By Soyoung Kim and Nicola Leske
NEW YORK, March 3 Loral Space & Communications
Inc has hired boutique investment bank Perella Weinberg
Partners to advise its independent directors as it explores a
potential sale of the company, people close to the matter said
Reuters reported in January that Loral, which holds a
majority stake in Canadian satellite communication services
company Telesat Holdings Inc, is working with Credit Suisse
Group AG to find a buyer.
The company's top shareholder is playing a key role in any
sale process, and independent members of Loral's board
separately hired Perella in recent weeks to advise them because
of the possibility of conflicts, according to people who spoke
on the subject but asked not to be named because the matter is
Representatives for Loral and Credit Suisse did not
immediately respond to requests for comment. Perella declined to
Loral shares rose 1.6 percent to $80.30 on the New York
Stock Exchange on Monday.
Loral's biggest shareholder is hedge fund veteran Mark
Rachesky's MHR Fund Management LLC, which held 38 percent of
Loral's outstanding voting common stock as of December.
Rachesky, who co-founded MHR in 1996 after working for activist
investor Carl Icahn for six years, is seen as key to Loral
accepting any takeover offer.
TWO-STAGE SALE PROCESS
Loral, which has a market value of around $1.7 billion,
draws the bulk of its value from Telesat, holding a 62.8 percent
economic interest but only 33.3 percent of its voting stock.
Canada's Public Sector Pension Investment Board (PSP) has a
35.3 percent economic interest and 66.7 percent of the voting
power, according to regulatory filings.
Because of the complicated ownership, an auction would
effectively be structured as a two-stage process in which Loral
will first shortlist bidders from a group of interested parties,
who will then negotiate a deal with PSP, people familiar with
the matter said.
Loral is expected to draw up a shortlist after receiving
first-round bids in the middle of March, the people said.
Parties that have expressed preliminary interest include
private equity firms Carlyle Group LP, KKR Co & LP
, Apax Partners and Onex Corp, as well as the
Canada Pension Plan Investment Board and the Ontario Teachers
Pension Plan, several people said.
Representatives for those parties either declined to comment
or did not immediately respond to requests for comment.
A buyer seeking control of Telesat would need PSP's
agreement. The Canadian pension fund manager is being advised by
Morgan Stanley on options for its stake in Telesat,
Reuters has reported previously.
Loral and PSP jointly explored the sale of Telesat to other
companies in the sector and private equity firms three years
ago, seeking as much $7 billion, but could not agree on a price.
This time, Loral is looking to sell itself, rather than only
its stake in Telesat, partly to avoid a big tax bill, according
to people familiar with the matter. If Loral were to sell its
Telesat stake, both the company and its shareholders would be
subject to taxes on the proceeds.
With headquarters in Ottawa, Telesat is the world's
fourth-largest provider of fixed satellite services, behind
Intelsat Global SA, SES SA and Eutelsat
Communications SA, according to the company's latest
Loral and PSP acquired Telesat in 2007 for $3.42 billion
from one of Canada's major phone companies, BCE Inc. In
2012, Loral sold its space systems subsidiary to MacDonald,
Dettwiler and Associates Ltd, leaving Telesat as
Loral's main asset.