Telesat has received formal communication from the Minister of Innovation, Science, and Industry of Canada, detailing the Government of Canada's decision to invest CAD 2.14 billion in Telesat Lightspeed.
This investment, following extensive negotiations between Telesat and federal authorities, is earmarked for Telesat LEO Inc., a subsidiary fully owned by Telesat. Telesat LEO Inc. has been tasked with the development, ownership, and operation of the cutting-edge Telesat Lightspeed low Earth orbit (LEO) global broadband satellite constellation.
The investment will be granted in the form of a loan, carrying a floating interest rate set at 4.75% above the Canadian Overnight Repo Rate Average (CORRA), with a maturity period of 15 years. During the construction phase of Telesat Lightspeed, interest payments will be made in-kind, followed by a sculpted amortization spanning over 10 years.
In addition to the loan, Telesat LEO Inc. will issue warrants to the Government of Canada, entitling them to 10% of the common shares of Telesat LEO. These warrants are based on an equity valuation of USD 3 billion for Telesat LEO.
Bridging the Global Digital Divide
“Telesat Lightspeed is a highly innovative and disruptive global broadband network and the largest space program in Canada’s long and distinguished history as a space faring nation,” said Dan Goldberg, Telesat’s President and CEO. “I am delighted with the engagement we have had with the Government of Canada on this flagship program, which will help bridge the global digital divide; create and sustain thousands of high-quality jobs in Canada; spur domestic innovation, investment and exports; and ensure that Canada is at the forefront of the rapidly growing New Space Economy. The Government of Canada has been a strong supporter of the Telesat Lightspeed program and we applaud their leadership and foresight.”
Goldberg estimated that, in addition to the roughly USD 2 billion in capital cost savings, the company is poised to achieve roughly USD 750 million in reduced borrowing costs compared to the initial Telesat Lightspeed program.
“Telesat Lightspeed will revolutionize broadband connectivity for enterprise and government users and represents a highly compelling growth and value creation opportunity for Telesat and its stakeholders,” concluded the PCEO.
