SCHEDULE: MHR Fund Management Amends Telesat Stake

MHR Fund Management and affiliated entities have amended their Schedule 13D filing concerning Telesat Corporation, detailing a series of transactions that restructured their beneficial ownership of Class B Shares.

Summary

• This filing is an amendment (Amendment No. 2) to a previous Schedule 13D concerning Telesat Corporation's Class B Variable Voting Shares.
• Several MHR-affiliated entities, including MHR Fund Management LLC, are listed as reporting persons.
• The filing details a series of transactions, collectively referred to as the 'CV Transaction', that occurred on July 8, 2026.
• These transactions involved the transfer of Class B Units from certain MHR funds (Institutional Partners II, Institutional Partners IIA, and Institutional Partners III) to newly formed special purpose vehicles (SAT Holdco A, SAT SubHoldco A, SAT Holdco B, and SAT SubHoldco B).
• These transfers were made in connection with limited partners' election to receive cash or roll over their indirect interests.
• Dr. Mark H. Rachesky, through various entities and as trustee, is identified as having significant beneficial ownership, totaling 35.5% of the Class B Shares outstanding.
• MHR Fund Management LLC is noted as having investment management agreements with several entities holding Class B Shares, leading to its beneficial ownership of 35.4%.

Sentiment

Score: 5

Explanation: StockSavvy.ai views this filing as neutral, primarily reflecting internal restructuring and ownership adjustments rather than new strategic initiatives or performance indicators for Telesat Corporation itself.

Positives

• The restructuring through the CV Transaction aims to manage limited partner interests, offering options for cash or rollover of investments.
• The formation of specialized vehicles (SAT Holdco A, etc.) may lead to more focused management of these assets.
• Dr. Rachesky's continued control over a significant portion of the Class B Shares suggests a stable, albeit restructured, investment strategy.

Negatives

• The complexity of the transactions and the multiple layers of entities involved can obscure direct beneficial ownership and control.
• The filing indicates that certain Class B Units were transferred to new entities controlled by the Lead Investor and MHR Sun Holdings LP, potentially shifting control dynamics.
• The 'Minimum Liquidity Threshold' clause suggests potential future pressure on MHR Sun GP to satisfy liquidity conditions for the Lead Investor, which could involve selling Class B Shares.

Risks

• The 'Minimum Liquidity Threshold' clause could lead to forced sales of Class B Shares if not met within three months after the fifth anniversary of the CV Transaction closing.
• If the Minimum Liquidity Threshold is not satisfied, the Lead Investor Representative has rights to cause sales of Class B Shares.
• The terms of the SAT SubHoldco A and SAT SubHoldco B LPAs grant the Lead Investor Representative rights to force liquidation or distribution in kind of unrealized investments after a certain period.
• The Side Letter includes provisions for the Lead Investor Representative to designate a director to Telesat's board, subject to approval, which could influence corporate governance.
• Restrictions on Sun Feeder's ability to enter into agreements with managing underwriters in registered offerings of Class B Shares for periods exceeding 120 days could impact future liquidity events.

Future Outlook

The filing does not contain explicit forward-looking financial guidance. However, it details potential future actions related to liquidity thresholds and investment wind-downs, which could impact future share availability and value.

Management Comments

• The Reporting Persons intend to review their holdings in the Issuer on a continuing basis and evaluate various alternatives.
• The Reporting Persons reserve the right to acquire or dispose of additional equity or debt securities or other instruments of the Issuer.
• The Reporting Persons reserve the right to formulate and implement other purposes, plans, or proposals regarding the Issuer or its subsidiaries.

Industry Context

StockSavvy.ai notes that this Schedule 13D amendment reflects a common strategy among investment funds to restructure holdings and manage investor liquidity, particularly in the telecommunications infrastructure sector where Telesat operates. The involvement of multiple entities and complex transaction structures is typical for large-scale investment management.

Corporate Governance

Related Party Transactions

• The CV Transaction involved transfers of Class B Units between various MHR-affiliated entities and newly formed special purpose vehicles (SAT Holdco A, SAT SubHoldco A, SAT Holdco B, SAT SubHoldco B).
• These transfers were in respect of indirect interests held by limited partners in Institutional Partners II, IIA, and III.
• The new SPVs are managed by Fund Management and controlled by MHR Sun GP, which is controlled by the Trust.
• The SPVs were indirectly funded by entities affiliated with RenWave Kore LLC (Lead Investor) and MHR Sun Holdings LP (controlled by Dr. Rachesky).

Stakeholder Impact

• Limited partners in Institutional Partners II, IIA, and III have had their indirect interests in Class B Units restructured, with options for cash or rollover.
• The Lead Investor has gained rights related to board designation and potential future liquidity or liquidation of assets held by SAT SubHoldco A and SAT SubHoldco B.
• Shareholders of Telesat Corporation may see indirect influence on board composition through the Lead Investor's designation rights.

Next Steps

• MHR Sun GP is required to use reasonable best efforts to satisfy the Minimum Liquidity Threshold within three months after the fifth anniversary of the CV Transaction closing.
• If the Minimum Liquidity Threshold is not satisfied, the Lead Investor Representative has rights to cause certain actions to satisfy it, including selling Class B Shares.
• If a material amount of unrealized investments are held by SAT SubHoldco A or SAT SubHoldco B at the six-month anniversary of the expiration of their terms (seven years from CV Transaction closing), the Lead Investor Representative may have rights to appoint a liquidator or effect a distribution in kind.
• If the wind-down right cannot be exercised, the Lead Investor Representative may cause SAT SubHoldco A and SAT SubHoldco B to transfer Class B Shares/Units to an affiliate of the Lead Investor.

Key Dates

Keywords

Telesat Corporation, Schedule 13D, MHR Fund Management, Class B Shares, Beneficial Ownership, CV Transaction, Limited Partners, Investment Management, Corporate Governance, SEC Filing, Dr. Mark H. Rachesky