Telesat’s astronomical goals are being weighed down by astronomical debt.
Driving the news: Canadian satellite operator Telesat was offered a refinancing deal from its top lenders ahead of a December 6 debt repayment deadline when it will owe them around $2.3 billion. Telesat has said it doesn’t have the operating revenue to cover this tab.
According to documents viewed by the Financial Times, the lenders put forward the deal last month, proposing refinancing through a $1.7 billion share offering for existing shareholders and lending another $1.5 billion in new secured loans.
Catch-up: Telesat is building a low Earth orbit satellite constellation called Lightspeed meant to compete with Starlink. However, the debt situation has put the company in crisis. The lenders offering this deal also sued the company this year, arguing Telesat illegally moved 62% of Lightspeed equity — its top asset — to a subsidiary that the lenders can’t access.
The lenders argue that this has left them tethered to Telesat’s aging geostationary orbit business, which is suffering “steady and irreversible decline.”
Why it matters: Some analysts believe Telesat is at real risk of defaulting come December. That’s a big issue for Ottawa, which has put a lot of eggs in Telesat’s basket, investing billions in Lightspeed and contracting Telesat to build its Arctic communications network.
Zoom out: The Telesat situation could have ripple effects across the Canadian investment space. At September’s foreign investment summit, Ottawa promoted the company. If it proves to be an unsafe investment, it could cast a pall over other Canadian projects.—QH
