Lenders to Ottawa-based satellite operator Telesat Corp. have put forward a new recapitalization proposal as the company approaches a significant debt repayment deadline. Telesat faces the maturity of approximately US$1.71 billion in debt on December 6, with an additional US$438 million due in 2027. This debt, issued by Telesat Canada—a subsidiary linked to the company’s legacy geostationary satellite business—is challenging to service amid declining revenues in that division. The company has acknowledged in financial disclosures that its cash flow is insufficient to cover all outstanding obligations.
According to a source familiar with the discussions, the lenders delivered their latest proposal to Telesat on October 14. The plan involves securing full repayment of principal and accrued interest through a $1.7 billion equity rights offering, paired with a $1.5 billion loan. Under this arrangement, existing shareholders would be able to purchase additional shares at $31.50 each on a pro-rata basis. The proposal could potentially dilute earnings per share and exert downward pressure on the company’s stock, which recently closed down nearly 10 percent on the Toronto Stock Exchange.
Telesat has confirmed receipt of the lenders’ proposals but has not entered into negotiations on the terms. Donald Tremblay, Telesat’s chief financial officer, stated that the company and its advisors continue to engage with debt holders in good faith to find a resolution. Meanwhile, lenders expressed frustration about the lack of progress despite multiple offers, urging Telesat to collaborate on a solution that safeguards the company and its stakeholders.
The dispute has intensified amid a legal battle in which the lenders allege that Telesat improperly shielded its most valuable asset—the low-Earth orbit (LEO) Lightspeed satellite business—by transferring it into a separate subsidiary. The Lightspeed project, designed to provide global broadband through a constellation slated to begin operations in 2028, is a major focus for Telesat and has received substantial support. The company secured $2.54 billion in financing from the Canadian and Quebec governments to develop Lightspeed, which recently signed a $2.3 billion contract to deliver Arctic connectivity services to the Canadian Armed Forces.
Experts note the importance of government backing in enabling Telesat to compete with better-financed rivals like SpaceX and Amazon. Caleb Henry, director of research at Quilty Space, remarked that without such support, entering this highly competitive sector would be extremely difficult. The situation is further complicated by the Telesat Canada Reorganization and Divestiture Act, which restricts winding up the company’s affairs without parliamentary approval. This raises questions about whether Telesat could restructure under U.S. bankruptcy provisions, which might place control over critical Canadian national infrastructure, such as Lightspeed, in foreign courts.
In the political arena, opposition parties have called for transparency around Telesat’s military contract. Connections between Prime Minister Mark Carney and Telesat CEO Dan Goldberg—who have been friends since Carney’s time as Bank of Canada governor—have drawn scrutiny, though both parties deny any influence or improper involvement. The Defence Investment Agency stated that the contract award followed all required approval procedures.
Observers highlight that Carney’s extensive network of government and industry ties could play a strategic role, while Goldberg maintains that his relationship with Carney has not resulted in special treatment or preferential access related to Telesat’s government dealings.