Telesat Stock Falls on Lawsuit from Lenders

By Kelly Cloonan

Shares of Telesat declined after its creditors filed a lawsuit alleging the satellite provider breached a credit agreement by transferring a key asset beyond their reach.

The stock fell 6.2% to $25.70 on Thursday. Shares are up 46% in the past 12 months.

The lawsuit, filed Wednesday, said that Telesat Canada unlawfully transferred 62% of the equity in its low-Earth-orbit satellite business (LEO) to a subsidiary out of lenders' reach.

Lenders said the transfer provided no consideration to Telesat Canada and that they learned of it only minutes before the LEO equity distribution was announced. When lenders previously asked whether the LEO business would be moved off Telesat Canada, the company assured them it wouldn't happen, according to the lawsuit.

In the lawsuit, the lenders asked a New York state court to unwind the company's move.

The lawsuit also alleged that Telesat Canada won't be able to repay $1.7 billion of debt maturing in December, including a $1.3 billion term loan, despite lenders' efforts to address what they called a foreseeable crisis.

Telesat said the lawsuit is without merit.

"The equity distribution at issue followed a robust governance process and was accomplished in strict accordance with relevant debt agreements and applicable law," Telesat said in a statement. "Telesat intends to defend itself vigorously."

Write to Kelly Cloonan at kelly.cloonan@wsj.com

(END) Dow Jones Newswires

January 22, 2026 12:37 ET (17:37 GMT)