Telesat’s new public listing on the Nasdaq is a “big milestone” for the Canadian company’s long term growth strategy, especially in getting ready to deploy the Lightspeed constellation, according to a senior executive.
Stephen Hampton, Telesat’s manager of government affairs, said the company is looking forward to the flexibility of raising financing for the constellation, which is underway amid an expected supply chain delay that is affecting other companies in the space business, including its largest competitor, SpaceX.
Telesat’s stock (TSAT) has declined by approximately 47% to $32.18 by midday Monday (Nov. 29) in the nearly two weeks since first being listed on the Nasdaq Nov. 19, but the overall index also is down approximately 27% in the same time period amid economic discussions about the impact of inflation and the new coronavirus pandemic. (Telesat is also listed on the Toronto Stock Exchange)
Nevertheless, Hampton told SpaceQ that the new listing has several positive effects on Telesat that will benefit shareholders in the long run, not least the rationalization of its corporation structure.
“People can invest directly in Telesat,” Hampton pointed out, instead of indirectly under the old ownership structure with Loral Space Communications and the Public Sector Pension Investment Board. And associated with that benefit, Hampton said, is another major boon for Telesat stakeholders.
“Becoming a public company, it gives us more financial flexibility, and gives us the potential opportunity to access public markets to execute and fund further growth initiatives,” Hampton said, clarifying that to mean broadband communications in general (a huge growth area due to the pandemic, he said) and Lightspeed more specifically.
“We’ve been in discussions with our with our senior lenders in Canada and France, for some time finalizing the financing for that program,” Hampton said of Lightspeed, which within Canada alone has received $1.44 billion in funding from the federal government and additional financial support in major deals from the governments of Ontario and Quebec.
“Lenders always like to know that a company has potential access to additional sources of financing, and furthermore, there’s a lot more transparency when you’re a public company than not,” Hampton continued.
Even though Telesat previously disclosed a portion of its finances publicly, Hampton said now there are more required disclosures that “gives more credibility and lowers risk for the lender, so for them, it just gives them some additional comfort as we finalize the financing process.”
Lightspeed is facing some headwinds due to the supply chain issue, which was disclosed in early November following Telesat’s conversations with manufacturer Thales Alenia Space. The impact of the issues has not been disclosed yet on Telesat’s website as discussions continue.
Telesat president and CEO Dan Goldberg spent most his company’s last quarterly result conference call with analysts Nov. 5 elaborating on the expected impacts of the delay, but saying that Telesat remains “bullish” about growth opportunities once the schedule is finalized.
“We’re working with Thales right now to get a better sense of the magnitude of the delay, whether there are steps we can take to mitigate the delays, and whether there are any further optimizations we should consider for the Lightspeed design if we have a little more time,” Goldberg said during the discussion.
The company has said that few other firms besides Thales Alenia would be able to take on the construction of the 298-satellite constellation, and to provide operational support. Delays in design, construction or launch “could have a material adverse effect on Telesat Corporation’s results of operations, business prospects and financial condition,” Telesat said in filings Tuesday (Nov. 9) with the U.S. Security and Exchange Commission
“This development has delayed our ability to finalize financing agreements with certain export credit agencies, which may also negatively impact the timeline,” Telesat added in the filings, although the agencies and the expected timeline have not yet been discussed publicly on the Telesat website.