Seeking Alpha

Bloomberg: Ontario Teachers Pension Plan front-runner to acquire Loral

  • Loral Space (LORL) +7.7% premarket as Bloomberg reports Ontario Teachers’ Pension Plan is the front-runner to acquire LORL's Telesat for ~$7B including debt, or at least $80/share.
  • The Telesat purchase apparently would come in two pieces: buying LORL, which owns 63% of the company, and acquiring the rest from Canada’s Public Sector Pension Investment Board, which co-owns the satellite operator.
  • The discussions indicate that LORL’s top shareholder, Mark Rachesky’s MHR Fund Management, and PSP are now working together to get a deal completed.
Comments (10)
  • Chris DeMuth Jr.
    , contributor
    Comments (4377) | Send Message
     
    (LORL) is worth around $100/share. One possibility would be for part of the deal consideration to be in the form of a CVR representing the litigation with (VSAT).
    10 Apr, 09:02 AM Reply Like
  • Mike Arnold, CFA
    , contributor
    Comments (1894) | Send Message
     
    I'd take $90/share.
    10 Apr, 09:44 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4377) | Send Message
     
    Three parties started out and bidders were probably dropping out as the price moved above $80. How to close $5-10? One possibility would be to simply split the difference and that gets to around your $90 per share. Another option would be $85 or so + a CVR for more depending upon the VSAT litigation outcome.
    10 Apr, 10:01 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (857) | Send Message
     
    God, Chris you are on a row man! Keep it up. Serving up OSHC next, any takers? I'll take 19 a share.
    10 Apr, 10:05 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4377) | Send Message
     
    Wilson,

     

    Thanks for the kind words. However, despite my highest regards for your valuation judgment and skill, I wouldn't take your stinkin' $19! (ISBC) will complete their conversion, and then an ISBC (or (BNCL) or (KRNY) or (OCFC)) conversation would be worth having, but I don't get up out of bed for anything without a $2 in front of it.

     

    -C
    10 Apr, 10:09 AM Reply Like
  • Mike Arnold, CFA
    , contributor
    Comments (1894) | Send Message
     
    I like either of those options. However, would prefer for it to get done sooner rather than later.

     

    I am out of town at the moment and forgot my PACER password. I want to see the damages thesis in the VSAT case. I can not believe the numbers I have seen; particularly, because a lost profits analysis needs a "but for" apportionment analysis. Given VSAT is not the only other player, 100% of Loral's offending sales would not have gone to VSAT but for the alleged infringement. I take some solace knowing the CAFC has really been dialing back damages awards.
    10 Apr, 10:15 AM Reply Like
  • Chris DeMuth Jr.
    , contributor
    Comments (4377) | Send Message
     
    I think that it would be reasonable to expect more information within a few weeks on LORL and within a few months on OSHC.
    10 Apr, 10:18 AM Reply Like
  • Wilson Wang
    , contributor
    Comments (857) | Send Message
     
    Chris,

     

    =] You bet! I'll take 22 then. haha! 19 was my lower end, but I guess when you got the power, I'll take a MUCH higher offer!
    10 Apr, 10:20 AM Reply Like
  • George Yannopoulos
    , contributor
    Comments (26) | Send Message
     
    WaPo/Bloomberg report suggests VSAT lawsuit liability is capped at $300 million (I'm guessing that this refers to cap in MDA purchase agreement in the event of a Loral change of control). If true, this would explain why deal process seems to be proceeding even in the shadow of the lawsuit.

     

    http://bit.ly/1kQk2WG
    11 Apr, 09:02 AM Reply Like
  • George Yannopoulos
    , contributor
    Comments (26) | Send Message
     
    Less than $300 million, I should have said. Let's also hope the market finds its feet soon.
    11 Apr, 09:05 AM Reply Like
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