Saturday, September 01, 2012

Will Telesat IPO before July 25th, 2013?

Fascinating data lies buried throughout the Loral Space and Communications August 9th, 2012 "10-Q Quarterly Report" concerning the current holding company of both US based Space Systems Loral (soon to be owned by iconic Canadarm manufacturer MacDonald Dettwiler) and Canadian based satellite communications provider Telesat (which Loral controls in partnership with the Public Sector Pension Investment Board (PSP) of Canada).

The document (also known as a form 10-Q or 10Q) is a quarterly report mandated by the United States Securities and Exchange Commission, which publicly traded corporations are required to file.

Its certainly useful reading. For example, as outlined at the bottom of page 35:
On July 25, 2012, PSP delivered a notice to Telesat Holdco (the holding company for Telesat stock) and Loral exercising its right to require Telesat Holdco to conduct an initial public offering. Loral is evaluating the effect of the notice and its obligations and alternatives. There can be no assurance as to whether, when or on what terms an initial public offering of Telesat Holdco equity may occur. 
The elephant in the room.
On page 36, the document continues:
Under the Shareholders Agreement, in the event that, either (i) ownership or control, directly or indirectly, by Dr. Rachesky, President of MHR, of Loral’s voting stock falls below certain levels or (ii) there is a change in the composition of a majority of the members of the Loral Board of Directors over a consecutive two-year period, Loral will lose its veto rights relating to certain extraordinary actions by Telesat Holdco and its subsidiaries. In addition, after either of these events, PSP will have certain rights to enable it to exit from its investment in Telesat Holdco, including a right to cause Telesat Holdco to conduct an initial public offering in which PSP’s shares would be the first shares offered or, if no such offering has occurred within one year due to a lack of cooperation from Loral or Telesat Holdco, to cause the sale of Telesat Holdco and to drag along the other shareholders in such sale, subject to Loral’s right to call PSP’s shares at fair market value.
Stripped of all the legal jargon, the essence of these statements is that there is a strong possibility Telesat will IPO before July 25, 2013 and the IPO will be driven by the actions of Canadian based PSP.


As outlined many times before in this blog (most recently in the September 18th, 2011 post "Oхуел Russian Rockets, Telesat Sale Nyet, Quebec Astronaut Finds NEMO and NASA Tabarnac!") Telesat has been looking for either a sale or an IPO opportunity for quite some time as part of a long-term effort by PSP (which invests on behalf of the Public Service, the Canadian Forces, the Canadian Forces Reserves and the Royal Canadian Mounted Police) to divest itself of Telesat holdings. 

Evidently, the police, the military and the public service don't like holding Telesat stock.

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