- Loral is going to be sold. The primary question is when.
- The intrinsic value of Loral as of the end of 2013 was $85 per share without any control premium.
- The intrinsic value of Loral will continue to increase throughout 2014 as the value of Loral's Telesat stake increases.
Loral - To Sell Or Not To Sell Is Not The Question
- Loral is in the final chapter of its corporate life and is in the process of selling its last significant asset, Telesat.
- The ‘noise’ around the sale of Loral is disguising the true value of Telesat’s business.
- By purchasing shares of Loral, one gets Telesat’s valuable and growing business for a significant discount.
Loral Loses ViaSat Patent Matter, But Could Be A Win For Shareholders
- News reports indicate Loral has identified a front-runner to acquire it -- Ontario Teachers' Pension Board.
- Loral lost its patent litigation with ViaSat, but allows for potential sale of Loral to go forward.
- While Loral's potential $200 million damages liability reduces potential value in a transaction, jury awards are not dispositive and damages could be lowered.
- Investors should learn more when Telesat reports Q1 earnings results and "other matters" on May 1.
Mon, Jan. 19, 3:07 PM
- The Information reports Google (NASDAQ:GOOG) is nearing a deal to invest in Elon Musk-founded rocket/spacecraft maker SpaceX. One source says the funding round is "very large," and will assign SpaceX a $10B+ valuation.
- The reported goal of the investment would be to "support the development of SpaceX satellites that could beam low-cost Internet around the globe to billions who don’t have it." Google was reported last June to be looking to spend anywhere from ~$1B to $3B+ on a satellite constellation providing Web access, and soon afterwards bought satellite imagery/analytics firm Skybox Imaging.
- Musk and SpaceX, meanwhile, are just days removed from unveiling plans for an Internet venture involving hundreds of satellites traveling at a much lower orbit than most satellites (thus reducing latency). Musk: "The speed of light is 40 percent faster in the vacuum of space than it is for fiber. The long-term potential is to be the primary means of long-distance Internet traffic and to serve people in sparsely populated areas."
- A Google/SpaceX effort would have competition: Qualcomm (NASDAQ:QCOM) and Richard Branson's Virgin Group just agreed to invest in OneWeb, a firm that plans to launch 648 broadband-capable low-orbit satellites.
- OneWeb is led by Greg Wyler, an industry vet who once worked for Google and was later rumored to be talking with Musk. Musk now asserts SpaceX has an edge on OneWeb. "Greg and I have a fundamental disagreement about the architecture. We want a satellite that is an order of magnitude more sophisticated..."
- Satellite services firms that could be affected: LORL, GSAT, IRDM, I, VSAT
Nov. 24, 2014, 4:02 PM
- Bloomberg reports The Ontario Teachers Pension Plan and Canada's Public Sector Pension Investment Board (PSP) are near a $7B deal to buy Telesat that would value Loral (LORL +7.2%) at $85/share.
- Loral has spiked to $78.50 on the report. The company recently shot down a Telesat deal valuing it at $80/share.
Nov. 9, 2014, 2:12 PM
- Elon Musk (of PayPal/Tesla/SolarCity/SpaceX fame) is working with Greg Wyler (founder of satellite startup/spectrum owner WorldVu) on building and launching cheap, lightweight satellites that would blanket the Earth with Internet access, the WSJ reports.
- Musk and Wyler are said to have "discussed launching around 700 satellites, each weighing less than 250 pounds." The WSJ observes such a constellation would be 10x as large as Iridium's (NASDAQ:IRDM), currently the world's largest, and would likely cost $1B+ to finance.
- Whereas the cheapest telecom satellites currently cost several million dollars, WorldVu is reportedly hoping to build satellites with a sub-$1M manufacturing cost. Sources state Musk/Wyler are thinking of building a manufacturing plant, and that WorldVu is looking for a satellite industry partner to "lend expertise." Musk's SpaceX would launch the hardware.
- In June, the WSJ reported Google is looking to spend as much as $3B+ to build a fleet of satellites providing Web access to unconnected/underserved regions. Since then, Google has bought satellite imagery services firm Skybox Imaging, while stating Skybox's satellites could also be used to "improve Internet access."
- Wyler was working for Google before departing this summer. Sources state he left in part due to concerns about Google's lack of manufacturing expertise.
- Other satellite services firms Musk/Wyler's efforts could have implications for: GSAT, VSAT, LORL, I.
Jun. 24, 2014, 9:10 AM
Jun. 24, 2014, 7:13 AM
- Loral (LORL) has declined a $7B deal to sell its stake in Telesat and sell itself for $80/share to the buyer group Ontario Teachers Pension Plan.
- The deal was rejected after a small price gap in the agreement could not be resolved.
- Both parties are reported to be no longer negotiating.
- Previous coverage
Jun. 4, 2014, 2:46 PM
- Telesat owners Loral (LORL +4.1%) and Canada's Public Sector Pension Investment Board (PSP) are "attempting to bridge a $100 million value gap" to complete a deal to sell Loral's Telesat stake to the Ontario Teachers' Pension Plan, Bloomberg reports.
- Loral, whose value is almost entirely derived from its 63% Telesat stake, is reportedly willing to sell itself for $85/share (a 14% premium from current levels).
- But PSP, which owns 37% of Telesat and 67% of its voting rights, wants a Telesat valuation that's ~$100M lower than what Loral supports, since the sale effectively makes it a buyer. Talks are ongoing, and a deal might still happen in July.
- Also complicating matters: Loral could be on the hook for $200M in legal costs related to ViaSat's patent suit against former subsidiary SSL. A jury awarded ViaSat $283M in damages in April.
- Previous coverage: I, II
Jun. 2, 2014, 9:16 AM
- Google (GOOG) plans to spend ~$1B to more than $3B to build a fleet of satellites providing Web access to unconnected and underserved regions, the WSJ reports.
- Google's project will reportedly start with 180 small satellites orbiting the earth at relatively low altitudes, and is being led by the founder of satellite services startup O3b Networks.
- The effort comes on the heels of Google's purchase of solar-powered drone maker Titan Aerospace (also aims to provide Web access to remote areas), and the launch of Project Loon, an effort to prove 3G-or-faster Web access for the planet using hot-air balloons.
- Larry Page has argued balloons are cheaper and easier to deploy than satellites, but satellites offer more capacity, and have seen their costs drop sharply in recent years. Analyst Tim Farrar thinks Google will replace Loon in favor of Titan's drones, and have Titan complement a satellite network.
- Google has also been reported to be close to acquiring Skybox Imaging, a provider of high-res satellite imagery and related analytics services, for ~$1B.
- Globalstar (GSAT) +1.2% premarket. Other satellite services firms that could be affected by Google's move: VSAT, LORL, SATS, IRDM.
May. 21, 2014, 12:51 PM
- ViaSat (VSAT -6.5%) commercial network revenue grew 15% Y/Y in FQ4 to $96.1M, a marked slowdown from FQ3's 34% growth. Moreover, rising investments led the division's adjusted EBITDA to fall to just $1.9M.
- At the same time, satellite services revenue (consumer-driven) rose 35% Y/Y to $105.9M vs. 37% in FQ3. The division had adjusted EBITDA of $25.5M (up over 2x Y/Y), and consumer broadband subs rose by 21K Q/Q to 641K.
- Government revenue fell 3% to $142M (nearly even with FQ3's decline) thanks to the completion of ViaSat's Blue Force Tracking bandwidth contract. Adjusted EBITDA was a healthy $30.2M.
- ViaSat also disclosed it spent nearly $25M in FY14 on legal expenses. Last month, the company won a $283M jury verdict for its IP/breach of contract suit against Loral (LORL -0.7%).
- Wells Fargo's pre-earnings upgrade wasn't well-timed.
- FQ4 results, PR
Apr. 10, 2014, 8:58 AM
- 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.
Mar. 3, 2014, 4:31 PM
- Reuters reports Loral (LORL +0.7%) has hired i-bank Perella Weinberg to advise its board on a potential sale.
- The news service reported in January Loral, which owns a majority stake in Canadian satellite network owner Telesat (but a minority voting stake), was working with Credit Suisse regarding a sale, and that it was talking with Canada's public sector pension investment board (another Telesat shareholder) about a joint Telesat sale.
- Any bid for Loral would depend on the support of 38% shareholder MHR Fund Management.
Jan. 22, 2014, 5:12 PM
- Loral (LORL +2.9%) shares surged into the close after Reuters reported the company is exploring a sale. Word of a possible deal surfaced back in Oct., but the new report adds that Mark Rachesky's MHR Fund Management has retained Credit Suisse to prepare for the ball.
- According to sources, Loral is also discussing a potential joint sale of Telesat with Canada's Public Sector Pension Investment Board. Although Loral holds a 62.8% economic interest, it possesses just 33.3% of the voting stock, making a sale dependent on PIB. The 2 had explored a sale 3 years ago and sought as much as $7B but could not agree on a price.
Oct. 28, 2013, 1:31 PM
- Loral (LORL +4.6%) gets its tail in the air as the NYPost reports Chairman Mark Rachesky - owner of 38% of the stock - is putting the company on the block. The hedge funder has reportedly put out feelers to potential buyers, but has not yet hired a banker.
- A favorite of special situation/value players, Loral's principal asset is a 62% stake in Canadian satellite company Telesat. Rachesky turned down $6B for Telesat about three years ago and now - with four satellites launched since - reportedly believes it to be worth $10B (which would put Loral's value at north of $100 vs. $71.96 at the moment). Putting maybe a more realistic price of $7.25B on Telesat, SA Pro's Mike Arnold makes the case for Loral being valued at around $84 per share.
- All of this excludes Loral's 56% stake in XTAR, which Arnold values at about $2 per share.
Jun. 8, 2013, 10:30 AMLoral (LORL) may be prepping the sale of its 62.8% stake in Canadian satellite operator Telesat, a move - according to Miller Tabak's Michael Broudo (the only WS analyst covering the company) - which could boost the stock price by 25%. A November 2010 bid of $6B was reportedly rejected and since then 4 new satellites have been launched, boosting Telesat's sale value to $6.7B-$7B, says Broudo. At that price, Loral is worth $73-$79 per share vs. yesterday's $59.65 close. Previous: SA Pro's Chris DeMuth's One Last Bite At The Apple With Loral. | Comment!
Dec. 14, 2012, 5:29 PMLoral Space & Communications (LORL) names Avi Katz to the role of president of the company, replacing Michael Targoff. Mr. Katz was formerly the company's senior VP, general counsel and corporate secretary. The appointment comes as a result of previously announced restructuring following last month's sale of the company's manufacturing division. Katz will also continue in his role as general counsel and secretary. | Comment!
Dec. 5, 2012, 12:45 PM
Nov. 7, 2012, 6:26 PM
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