Saturday, June 14, 2014

The "Three Kings" of CDN Commercial Space Prepare for Changes

          by Chuck Black

Telesat HQ in Ottawa. Photo c/o Globe & Mail.
The "three kings" of the Canadian space industry, communications giant Telesat, component manufacturing upstart COM DEV International (COM DEV) and robotics expert/ satellite manufacturer Macdonald Dettwiler (MDA) are each weighing their options in anticipation of changes expected to occur over the next few months.

The situation at Telesat, which has been trying to do "something," maybe even "anything" to shake up the corporate structure over the last few years, whether it's a sale, a recapitalization (as per the March 22nd, 2011 post "Telesat Sale (or Recapitalization) Near (or Not)" and the February 13, 2014 post "Telesat Being Shopped Around, Again"), an acquisition or even an IPO (as per the September 1st, 2012 post "Will Telesat IPO before July 25th, 2013?"), is considered the most confusing.

As per the June 4th, 2014 Seeking Alpha post "Loral higher following fresh Telesat deal report," Telesat owners Loral Space & Communications (LORAL) and Canada's Public Sector Pension Investment Board (PSP) are "attempting to bridge a $100 million value gap" to complete a deal to sell Loral's Telesat stake to the Ontario Teachers' Pension Plan (OTPP). 

But PSP, because of its complex relationship with OTPP, could potentially end up selling its Telesat shares to itself and needs to weigh the tax repercussions of the various potential valuations on both sides of the ledger before proceeding. According to the the article, "talks are ongoing" and a deal could happen in July.

COM DEV HQ in Cambridge. Photo c/o COM DEV.

The situation over at COM DEV is certainly easier to follow. As outlined in the June 6th, 2014 Space News article "COM DEV Itching for an Acquisition amid Shrinking U.S. Losses," the firm is looking to retrace the path of MDA, which in 2012 used its acquisition of US based Space Systems Loral (SSL, which is a different Loral from the LORAL in talks with PSP, although SSL was once owned by LORAL) to double in size, drive up its stock price and gain access into a variety of lucrative US military and commercial space markets. 

The Space News article quoted COM DEV CEO Mike Pley as stating that “we have a fair number of them (potential acquisitions) in the funnel right now and I would hope to be able to announce something before the end of the fiscal year.” The COM DEV fiscal year will finish up at the end of the calender year.

MDA HQ in Richmond. Photo c/o MDA.
As for MDA, given its past successes and current access to US markets normally unavailable to Canadian firms, its problem and opportunity might be of a more subtle nature. After all, MDA shares hit a new 52-week high on the Toronto Stock Exchange (TSE) of $90.53 CDN on June 9th, according to the VURU stock analysis website.

But what goes up must come down, even in the stock market and the bloom could finally be coming off the company, at least according to the May 27th, 2014 Financial Post article, "Tech selloff presents opportunities in Canada." The article quoted TD Securities analyst Scott Penner as stating that MDA may not be able to sustain or surpass its recent highs and the stock price could be due for a short term "correction."

Only time will tell the whole story of these three critical Canadian space firms. Whatever happens over the next few months, these "three kings" will have more effect on Canada in space than anything happening at the Canadian Space Agency (CSA) or in academia. 

To learn more about the "three kings," check out the May 22nd, 2010 post on "The "Three Kings" of Canadian Commercial Space."

No comments:

Post a Comment

Support our Patreon Page