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Canada to Support Telesat Lightspeed With $1.6B Loan

By Rachel Jewett | April 1, 2024

Rendering of Telesat’s Lightspeed LEO constellation. Photo: Telesat

Telesat’s Low-Earth Orbit (LEO) constellation Lightspeed will receive additional support from the Canadian government with a new loan announced Monday. The government of Canada is prepared to loan Telesat $2.14 billion Canadian dollars ($1.6 billion) for Lightspeed. This comes after several months of negotiations. 

Telesat shared the terms of the deal, which is subject to certain conditions, including the “entry of definitive documentation with the government and Telesat’s other financing sources to the government’s satisfaction.”

Under the terms of the deal, the loan will carry a floating interest rate that is 4.75% above the Canadian Overnight Repo Rate Average (CORRA) with a 15-year maturity. Interest is payable in-kind during the Telesat Lightspeed construction period, followed by a 10-year sculpted amortization. Telesat’s Lightspeed subsidiary, Telesat LEO Inc., will provide the government with warrants for 10% of the common shares of the subsidiary based on an equity valuation for Telesat LEO of $3 billion U.S. dollars.

The government of Canada previously agreed to invest CA$1.44 billion into Lightspeed, and the governments of Ontario and Québec also pledged investments. 

Telesat CEO Dan Goldberg thanked Canada for the investment: “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.” 

Goldberg reiterated what he stated on last week’s investor call, that Telesat is saving $2 billion U.S. dollars from the original cost of the program with the MDA contract, and Telesat will need to borrow about $750 million U.S. dollars less than the prior Lightspeed plan. 

Telesat is moving forward with prime contractor MDA and Goldberg reported last week that MDA is progressing toward preliminary design review in the third quarter of this year. Telesat plans to launch its first satellites in about two years in June 2026 and offer data services shortly after, targeting full global coverage and service by the end of 2027.