Canada Pension Plan Seeks Infrastructure Assets Like Telesat

May 23, 2014 4:51 pm ET

(Updates with proposed deal structure in 4th paragraph.)

May 23 (Bloomberg) -- Canada Pension Plan Investment Board, the country’s biggest pension fund manager, said it would be interested in adding more infrastructure assets such as Loral Space & Communications Inc.’s Telesat Holdings Inc.

“The type of assets Telesat represents, generally, which are let’s call them critical infrastructure type assets with monopolistic characteristics, are the type of assets at the right price that CPPIB would be interested in owning,” Canada Pension Chief Executive Officer Mark Wiseman said in a phone interview today. “I think it’s safe to assume that any transaction like that is one that we would explore.”

Another pension fund, Ontario Teachers’ Pension Plan is the front-runner to acquire Telesat, people with knowledge of the matter said last month. Canada Pension has also been in talks with Telesat’s owners, the people said.

A Telesat purchase would come in two pieces: buying publicly traded Loral, which owns 63 percent of the company, and acquiring the rest from Canada’s Public Sector Pension Investment Board, which co-owns the satellite operator, the people said last month.

A price disagreement has kept the deal with Ontario Teachers from being completed, the same people said more recently. One alternative being discussed is for Public Sector Pension to to roll over its stake, maintaining its ownership, or sell only a portion of its holdings, the people said.

A deal could be finalized in June, they said.

$7 Billion

New York-based Loral could be bought for more than $80 a share, said the people, who asked not to be identified because the talks are private. That would value Telesat at about $7 billion including debt.

Loral fell 0.7 percent to $70.94 in New York at the close, giving the company a market value of $2.19 billion.

Public Sector Pension owns about 37 percent of Telesat and controls about 67 percent of the voting rights. As a result, both Loral and PSP must agree to a deal for a full sale of Telesat.

Michael Bolitho, a Telesat spokesman, declined to comment, as did Deborah Allan, a spokeswoman for Toronto-based Ontario Teachers’, and Mark Boutet, a spokesman for Public Sector Pension Investment.

Related news and information: Ontario Teachers’ Said in Lead for $7 Billion Telesat Deal NSN N3U2TA6S972T <GO> KKR, Apax Said Among Buyout Firms Weighing Offers for Telesat NSN N0WQXV6TTDSK<GO> Bloomberg Industries Cable & Satellite Analysis: BI CATV <GO> Top Media Stories: TOP MED <GO> To contact the reporters on this story: Scott Deveau in Toronto at sdeveau2@bloomberg.net; Alex Sherman in New York at asherman6@bloomberg.net To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; Mohammed Hadi at mhadi1@bloomberg.net Mohammed Hadi