-based group said discussions with its “high bidder”, which SatelliteFinance understands is Ontario Teachers’ Pension Plan (OTPP) of Canada, failed to “overcome the gap posed primarily by the currency exchange fluctuations”.
It is now exploring other options for its 63% economic and 33% voting interest in Telesat, together with Canada’s Public Sector Pension Investment Board (PSP), which owns the rest of the operator.
These include combining Loral and Telesat into a new public company, as well as paying a dividend to shareholders.
Loral declined to comment.
Attempts to sell Telesat are understood to have broken down multiple times since Morgan Stanley was brought in to advise the process more than a year ago, alongside Credit Suisse’s search to find a buyer for Loral.
A source earlier this year told SatelliteFinance that OTPP and PSP were struggling to secure debt funding for a deal at a price that they could justify.
The Canadian pension funds had agreed a deal in principle late last year to buy Loral for around US$83-85 per share. That deal, which would have seen PSP raise its economic share to 50% while cutting its voting rights to 50%, is thought to have collapsed after Loral balked at a US$300m consent fee to push it through.
Highland Capital Management, a hedge fund owning nearly 10% of Loral, later slammed the company for not first baulking at the price and its “minuscule” premium of about 10%.
Loral has derived most of its value from Telesat since selling Space System Loral, its former satellite manufacturing subsidiary, back in 2012 to MacDonald, Dettwiler and Associates for US$875m.
The group still owns 56% of XTAR, a joint venture it shares with Spanish satellite operator Hisdesat that offers X-band services to government customers.
Perella Weinberg was reportedly advising Loral’s independent board on the sale.
