Moody’s changes Telesat view to negative

Moody's Investors Service said it changed Telesat Canada's outlook to negative from developing and affirmed its corporate family rating at B1, probability of default rating at B1-PD, senior secured credit facility at Ba3 (LGD3) and senior unsecured bonds at B3 (LGD5) and lowered the speculative grade liquidity rating to SGL-2 from SGL-1.

The agency said the rating action was prompted by Loral Space & Communications Inc.'s disclosure that discussions between Loral and the high bidder in the previously disclosed 2014 strategic review process have concluded without an agreement being reached. Loral holds a 63% economic interest and a 33% voting interest in Telesat. Loral noted that the two shareholders are exploring "other potential strategic initiatives, including paying a dividend to Telesat shareholders, of which [Loral] would use [its] portion to pay a dividend to [its] stockholders, as well as a combination of Telesat and Loral into a new public company."

The outlook reflects the heightened potential of a dividend recapitalization transaction in which leverage materially increases, Moody’s said.

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