20-F: Telesat Amends Credit Agreement, Replacing LIBOR with SOFR

Telesat Canada amends its credit agreement to transition from LIBOR to SOFR as the benchmark interest rate.

Summary

• Telesat Canada amended its existing credit agreement effective May 9, 2023.
• The amendment replaces the LIBOR benchmark with the Adjusted Term SOFR Rate, including a SOFR-Based Rate.
• The Term SOFR Rate will be the new benchmark under the amended credit agreement.
• Existing Eurodollar Loans will continue to accrue interest at the Adjusted LIBO Rate until their current Interest Period expires.
• The Canadian Borrower must elect to convert Existing Eurodollar Loans to Term Benchmark Loans or ABR Loans by specific deadlines.
• The amendment includes conforming changes necessary or advisable due to the benchmark transition.
• The amendment does not affect the rights and remedies of the lenders or alter the existing terms, conditions, obligations, or covenants of the credit agreement, except as expressly set forth in the amendment.

Sentiment

Score: 7

Explanation: The document is a standard legal amendment, indicating a neutral to slightly positive sentiment. The transition to SOFR is a necessary step for financial stability and compliance.

Positives

• The transition to SOFR aligns the credit agreement with current market trends and regulatory recommendations.
• The amendment provides clarity and certainty regarding the benchmark interest rate.
• The amendment ensures continuity for existing Eurodollar Loans until their current Interest Period expires.

Future Outlook

The document outlines the transition from LIBOR to SOFR, indicating a move towards a new benchmark rate environment. The future interest rates on Telesat's debt will be determined by the new SOFR-based rates.

Industry Context

The transition from LIBOR to SOFR is a widespread trend in the financial industry, driven by regulatory changes and the need for more robust and reliable benchmark rates. This announcement reflects Telesat's adaptation to these industry-wide changes.

Stakeholder Impact

• Lenders will be affected by the change in benchmark rates and the need to adapt to SOFR-based lending.
• Borrowers will need to manage the transition of their existing loans to the new benchmark rates.

Next Steps

• The Canadian Borrower will need to actively manage the conversion of existing Eurodollar Loans to Term Benchmark Loans or ABR Loans.
• The Administrative Agent will need to implement the Benchmark Replacement Conforming Changes.

Key Dates

Keywords

Credit Agreement, LIBOR, SOFR, Benchmark Replacement, Telesat, Amendment, Loans, Interest Rate