Lenders to Telesat have offered the Ottawa satellite operator a $3.2 billion rescue package, The Wall Street Journal reported Monday, to repay debt that comes due in December.
The lenders would help Telesat raise $1.7 billion in new equity and borrow $1.5 billion, the Journal reported. The Globe and Mail reported Tuesday that the plan, delivered Oct. 14, would repay the lenders in full with accrued interest.
Existing shareholders could buy the new shares at $31.50, about half Monday’s close, according to the Globe. Telesat’s stock fell almost 10 per cent on the Toronto Stock Exchange on Tuesday.
Silver Point Capital, GoldenTree Asset Management and Sound Point Capital Management are among the lenders, the Globe reported. It is their second offer; the first came in August. Telesat has acknowledged both but has not negotiated their terms, the Globe’s source said. Chief financial officer Donald Tremblay said in a statement that the company continues to seek a negotiated resolution in good faith.
“It’s time for Telesat to match its words with action,” the lenders said in their own statement.
Telesat GEO, the subsidiary that runs the company’s older geostationary satellites, owes about $2.4 billion on a term loan and notes that mature in December. Telesat’s second-quarter filings say its cash flows and cash on hand are not expected to cover that debt, raising “substantial doubt” about the subsidiary’s ability to pay.
The GEO business held $160.8 million in cash at the end of June.
Chief executive officer Dan Goldberg ruled out a Chapter 11 bankruptcy filing on the company’s August earnings call. “Our focus is strongly on refinancing the debt prior to the maturities, achieving a consensual outcome,” he said.
The lenders sued Telesat in January in New York and Ontario over its September 2025 transfer of 62 per cent of Lightspeed, its low Earth orbit broadband constellation, to a subsidiary outside their collateral. They allege a fraudulent conveyance, a transfer meant to put assets beyond creditors’ reach. The claims have not been proven in court, and Telesat says the transfer was lawful.
A 1991 federal law, the Telesat Canada Reorganization and Divestiture Act, says no insolvency law applies to Telesat and that its affairs cannot be wound up without an Act of Parliament.
The first payment is due Dec. 6. ATB Cormark Capital Markets analyst David McFadgen told the Globe in September that a default “is not an unlikely event.”