Telesat Canada sets talk on $2.55 billion credit facility with launch

By Sara Rosenberg

New York, March 12 - Telesat Canada released price talk on its $2.55 billion senior credit facility as it launched with a bank meeting on Monday, according to market sources.

The $150 million five-year revolver that will be denominated in U.S. and Canadian dollars is talked at Libor plus 300 basis points, the $500 million five-year Canadian dollar-equivalent term loan A is talked at BA plus 300 bps, and the $1.9 billion seven-year term loan B, of which a portion may be Canadian dollars, is talked at Libor plus 350 bps with a 1.25% Libor floor and an original issue discount of 99, sources said.

J.P. Morgan Securities LLC, Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC and UBS Securities LLC are the joint lead arrangers and bookrunners on the term loan B, and Scotia Capital (USA) Inc., CIBC World Markets Corp. and ING Financial Markets LLC are co-managers.

CIBC and JPMorgan are the joint lead arrangers and bookrunners on the term loan A and revolver, with Credit Suisse, ING, Morgan Stanley, Scotia and UBS serving as the co-managers.

JPMorgan is the administrative agent on the entire deal.

Amortization on the term loan A is 0% in year one, 5% in year two, 10% in years three and four and 15% in year five, while the term loan B amortizes at a rate of 1% per annum, the company said in a 6-K filed with the Securities and Exchange Commission.

Financial covenants include a maximum senior secured leverage ratio of 5.25:1.00.

Proceeds will be used to refinance an existing credit facility, to fund a roughly C$705 million distribution to shareholders and for general corporate purposes.

Commitments are due on March 19.

Closing is expected to occur this month.

Subject to completion of the refinancing, all of the outstanding senior preferred shares of Telesat Holdings Inc., the company's parent entity, would be redeemed in exchange for a C$146 million note issued by Telesat, of which at least 50% would need to be repaid on March 31, 2014 and the balance would be repaid on March 31, 2016.

Pricing on the note is 9¾% for the first two years, and it adjusts thereafter to reflect the then-current market rate, with a minimum rate of 11%.

Telesat is an Ottawa-based fixed satellite services operator.

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