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Telesat debt tumbles following LEO equity transfer
Ayden Crosby
•2 min read
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This article has been amended since publication to clarify in the first paragraph that the equity was transferred into a non-guarantor subsidiary, rather than non-guarantor restricted subsidiary as originally stated. Additionally, we have corrected the low prints of the bonds, which were 1.35 points higher than we had reported, and updated the headline and lead to capture the recovery.
Telesat Canada’s debt stack sold off on 15 September following the company’s announcement that it would transfer 62% of equity in its Telesat Lightspeed business into a non-guarantorsubsidiary. The debt has since recovered.
Its 6.5% SUNs due 2027 took the biggest hit, trading at 44.25 cents on the dollar today, down 3.625 points from the prior round lot trade on 27 August, per TRACE. Its 4.875% SSNs due 2027 traded at 72 cents after the announcement, down 3 points, while its 5.625% SSNs due 2026 fell to 73.5 cents, down roughly five points from 12 September.
The company did not disclose the reason for the transfer, stating only that the indirect subsidiary to which the equity has been distributed is wholly-owned by the company’s parent entities, and is not a guarantor under its debt agreements.
Telesat’s share price jumped roughly $5 on the news, up to $26.58 per share on 15 September, with value from the company’s future LEO business being transferred away from the reach of legacy creditors.
The move comes as those creditors were organized ahead of the impending debt maturities for more than a year without engagement from the company, which has nevertheless told investors that it intends to engage with creditors in the “near term.”
Telesat Canada is the issuer of the 6.5% SUNs due 2027, 4.875% SSNs due 2027, and 2.75% term loan B due 2026, while a combined $2.54bn in senior secured delayed draw term loans financed by the governments of Canada and Quebec sit within the LEO structure. Telesat LLC is the issuer of the 5.625% SSNs due 2026.
