Concluding several months of negotiations the Government of Canada has notified Telesat they are prepared to invest C$2.14 billion in Telesat Lightspeed by way of a loan. The amount is almost 50% of the total budget.
Telesat LEO Inc. is a wholly owned subsidiary of Telesat, that is developing and will own and operate the highly advanced Telesat Lightspeed Low Earth Orbit (LEO) global broadband satellite constellation.
The terms of the loan will see a floating interest rate applied that is 4.75% above the Canadian overnight repo rate average (CORRA) with a 15-year maturity.
Interest is payable in kind during the Telesat Lightspeed construction period, followed by a 10-year sculpted amortisation. Telesat LEO Inc. will provide the GoC with warrants for 10% of the common shares of Telesat LEO based upon an equity valuation for Telesat LEO of US$3 billion.
“Telesat Lightspeed is a highly innovative and disruptive global broadband network and the largest space program in Canada’s long and distinguished history as a space-faring nation,” said Dan Goldberg, Telesat’s President and CEO.
“I am delighted with the engagement we have had with the Government of Canada on this flagship programme, which will help bridge the global digital divide, create and sustain thousands of high-quality jobs in Canada, spur domestic innovation, investment and exports, and ensure that Canada is at the forefront of the rapidly growing New Space Economy.
"The Government of Canada has been a strong supporter of the Telesat Lightspeed program and we applaud their leadership and foresight.”
Goldberg added: “We estimate that, in addition to the roughly US$2 billion of capital cost savings, we will realise roughly US$750 million of savings in reduced borrowing costs relative to the original Telesat Lightspeed programme.
"Telesat Lightspeed will revolutionise broadband connectivity for enterprise and government users and represents a highly compelling growth and value creation opportunity for Telesat and its stakeholders.”
The GoC investment is subject to certain conditions, including the entry of definitive documentation with the GoC and Telesat’s other financing sources to the GoC’s satisfaction.
