Telesat launches $2.209 billion credit facility

By Sara Rosenberg

New York, Sept. 25 - Telesat held a bank meeting on Tuesday morning that was "well attended" to launch its proposed $2.209 billion credit facility, according to a market source.

Morgan Stanley, UBS and JPMorgan are the lead arrangers and bookrunners on the deal, with Morgan Stanley and UBS as senior lead arrangers and Morgan Stanley on the left. Morgan Stanley is administrative agent on the credit facility, UBS is syndication agent and Bank of Nova Scotia, JPMorgan and Citigroup are joint documentation agents.

The facility consists of a $150 million five-year Canadian dollar-equivalent revolver, a $469 million five-year Canadian dollar equivalent term loan A, a $1.44 billion seven-year term loan B and a $150 million delayed-draw term loan B, the source said.

Official price talk on the deal was unavailable prior to press time. However, according to past filings with the Securities and Exchange Commission, for ratings of B1 or higher from Moody's Investors Service and B+ or higher from Standard & Poor's, the term loan A will be at the Bankers Acceptance rate plus 200 basis points, the term loan B will be at Libor plus 225 bps and the revolver will be at Libor plus 200 bps. For lower ratings, the term loan A will be at Bankers Acceptance plus 225 bps, the term loan B at Libor plus 250 bps and the revolver at Libor plus 225 bps.

The filings also said that the delayed-draw loan will have a ticking fee equal to half its margin over Libor and the revolver will have an initial commitment fee of 50 bps.

There are maintenance covenants under the facility.

Proceeds from the credit facility, along with along with $910 million of high-yield senior notes and $761 million of equity, will be used to help fund the acquisition of Telesat Canada by a joint venture company formed by Loral Space & Communications Inc. and the Public Sector Pension Investment Board.

The newly formed joint venture is buying Telesat from BCE Inc. for about $2.8 billion, plus the assumption of $148 million of debt.

In connection with this transaction, Loral will transfer the fixed satellite services and network services assets of Loral Skynet to the joint venture, which will be known as Telesat and based in Ottawa.

This new company will be one of the world's largest operators of telecommunications satellites.

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