Telesat plans $2.2 billion credit facility, $900 million bonds

By Sara Rosenberg

New York, Dec. 18 - Telesat is planning on getting a $2.2 billion credit facility and issuing $900 million of bonds to help fund its acquisition by a joint venture company formed by Loral Space & Communications Inc. and the Public Sector Pension Investment Board, company officials said in a conference call Monday.

Morgan Stanley and UBS are the lead banks on the financing, with Morgan Stanley the left lead on the bank deal.

The credit facility is expected to provide for $1.9 billion in funded bank debt, of which about 25% of that would be Canadian, and $300 million in lines of credit for capital expenditures and liquidity, officials said.

Under the acquisition agreement, the newly formed joint venture is buying Telesat Canada 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.

In connection with the transaction, Loral Skynet intends to retire its outstanding 14% senior secured notes and 12% series A non-convertible preferred stock.

This new company will be one of the world's largest operators of telecommunications satellites, with a combined fleet of 11 satellites and four additional satellites to be launched over the next three years.

The new company will have combined trailing 12 months revenue for the period ended Sept. 30, 2006 of about $568 million and will have $4.9 billion of backlog, generating combined trailing 12 months adjusted EBITDA for the period ended Sept. 30, 2006 of about $295 million.

The transaction is expected to close by mid-2007, subject to customary closing conditions, including approvals of the relevant Canadian and U.S. government authorities.

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