Telesat Achieves Strong Growth in Second Quarter & First Half of 2009

OTTAWA, Aug. 10, 2009 (GLOBE NEWSWIRE) -- Telesat Holdings Inc. (Telesat) today announced its unaudited financial results for the three and six month periods ended June 30, 2009. Unless otherwise stated herein, all amounts are in Canadian Dollars (CAD).

For the three month period ended June 30, 2009, Telesat reported consolidated revenues of $201 million, an increase of approximately 19% ($32 million) compared to the same period in 2008. The increased revenue was primarily the result of the commencement of service on Nimiq 4 in October, 2008 and the impact of the stronger U.S. dollar on the conversion of Telesat's U.S. dollar denominated revenues into Canadian dollars. Telesat also reported Adjusted EBITDA(1) for the second quarter of $142 million, an increase of $38 million (36%) compared to the same quarter last year. Adjusted EBITDA margin(1) was 71% for the quarter, compared to 62% in 2008. Telesat reported net income for the three months ended June 30, 2009 of $187 million. The impact on net income of a non-cash foreign exchange gain related to Telesat's U.S. dollar denominated debt, partially offset by non-cash losses on financial instruments, was $190 million.

For the six month period ended June 30, 2009, consolidated revenues were $405 million. Adjusted EBITDA for the first half of 2009 was $286 million and the Adjusted EBITDA margin was 71%. Net income was $148 million. Revenues, Adjusted EBITDA, and net income increased by $73 million, $83 million, and $237 million respectively compared to the same period in 2008.

Dan Goldberg, Telesat's President and CEO, commented: "I'm very pleased with Telesat's strong financial and operating performance in the second quarter and first half of this year. We achieved meaningful growth in revenue, Adjusted EBITDA and our Adjusted EBITDA margin compared to the same periods last year as a result of the entry into service of Nimiq 4, higher utilization of our international satellite fleet and our continued focus on improving our cost structure and operating efficiency. Although the broader economic environment presents certain challenges, Telesat remains well positioned at this time given the strong momentum achieved to date, our significant contractual backlog and the recent addition of Telstar 11N and planned launch of Nimiq 5 later this year."

Business Highlights

 * At June 30, 2009:

   * Telesat had contracted backlog for future services of
     approximately $5.1 billion.
   * Fleet utilization was 83% for Telesat's North American fleet,
     and 75% for Telesat's international fleet.  Telstar 11N entered
     into service during the second quarter, increasing the number of
     available transponders in the international fleet.

 * Nimiq 5 remains under construction and is anticipated to be
   launched later this year.

 * In July 2009, Telesat announced its decision to procure a
   replacement for the Telstar 14/Estrela do Sul satellite at its
   current 63 degrees West orbital location.  The new high powered
   Ku-band satellite will be known as Telstar 14R in most service
   regions and Estrela do Sul 2 in Brazil, and will have 58
   transponder equivalents (36 MHz).  Telesat anticipates the new
   satellite will be operational in the second half of 2011.  Telesat
   has selected Space Systems/Loral as the manufacturer for Telstar
   14R and International Launch Services for the satellite's launch
   into geostationary orbit.

 * In July 2009, Telesat terminated its leasehold interest in the
   Telstar 10 satellite and transferred certain related customer
   contracts to the satellite's owner in exchange for a total price
   of approximately US$69 million.  As previously reported, Telesat
   remains in discussions regarding the potential sale of its
   interests in one of its international satellites and related
   assets.  Any potential transaction is subject to further due
   diligence and other conditions and Telesat cannot at this time
   assess the probability of concluding any transaction under
   discussion or under what terms, including price, these assets may
   be sold.

 * On August 3, 2009, Telesat Canada completed an offer to exchange
   (1) any and all of its US$693 million outstanding principal amount
   of restricted 11.0% Senior Notes due 2015 for an equal amount of
   registered 11.0% Senior Notes due 2015 and (2) any and all of its
   US$217 million outstanding principal amount of restricted 12.5%
   Senior Subordinated Notes due 2017 for an equal amount of
   registered 12.5% Senior Subordinated Notes due 2017.  Holders of
   US$683 million outstanding principal amount of the 11.0% Senior
   Notes due 2015 and all of the 12.5% Senior Subordinated Notes due
   2017 exchanged their restricted notes for registered notes.
   Telesat LLC is the co-issuer of the notes.

All Adjusted EBITDA and Adjusted EBITDA margins included in this release are non-GAAP financial measures, as described in the End Notes section of this release. For information reconciling non-GAAP financial measures to the most comparable GAAP financial measures, please see the consolidated financial information below.

Telesat Canada's unaudited Quarterly Report for the three and six month periods ended June 30, 2009 will be posted at under the tab "Media Room" in the "Investor Relations" section. This information will also be furnished within the next week to the U.S. Securities and Exchange Commission by Telesat Canada on Form 6-K and may be accessed at the SEC's website at

Conference Call

Telesat has scheduled a conference call to discuss its financial results for the three and six months periods ended June 30, 2009 for Monday, August 10, 2009 at 10:30 a.m. EDT. The call will be hosted by Dan Goldberg, President and Chief Executive Officer, and Michel Cayouette, Chief Financial Officer of Telesat.

    Dial-in Instructions:

    The toll-free dial-in number for the teleconference is
    +1 (866) 266-1793. Callers outside of North America should dial
    +1 (416) 340-2218. The access code is 4012137 followed by the
    number sign (#). Please allow at least 15 minutes prior to the
    scheduled start time to connect to the teleconference.

    Dial-in Audio Replay:

    A replay of the teleconference will be available beginning at
    1:00 p.m. EDT August 10, 2009, until 11:59 p.m. EDT on August 24,
    2009. To access the replay, please call +1 (800) 408-3053.
    Callers outside of North America should dial +1 (416) 695-5800.
    The access code is 2106624 followed by the number sign (#).

Forward-Looking Statements Safe Harbour

This news release contains statements that are not based on historical fact and are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this news release, the words "believes", "expects", "plans", "may", "will", "would", "could", "should", "anticipates", "estimates", "project", "intend" or "outlook" or other variations of these words or other similar expressions are intended to identify forward-looking statements and information. Actual results may differ materially from the expectations expressed or implied in the forward-looking statements as a result of known and unknown risks and uncertainties. Detailed information about some of the known risks and uncertainties is included in the "Risk Factors" section of Telesat Canada's final prospectus filed with the United States Securities and Exchange Commission (SEC) on June 29, 2009. Readers are specifically referred to that document, as well as Telesat Canada's other filings with the SEC which can be obtained on the SEC's website at Known risks and uncertainties include but are not limited to: (1) financial risks, including economic downturns, restrictions imposed by covenants contained in the agreements governing Telesat's debt, Telesat's leverage, volatility in exchange rates, and Telesat's dependence on a few large customers for a significant proportion of its revenue; (2) risks associated with operating satellites and providing satellite services, including satellite construction or launch delays, launch failures, in-orbit failures or impaired satellite performance, the ability to obtain or renew satellite insurance at all or on reasonable terms, and competition from other providers of telecommunications services; (3) risks associated with domestic and foreign government regulation; and (4) other risks, including potential conflicts of interest with Telesat's significant shareholders, litigation, and market risks. The foregoing list of important factors is not exclusive. The information contained in this news release reflects Telesat's beliefs, assumptions, intentions, plans and expectations as of the date of this news release. Telesat disclaims any obligation or undertaking to update or revise the information herein.

End Notes

(1) The common definition of EBITDA is "Earnings Before Interest, Taxes, Depreciation and Amortization." In evaluating financial performance, we use revenues and deduct certain operating expenses (including making adjustments to operating expenses for stock based compensation expense and unusual and non-recurring items, including restructuring related expenses) to obtain operating loss/income before depreciation and amortization ("Adjusted EBITDA") and Adjusted EBITDA margin (defined as the ratio of Adjusted EBITDA to operating revenues) as measures of Telesat's operating performance.

Adjusted EBITDA allows us and investors to compare our operating results with that of competitors exclusive of depreciation and amortization, interest and investment income, interest expense, and other expense. Financial results of competitors in our industry have significant variations that can result from timing of capital expenditures, the amount of intangible assets recorded, the differences in assets' lives, the timing and amount of investments, the effects of other income (expense), and unusual and non-recurring items. The use of Adjusted EBITDA allows us and investors to compare operating results exclusive of these items. Competitors in our industry have significantly different capital structures. The use of Adjusted EBITDA facilitates comparability of performance by excluding interest expense.

We believe the use of Adjusted EBITDA and Adjusted EBITDA margin along with GAAP financial measures enhances the understanding of our operating results and is useful to us and investors in comparing performance with competitors, estimating enterprise value and making investment decisions. Adjusted EBITDA as used here may not be comparable to similarly titled measures reported by competitors. Adjusted EBITDA should be used in conjunction with GAAP financial measures and is not presented as an alternative to cash flow from operations as a measure of our liquidity or as an alternative to net income as an indicator of our operating performance.

About Telesat (

Headquartered in Ottawa, Canada, with offices and facilities around the world, Telesat is the fourth-largest fixed satellite services operator. The company provides reliable and secure satellite-delivered communications solutions to broadcast, telecom, corporate and government customers. Telesat has a global state-of-the-art fleet comprised of 11 in-orbit satellites, has 2 more satellites presently under construction, and manages the operations of 13 additional satellites for third parties. Telesat is privately held. Its principal shareholders are Canada's Public Sector Pension Investment Board and Loral Space & Communications Inc. (Nasdaq:LORL).

 Telesat Holdings Inc.
 Consolidated Statements of Earnings (Loss)

 (in thousands of                  Three Months         Six Months
  Canadian dollars) (unaudited)  2009      2008      2009      2008
 ------------------------------------------------   -----------------
 Operating revenues
 Service revenues               197,438   161,892   396,244   317,081
 Equipment sales revenues         3,744     7,584     8,988    15,116
 ------------------------------------------------   -----------------
 Operating revenues             201,182   169,476   405,232   332,197
 ------------------------------------------------   -----------------

 Amortization                    63,600    57,317   124,873   116,062
 Operations and administration   59,259    59,564   117,498   119,052
 Cost of equipment sales          4,034     5,879     8,416    11,915
 ------------------------------------------------   -----------------
 Total operating expenses       126,893   122,760   250,787   247,029
 ------------------------------------------------   -----------------
 Earnings from operations        74,289    46,716   154,445    85,168
 Interest expense                66,729    55,699   137,799   121,037
 Other expense (income)        (192,878)  (39,051) (148,961)   51,815
 ------------------------------------------------   -----------------
 Earnings (loss) before income
  taxes                         200,438    30,068   165,607   (87,684)
 Income tax expense              13,392    17,658    17,647     1,320
 ------------------------------------------------   -----------------
 Net earnings (loss)
  applicable to common shares   187,046   12,410    147,960   (89,004)
 ------------------------------------------------   -----------------

 Telesat Holdings Inc.
 Consolidated Balance Sheets

                                                  June 30,    Dec. 31,
 (in thousands of Canadian dollars) (unaudited)     2009        2008
 Current assets
   Cash and cash equivalents                        80,796      98,539
   Accounts receivable                              54,532      61,933
   Current future tax asset                          2,559       2,581
   Assets held for sale                             44,569          --
   Other current assets                             35,376      49,187
 Total current assets                              217,832     212,240
 Satellites, property and other equipment, net   1,873,360   1,883,576
 Other long-term assets                             35,259      42,303
 Intangible assets, net                            544,218     582,035
 Goodwill                                        2,446,603   2,446,603
 Total assets                                    5,117,272   5,166,757
 Current liabilities
   Accounts payable and accrued liabilities         42,718      48,792
   Other current liabilities                       123,376     138,095
   Debt due within one year                         21,035      23,272
 Total current liabilities                         187,129     210,159
 Debt financing                                  3,330,510   3,513,223
 Future tax liability                              286,355     266,372
 Other long-term liabilities                       548,295     566,136
 Senior preferred shares                           141,435     141,435
 Total liabilities                               4,493,724   4,697,325

 Shareholders' equity
   Common shares (74,252,460 common shares
    issued and outstanding)                        756,414     756,414
   Preferred shares                                541,764     541,764
                                                 1,298,178   1,298,178
   Accumulated deficit                            (678,492)   (826,452)
   Accumulated other comprehensive loss             (4,654)     (7,742)
                                                  (683,146)   (834,194)
   Contributed surplus                               8,516       5,448
 Total shareholders' equity                        623,548     469,432
 Total liabilities and shareholders' equity      5,117,272   5,166,757

 Telesat Holdings Inc.
 Consolidated Statements of Cash Flow

  JUNE 30
 (in thousands of
  Canadian dollars)            Three Months           Six Months
  (unaudited)                 2009       2008       2009       2008
 ----------------------------------------------  ---------------------
 Cash flows from operating
 Net earnings (loss)         187,046     12,410    147,960    (89,004)
 Adjustments to reconcile
  net earnings (loss) to
  cash flows from
  operating activities:
   Amortization               63,600     57,317    124,873    116,062
   Future income taxes        18,598     15,174     20,445     (2,814)
   Unrealized foreign
    exchange loss (gain)    (286,509)   (25,214)  (185,780)    74,813
   Unrealized loss (gain)
    on derivatives            96,890    (20,857)    43,035    (40,214)
   Dividends on preferred
    shares                     3,215      2,475      6,925      4,905
    compensation expense       1,492         --      3,068         --
   Other                      (4,745)   (13,435)   (14,654)   (23,199)
 Customer prepayments on
  future satellite
  services                        --      2,841      3,309     20,371
 Operating assets and
  liabilities                (53,489)   (14,139)   (22,121)   (12,651)
 ----------------------------------------------  ---------------------
                              26,098     16,572    127,060     48,269
 ----------------------------------------------  ---------------------
 Cash flows used in
  investing activities
 Satellite programs          (30,878)   (75,766)  (121,180)  (121,747)
 Property additions           (1,418)    (1,478)    (3,032)    (3,703)
 Insurance proceeds               --      4,006         --      4,006
 Proceeds on disposals
  of assets                      522      3,948        525      4,608
 ----------------------------------------------  ---------------------
                             (31,774)   (69,290)  (123,687)  (116,836)
 ----------------------------------------------  ---------------------
 Cash flows from (used in)
  financing activities
 Debt financing and bank
  loans                       23,880     61,475     23,880    132,558
 Repayment of bank loans
  and debt financing         (29,706)   (17,444)   (38,461)   (70,812)
 Capital lease payments       (1,078)    (2,488)    (3,514)    (5,441)
 Satellite performance
  incentive payments          (1,765)    (1,659)    (2,987)    (1,852)
 ----------------------------------------------  ---------------------
                              (8,669)    39,884    (21,082)    54,453
 ----------------------------------------------  ---------------------
 Effect of changes in
  exchange rates on cash
  and cash equivalents          (633)      (635)       (34)       878
 Increase (decrease) in
  cash and cash
  equivalents                (14,978)   (13,469)   (17,743)   (13,236)
 Cash and cash
  equivalents, beginning
  of period                   95,774     42,436     98,539     42,203
 ----------------------------------------------  ---------------------
 Cash and cash
  equivalents, end of
  period                      80,796     28,967     80,796     28,967
 ==============================================  =====================
 Supplemental disclosure
  of cash flow information
   Interest paid             118,852     72,825    165,156    114,794
   Income taxes paid           1,323        345      3,995        832
 ----------------------------------------------  ---------------------
                             120,175     73,170    169,151    115,626
 ----------------------------------------------  ---------------------

The following table reconciles our Net earnings (loss) applicable to common shareholders to our Adjusted EBITDA(1) and presents our Adjusted EBITDA margin(1):

 (in thousands of Canadian        Three Months         Six Months
  dollars)     (unaudited)       2009      2008      2009      2008
 ------------------------------------------------   -----------------

  Net earnings (loss)
   applicable to common shares  187,046    12,410   147,960   (89,004)
  Income tax expense             13,392    17,658    17,647     1,320
  Other expense (income)       (192,878)  (39,051) (148,961)   51,815
  Interest expense               66,729    55,699   137,799   121,037
  Amortization                   63,600    57,317   124,873   116,062
  Unusual & non-recurring items   3,083       481     3,876     1,709
  Non-cash expense related to
   stock compensation             1,492        --     3,068        --
 ------------------------------------------------   -----------------
  Adjusted EBITDA               142,464   104,514   286,262   202,939

  Operating revenues            201,182   169,476   405,232   332,197

  Adjusted EBITDA margin             71%       62%       71%       61%

 Note: Unusual & non-recurring Items are restructuring related expenses


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