Loral, in a SEC filing, stated such a transaction, which Telesat’s board has asked Telesat to investigate, would trigger a decision by Loral to separate Loral’s non-Telesat assets in order that any transaction involving Loral’s interest in Telesat could be structured in the form of a transaction at the parent-company level. “[I]n the event of any such transaction, Loral would, prior to the transaction, likely spin off or sell its interest in SS/L, (or its remaining interest if there has first been an SS/L initial public offering) and otherwise separate from Loral the remaining non-Telesat assets,” New York-based Loral said. Ottawa-based Telesat, which, since a July change in Canadian telecommunications regulations, has been freed of its obligation to remain Canadian-owned, is investigating a stock offering or other strategic transaction.
Loral's latest attempt at an initial stock offering to meet ongoing business needs to the tune of $100 million has been unable to move forward, due to a lack of market enthusiasm. On the block is 19.9 percent of Space Systems/Loral, whose satellite system backlog stands with an uptick of just over 6 percent over last year, bringing into play $1.73 billion as of September 30th. This does not take into account the recent contract for the ABS-2 satellites that was booked just prior to the close of the last financial quarter.
Additionally, a major customer of SS/L's happens to be Terrestar, which just recently filed for Chapter 11 bankruptcy protection to reorganize. TerreStar is currently on SS/L's books for a total of $35 million or so for the TereStar-1 and TerreStar-2 satellites, with the latter satellite's construction on hold due to non-payment of invoices by TerreStar — according to Loral, the construction was halted prior to the Chapter 11 filing.