Exclusive: Telesat owner Loral explores sale-sources

Wed Jan 22, 2014 4:37pm EST
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By Soyoung Kim, Greg Roumeliotis and Nadia Damouni

NEW YORK (Reuters) - Loral Space & Communications Inc, which holds a majority stake in Canadian satellite communication services company Telesat Holdings Inc, is exploring a sale, according to several people familiar with the matter.

Loral, whose biggest shareholder is hedge fund veteran Mark Rachesky's MHR Fund Management LLC, is working with Credit Suisse Group AG as it prepares to market itself to potential buyers, the people said.

At the same time, Loral is talking to another Telesat shareholder, Canada's Public Sector Pension Investment Board (PSP), about the possibility of jointly selling Telesat, one of the people said. There is no agreement currently between Loral and PSP about a joint sale of Telesat, the people said.

A buyer seeking control of Telesat would need PSP's agreement. The Canadian pension fund manager is being advised by Morgan Stanley on options for its stake in Telesat, the person added.

All the sources asked not to be identified because the deliberations are confidential. Loral, Credit Suisse and Morgan Stanley declined to comment while representatives of PSP, Telesat and MHR did not respond to requests for comment.

Loral shares rose as much as 8 percent on the news and ended trading on Wednesday up 2.9 percent at $78.04, giving it a market value of $2.35 billion.

Loral draws the bulk of its value from Telesat, holding a 62.8 percent economic interest but only 33.3 percent of its voting stock. PSP has a 35.3 percent economic interest and 66.7 percent of the voting power, according to regulatory filings.

Loral and PSP jointly explored the sale of Telesat to other companies in the sector and private equity firms three years ago, seeking as much $7 billion, but could not agree on a price.   Continued...