Lenders (bondholders) to Canada-based satellite operator Telesat are suing the company alleging that Telesat has illegally moved the firm’s “crown jewel asset” out of their reach ahead of critical debt-repayment deadlines.

Telesat has $1.7 billion (€1.4bn) of debt maturing in December 2026, with nearly $450 million more coming due in 2027, according to a lawsuit filed January 21st by a group of the company’s creditors in the Supreme Court of the State of New York with a matching writ lodged into the Ontaria Superior Court.

The Wilmington (Delaware) Savings Fund Society, an administrative agent, filed the lawsuit on behalf of creditors holding 90 per cent of the $1.7 billion of debt.

According to a report in Canada’s Globe & Mail, the creditors allege in the US action that Telesat Canada, a subsidiary of Telesat Corp, transferred 62 per cent of the equity of its low-Earth-orbit, or LEO, business to another Telesat Corp subsidiary last September to move it away from creditors because the company is “indisputably insolvent” and unable to pay its debt.

“In effect, Telesat Canada sacrificed lender recoveries in a desperate bid to shield equity, which amounts to textbook fraud,” the lawsuit alleges.

Dan Goldberg (pictured), Telesat’s CEO, said the company was within its rights to make the transfer. “We operated within our covenants. We operated within the law. We exercised best governance practices in coming to the decision and we’re very comfortable with the action that we took,” Goldberg said.

The complaint argues that “Rather than engage, the company ignored its debtholders and audaciously attempted to transfer its crown-jewel asset out of its creditors’ reach, in clear violation of its contractual obligations and applicable law.”

Telesat is investing heavily in its future Lightspeed low Earth orbiting fleet.

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Categories: Articles, Business, Satellite

Tags: canada, telesat