TORONTO – Moody’s Investors Service has changed Telesat Canada’s outlook to developing from stable on Tuesday on expectations that the company is investigating a dividend recapitalization transaction and that it will be completed within a short time.
At the same time, the company’s B2 corporate family and probability of default ratings (CFR and PDR respectively) were affirmed as were all instrument ratings. Despite the pending October 31, 2012 maturity of the company’s liquidity facility, Telesat’s speculative grade liquidity rating remains unchanged at SGL-3 (adequate).
“During the third quarter of 2010, Telesat’s board authorized management to explore an IPO and other strategic alternatives”, reads Moody’s note. “Despite recent regulatory changes that exempt satellite companies from certain foreign ownership restrictions under both of Canada’s Telecommunications Act and Radiocommunications Act, an acceptable transaction did not present itself.
“However, since the company’s revolving credit facility matures in October of 2012 and since we believe that a refinance or extension is impracticable without ownership commitment to both the business and a given capital structure, we think that the advancing maturity date will mandate that a conclusion be reached one way or the other.”
