Telesat evaluates alternatives as December deadline to repay debt looms

The chief executive of Telesat Corp. TSAT-T says the satellite operator is considering a range of alternatives ahead of a looming debt-repayment deadline.

Ottawa-based Telesat, which is building a constellation of low-Earth-orbit satellites called Lightspeed, has approximately US$1.71-billion in debt coming due Dec. 6, with another US$438-million of debt maturing in 2027. The debt was issued by a subsidiary of the company called Telesat Canada and is tied to the company’s fleet of geostationary satellites, an older, declining business division.

“Our advisers continue to seek good-faith engagement with the Telesat geo debt holders, and we’re evaluating other alternatives as well, with the goal of reaching an outcome that’s fair to all stakeholders,” Telesat CEO Dan Goldberg told investors during a conference call Thursday to discuss the company’s third-quarter results.

Mr. Goldberg declined to provide any specifics about those alternatives, saying the company is “pretty constrained in terms of what we can say at this time.”

Telesat faces showdown with American creditors over debt

Telesat operates communication satellites that provide connectivity in remote areas to enterprise customers such as governments, telecoms and the airline and maritime industries. The company was promoted in the Canada Investment Summit prospectus circulated among major global funds last month, and in August announced a $2.3-billion contract to deliver Arctic connectivity to the Canadian Armed Forces.

The Globe previously reported that the lenders – including Silver Point Capital, GoldenTree Asset Management and Sound Point Capital Management – presented Telesat with a proposal on Oct. 14.

The recapitalization plan proposed by the lenders involves a $1.7-billion equity-rights offering and a $1.5-billion loan, The Globe reported earlier this month.

Telesat reported a net loss of $157.2-million for the three-month period ended Sept. 30, as its revenue declined to $80.6-million. The company had a net loss of $121.1-million and revenue of $101.1-million during the same period last year.

Telesat attributed the revenue decline largely to a broadcast contract not being renewed and a broadcast customer reducing its contracted capacity. The company said it also reduced service to a North American broadband customer and removed certain geostationary satellites from service.