LORAL ALSO DECLARES SPECIAL DIVIDEND OF $1.50 PER SHARE
Dividend payable December 17,
2020 to Stockholders of Record as of
December 4, 2020
Investor Call and Webcast Discussion of the Transaction
Today at 4:30 p.m. EST
NEW YORK, Nov. 24, 2020 /CNW/ -- Loral Space &
Communications Inc. (NASDAQ:LORL) today announced that it has
entered into a definitive agreement with Public Sector Pension
Investment Board (PSP Investments) and Telesat Canada (Telesat) to
combine Loral and Telesat into a new Canadian public company (New
Telesat). Upon closing of the transaction, the stockholders
in Loral, together with PSP Investments and certain current and
former management shareholders of Telesat, will beneficially own
all of the equity in New Telesat in approximately the same
proportion as their current, indirect ownership in Telesat.
Loral stockholders not affiliated with the funds managed by MHR
Fund Management LLC (MHR Funds) will beneficially own 26.1% of the
economic interests in New Telesat, with the MHR Funds,
PSP Investments and management shareholders of Telesat
beneficially owning the remaining 36.6%, 36.7% and 0.7%,
respectively, of the economic interests in New Telesat (such
percentages have been subjected to rounding adjustments). New
Telesat shares will initially be listed on the Nasdaq Global Select
Market, and New Telesat is also considering a listing for its
shares on a Canadian stock exchange. New Telesat's governance
provisions will contain special features designed to maintain
majority Canadian board and voting control.
In addition, Loral announced that its Board of Directors has
declared a special dividend of $1.50
per share for an aggregate dividend of approximately $46.4 million. The dividend is payable on
December 17, 2020 to holders of
record of Loral voting and non-voting common stock as of the close
of business on December 4, 2020.
Michael B. Targoff, Vice Chairman
of Loral, said, "The transaction announced today reflects our
long-standing efforts to maximize value for Loral
stockholders. This transaction will consolidate all of the
equity ownership of Telesat in the capital structure of New Telesat
and will bring substantial benefits to Loral stockholders. In
addition to affording Telesat the benefits of being a publicly
traded Canadian company through New Telesat, Loral stockholders may
elect to hold their interests directly in New Telesat, which should
over time lead to improved liquidity. We are extremely
pleased to have finally achieved this result." Commenting on
the declaration of the special dividend, Mr. Targoff said, "At
Loral, we have now fulfilled our stated intention to distribute
substantially all of our cash to stockholders except for what is
needed to fund working capital and certain other liabilities."
Dr. Mark H. Rachesky, Chairman of
the Board of Directors of Loral, said, "The conclusion of this
transaction represents an important milestone in our plan to
deliver significant value to all Loral stockholders. Telesat
is revolutionizing the provision of broadband internet connectivity
worldwide by developing the most advanced constellation of low
earth orbit (LEO) satellites and integrated terrestrial
infrastructure ever conceived. The ownership structure of New
Telesat will facilitate access to the capital markets for continued
advancement of LEO, positioning New Telesat for substantial growth
to further enhance shareholder value."
Regarding today's dividend declaration, Dr. Rachesky said, "The
Loral Board has worked diligently over the last decade to maximize
value for shareholders, first, by successfully turning around and
selling our former satellite manufacturing business for over
$1 billion and next by using the
strong free cash flow generated at Telesat to enable Telesat to
invest in its state-of-the-art satellite fleet and to pay
extraordinary dividends. In addition to the significant
equity interest in New Telesat that the Loral stockholders will
collectively receive in the transaction, the Loral Board has
delivered to stockholders cash dividends, including the dividend
declared today, of over $49 per
share, or an aggregate in excess of $1.5
billion."
The definitive agreement provides for Loral stockholders to
receive, at their election and subject to the terms and conditions
of the definitive agreement, shares of New Telesat or limited
partnership units of a Canadian partnership (Telesat Partnership),
which limited partnership units will be exchangeable by the holder
for shares of New Telesat. New Telesat will be the
controlling general partner of Telesat Partnership. While the
exchange of Loral stock for shares of New Telesat is anticipated to
be taxable to U.S. stockholders to the extent of any gain, it is
anticipated that Loral U.S. stockholders that elect to receive
limited partnership units of Telesat Partnership in lieu of
receiving shares of New Telesat will do so on a tax deferred
basis. The limited partnership units of Telesat Partnership,
while not transferable, will otherwise have substantially the same
economic and voting rights as the shares of New Telesat.
Loral stockholders who elect to receive limited partnership units
of Telesat Partnership will, however, like all other holders of
limited partnership units of Telesat Partnership, be required to
hold their units for at least six months following closing of the
transaction before they may exchange their limited partnership
units of Telesat Partnership for shares of New Telesat. The
exchange of limited partnership units of Telesat Partnership for
shares of New Telesat is anticipated to be a taxable transaction to
U.S. stockholders.
The definitive agreement also provides for PSP Investments to
exchange substantially all of its interests in Telesat for limited
partnership units of Telesat Partnership, with the balance of its
interests in Telesat being exchanged for shares in New
Telesat. Other holders of Telesat shares and derivatives have
the option to exchange their equity or retain their direct
interests in Telesat (the beneficial ownership percentages referred
to in this press release assume that such shareholders will
exchange their interests in Telesat for shares of New Telesat).
Loral and Telesat will also make certain cash payments to PSP
Investments in connection with the transaction, including a payment
of $7 million and a payment to adjust
for the value of Loral's non–Telesat assets and liabilities at the
time of the closing of the transaction.
The transaction, which is subject to customary closing
conditions, including approval by Loral stockholders (as further
described below) and certain regulatory approvals, is expected to
close in the second or third quarter of 2021. As of November
23, 2020, there were outstanding 21,427,078 shares of Loral
voting common stock, 9,505,673 shares of Loral non–voting common
stock and 92,857 Loral restricted stock units.
Loral's Board of Directors has set a record date of November
30, 2020 for stockholders entitled to vote at the stockholder
meeting to be held to approve the transaction (the stockholder
meeting). The record date is subject to change based on the
timing of the mailing of the proxy statement for the stockholder
meeting. The MHR Funds have entered into an agreement to vote
30% of the shares of outstanding Loral voting common stock in favor
of the transaction. In addition to the approval of the
transaction by the holders of a majority of the outstanding Loral
voting common stock, the transaction is also subject to approval
(the Majority of the Unaffiliated Vote) by holders of the majority
of the outstanding voting common stock held by Loral stockholders
not affiliated with PSP Investments, the MHR Funds or other
transaction participants (Unaffiliated Shares).
In addition, in connection with the transaction, the Loral Board
of Directors has adopted a shareholder rights plan that would be
triggered if a party (other than the MHR Funds) acquires or
announces the intention to acquire shares of Loral voting common
stock such that after giving effect to the acquisition the party
would own more than 15% of the Unaffiliated Shares, or for those
Loral stockholders (other than the MHR Funds) already over such
15% threshold, if such stockholder increases its ownership of
such Unaffiliated Shares by 0.001% or more. The shareholder
rights plan will expire immediately upon the first to occur of
receipt of the Majority of the Unaffiliated Vote, termination of
the definitive transaction agreement and
November 23, 2021. The MHR Funds have also entered
into a separate standstill agreement prohibiting the MHR Funds and
their affiliates from acquiring more than an additional 6% of the
outstanding shares of Loral voting common stock prior to the
conclusion of the stockholder meeting.
An independent special committee of the Loral Board (the Special
Committee) and the Loral Board received a fairness opinion from
Loral's financial advisor, LionTree Advisors LLC
(LionTree). The Special Committee and the Loral Board each
approved the transaction and determined it to be fair to the Loral
stockholders not affiliated with the MHR Funds. The
definitive transaction agreement was also approved by the Board of
Directors of each of PSP Investments and Telesat.
In connection with the transaction, LionTree and Credit Suisse
Securities (USA) LLC acted as
financial advisors, Willkie Farr
& Gallagher LLP acted as legal counsel, McCarthy Tétrault LLP
acted as Canadian legal counsel, and DLA Piper LLP acted as U.S.
tax counsel, to Loral. Cleary Gottlieb Steen & Hamilton
LLP acted as legal counsel, and Goodmans LLP acted as Canadian
legal counsel, to the Special Committee.
Conference Call and Webcast
Loral's Vice Chairman, Michael B.
Targoff, will host a conference call and webcast on
Tuesday, November 24, 2020 at
4:30 p.m. EST to discuss the
transaction and respond to questions from stockholders. To
participate by phone, please dial 412-317-0790 or toll free at
877–870–4263 approximately ten minutes prior to the scheduled start
of the call. A listen-only webcast of the call will be
available at
https://www.webcaster4.com/Webcast/Page/2555/38262. A replay
of the call will be made available for 14 days by dialing
877-344-7529 (toll free in the U.S.), 855-669-9658 (toll free in
Canada), or 412-317-0088
(internationally) / access code 10149334, and a replay of the
webcast will be available for 120 days at
https://www.webcaster4.com/Webcast/Page/2555/38262 or on the
Investors/Events section of Loral's website
(http://investor.loral.com/events.cfm).
About Loral Space & Communications Inc.
Loral Space & Communications Inc. is a satellite
communications company. Loral holds a 62.7% economic interest
Telesat Canada, a global operator of telecommunications and direct
broadcast satellites used to distribute video entertainment
programming and broadband data and to provide access to Internet
services and other value-added communications services.
Telesat is also developing a global constellation of low earth
orbit satellites. For more information, visit Loral's website
at www.loral.com.
Forward–Looking Statements
This press release contains forward-looking statements within
the meaning of the U.S. Private Securities Litigation Reform Act of
1995. When used in this press release, the words "believes,"
"expects," "plans," "may," "will," "would," "could," "should,"
"anticipates," "estimates," "project," "intend" or "outlook" or
other variations of these words or other similar expressions are
intended to identify forward-looking statements and
information. In addition, Loral or its representatives have
made or may make forward-looking statements, orally or in writing,
which may be included in, but are not limited to, various filings
made from time to time with the Securities and Exchange Commission
(SEC), and press releases or oral statements made with the approval
of an authorized executive officer of the company. Actual
results may differ materially from anticipated results as a result
of certain risks and uncertainties which are described as "Risk
Factors" in the current Form 10-K and in Loral's quarterly reports
on Form 10-Q. The reader is specifically referred to these
documents, as well as Loral's other filings with the SEC.
Risks and uncertainties include but are not limited to (1) risks
associated with financial factors, including swings in the global
financial markets, increases in interest rates and access to
capital; (2) risks associated with satellite services, including
dependence on large customers, launch delays and failures, in-orbit
failures and competition; (3) risks and uncertainties
associated with Telesat's planned low earth orbit constellation,
including overcoming technological challenges, access to spectrum
and markets, governmental restrictions or regulations to address
environmental concerns, raising sufficient capital to design and
implement the system and competition from other low earth orbit
systems; (4) regulatory risks, such as the effect of industry and
government regulations that affect Telesat; (5) risks related to
the satisfaction of the conditions to closing the transaction with
PSP Investments and Telesat in the anticipated timeframe or at all,
including the failure to obtain necessary regulatory and
stockholder approvals; (6) risks relating to the inability or
failure to realize the anticipated benefits of the transaction; (7)
risks of disruption from the transaction making it more difficult
to maintain business and operational relationships; (8) risks
arising from or relating to the negative effects of this
announcement or the consummation of the transaction on the market
price of Loral's voting common stock; (9) risks relating to the
incurrence of significant transaction costs and unknown
liabilities, including litigation or regulatory actions related to
the transaction; and (10) other risks, including risks relating to
and resulting from the Covid-19 pandemic. The foregoing list
of important factors is not exclusive. Furthermore, Loral
operates in an industry sector where securities values may be
volatile and may be influenced by economic and other factors beyond
Loral's control.
Additional Information and Where to Find It
In connection with the transaction, New Telesat and Telesat
Partnership will file with the SEC and the applicable Canadian
securities regulators a registration statement on Form F-4
that will contain a prospectus relating to the issuance of the
shares of New Telesat and limited partnership units of Telesat
Partnership, as well as Loral's proxy statement.
Promptly after the definitive proxy statement is filed with the
SEC, Loral will mail the definitive proxy statement to each
stockholder entitled to vote at the stockholder meeting relating to
the transaction. INVESTORS AND STOCKHOLDERS ARE URGED TO
CAREFULLY READ THE PROXY STATEMENT (INCLUDING ANY AMENDMENTS OR
SUPPLEMENTS THERETO AND ANY DOCUMENTS INCORPORATED BY REFERENCE
THEREIN) AND ANY OTHER RELEVANT DOCUMENTS IN CONNECTION WITH THE
TRANSACTION THAT LORAL WILL FILE WITH THE SEC WHEN THEY BECOME
AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE
TRANSACTION AND THE PARTIES TO THE TRANSACTION. The
definitive proxy statement, the preliminary proxy statement, other
relevant materials in connection with the transaction (when they
become available) and any other documents filed by Loral, New
Telesat or Telesat Partnership with the SEC may be obtained free of
charge at the SEC's website (www.sec.gov) and, in the case of
Telesat and New Telesat, at the System for Electronic Document
Analysis and Retrieval (SEDAR) at www.sedar.com.
Participants in the Transaction
Loral, New Telesat, Telesat Partnership, Telesat and their
respective directors and executive officers and certain other
members of management and employees may be deemed, under SEC
rules, to be participants in the solicitation of proxies from
Loral's stockholders in connection with the transaction.
Information regarding the interests of such individuals in
the transaction will be included in the proxy statement relating to
the transaction when it is filed with the SEC. Stockholders
may also obtain information about Loral's executive officers and
directors in Loral's Amendment No. 1 to Form 10-K filed with the
SEC on March 26, 2020 and about
Telesat's executive officers and directors in Telesat's Form 20-F
filed on February 27, 2020.
No Offer or Solicitation
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of
securities shall be made except by means of a prospectus meeting
the requirements of Section 10 of the Securities Act of 1933, as
amended.
Contact:
John
Capogrossi
212-338-5355
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SOURCE Loral Space & Communications