Insider Brief:
- Telesat announced the Minister of Innovation, Science and Industry on behalf of the Canadian Government has committed to investing C$2.14 billion in Telesat Lightspeed by way of loan.
- This investment will support the development and deployment of the Telesat Lightspeed Low Earth Orbit (LEO) global broadband satellite constellation.
- In addition to the loan, Telesat LEO Inc. will issue warrants to the Government of Canada for 10% of its common shares, based on an equity valuation of US$3 billion for Telesat LEO.
- Image credit: Telesat
Telesat, a leading satellite operator, announced the Canadian Government, represented by the Minister of Innovation, Science and Industry, has committed to investing C$2.14 billion in Telesat Lightspeed. This investment will support the development and deployment of the Telesat Lightspeed Low Earth Orbit (LEO) global broadband satellite constellation.
According to the letter from the Minister, the investment will be provided in the form of a loan to Telesat LEO Inc., a subsidiary responsible for the Telesat Lightspeed project. The loan comes with a floating interest rate tied to the Canadian Overnight Repo Rate Average (CORRA), with a 15-year maturity period. During the construction phase, interest payments will be made in-kind, followed by a 10-year amortization period.
In addition to the loan, Telesat LEO Inc. will issue warrants to the Government of Canada for 10% of its common shares, based on an equity valuation of US$3 billion for Telesat LEO.
Dan Goldberg, President and CEO of Telesat, expressed his enthusiasm for the partnership with the Government of Canada, highlighting the program’s potential to bridge the global digital divide, create jobs, foster innovation, and position Canada at the forefront of the evolving space economy.
Goldberg discussed the significant cost savings expected from the investment, estimating around US$2 billion in capital cost savings and approximately US$750 million in reduced borrowing costs compared to the original program.
The Telesat Lightspeed Project aims to revolutionize broadband connectivity for enterprise and government users, presenting a promising avenue for growth and value creation.
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