Canadian Government to Back Telesat With $1.6B Loan 

Image: Telesat

Telesat ($TSAT), a Canadian satcom provider, announced it received a loan proposal of $2.1B CAD ($1.6B) from the Canadian government to help finance its 198-bird Lightspeed LEO constellation. 

The financing announcement follows Telesat’s decision to swap its satellite manufacturer from Thales Alenia Space to MDA last year due to delays and supply chain woes. Telesat signed a  $2.1B CAD ($1.5B USD) contract with MDA—a move the company said would save it ~$2B.  

“We estimate that, in addition to the roughly $2B of capital cost savings, we will realize roughly $750M of savings in reduced borrowing costs relative to the original Telesat Lightspeed program,” Telesat chief Dan Goldberg said in a release

The terms:

  • The floating interest rate loan is priced at the Canadian Overnight Repo Rate Average (CORRA) + 4.75% and matures in 15 years. 
  • The Canadian government will have warrants for the right to buy 10% of Telesat Lightspeed based on a $3B valuation. 

“The Government of Canada has been a strong supporter of the Telesat Lightspeed program, and we applaud their leadership and foresight,” Goldberg said. 

Buzz Lightspeed: The Lightspeed LEO constellation aims to provide high-throughput, low-latency, secure comms for enterprise and government customers. The first satellite launches are slated for 2026, with service beginning in 2027. 

+ $TSAT: The company released its Q4 and FY2023 financials last week, reporting revenue of CAD $704M ($520.9M), a 7% YoY decrease as it faces competitive pressures from Starlink. $TSAT is trading down ~20% YTD.

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