Good morning, ladies and gentlemen. Welcome to the conference call to report the Third Quarter 2023 Financial Results for Telesat. Our speakers today will be Dan Goldberg, President and Chief Executive Officer of Telesat; and Andrew Browne, Chief Financial Officer of Telesat. I would now like to turn the meeting over to Mr.

Michael Bolitho, Director of Treasury and Risk Management. Please go ahead, Sir..

Thank you, and good morning. This morning, we filed our quarterly report on Form 6-K with the SEC and on SEDAR. Our remarks today may contain forward-looking statements.

There are risks that Telesat's actual results may differ materially from the results contemplated by the forward-looking statements as a result of known and unknown risks and uncertainties. For a discussion of known risks, see Telesat's annual and quarterly reports filed with the SEC.

Telesat assumes no responsibility to update or revise these forward-looking statements. I will now turn the call over to Dan Goldberg, Telesat's President and Chief Executive Officer..

Okay. Thank you, Michael. This morning, I will share some thoughts on our financial results and give an update on the business. I'll then hand over to Andrew, who will speak to the numbers in detail, and then we will open the call up for questions.

We have been executing well so far this year, are on-track with the key financial, strategic, and operational objectives we have been focused on. We are tracking our guidance, received the final roughly $260 million of U.S.

C-band clearing proceeds, and completed some meaningful additional debt repurchased in the quarter that we think will strengthen our financial position and create value for shareholders. Obviously, a huge focus for us is executing on Telesat Lightspeed our advanced broadband LEO network, and I will give some updates on that.

Since sharing on our Q2 call that we selected MDA as our prime contractor, and are fully-funded for the program, we have done a significant amount of work with MDA to advance the program, including further engagement with the supply chain. Both Telesat and MDA are ramping-up their teams to execute Lightspeed.

And I have been really pleased, but not surprised, by the extraordinarily capable people we are bringing on board and the really strong interest we are seeing from professionals throughout the industry, to join us to work on this flagship program.

We also announced in the quarter another key Lightspeed contract This one with SpaceX for fourteen Falcon 9 rockets to launch the advanced satellites making up the Lightspeed network. I believe it is SpaceX's largest commercial launch contract. Falcon 9 is the most reliable rocket out there.

And SpaceX has a demonstrated high launch cadence that will go a long way toward ensuring that, we bring Lightspeed to market, consistent with our schedule. They have been a great partner for Telesat on a number of our prior programs, and we are very pleased to be working with them on Lightspeed.

Our other key focus is concluding our funding arrangements with our Canadian federal and provincial partners. We are fully-engaged with them at this time and remain optimistic that we will be able to reach financial close, consistent with the timeframe we shared previously, which is to say, later this year or early next year.

The Telesat Lightspeed program advances a wide range of important public policy goals, including bridging the digital divide, spurring advanced manufacturing, IP development, exports, and high-quality jobs, as well as important climate and national security objectives.

Our federal and provincial partners in Canada have been strong and consistent supporters of the Lightspeed program, and we are grateful for that. We remain hugely bullish about Telesat Lightspeed and are looking forward to sharing more detailed information with investors about our business plan and expectations.

To that end, Andrew and I plan to get on the road, to meet with investors in both the U.S. and Canada over the next couple of weeks. We are looking forward to it. With that, I'll hand over to Andrew and then look forward to addressing any questions you may have..

Thank you, Dan. Good morning, everyone. I would now like to focus on highlights from this morning's press release and filings.

In the third quarter of 2023, Telesat reported revenues of $175 million, adjusted EBITDA of $133 million and for the nine months ended September 30th, 2023, we generated cash from operations of $156 million and we held $1.8 billion of cash on the balance sheet.

In the third quarter of 2023, compared to the same period in 2022, revenues decreased by $5 million to $175 million. Operating expenses decreased by $6 million to $50 million and adjusted EBITDA decreased by $4 million to $133 million. The adjusted EBITDA margin was 75.9%, compared to 76% in 2022. Between 2022 and 2023, changes in the U.S.

dollar exchange rate had a positive impact of $3 million on revenues, a negative impact of $1 million on operating expenses, and a positive impact of $2 million on adjusted EBITDA.

When adjusted for changes in foreign exchange rates, revenues decreased by $8 million, operating expenses decreased by $7 million and adjusted EBITDA decreased by $7 million. The revenue decrease for the quarter was mainly due to lower revenue from certain South American customers.

OpEx to decrease the operating expenses was primarily due to lower non-cash share-based comp, partially offset by higher costs associated with the procurement of third-party satellite capacity required to support certain customers networks that could no longer be supported on ANAC S2 constant, once it commenced client operations.

Interest expense increased by $11 million during the third quarter when compared to the same period in 2022. The change was due to an increase in interest rates on the U.S. Term Loan B facility, combined with the foreign exchange impact in U.S. dollar denominated in interest expense.

This was partially offset by the impact of the repurchase of notes in 2023, combined with the impact of the maturity of one of the interest rate swaps in September of 2022. In the third quarter, we have recorded a loss from foreign exchange of $77 million, as compared to a loss of $99 million, the second quarter of 2022.

The loss of the three months ended September 30th, 2023 was mainly the result of a stronger U.S. dollar to Canadian dollar, which the resulting unfavorable impact on the cancellation of our U.S. dollar denominated debt.

Our net loss for the third quarter of 2023 was $3.3 million compared to net loss of $228.7 million in the prior year, the variation was principally due to the positive impact on the conversion of a U.S. dollar debt into Canadian dollars and the gain on the repurchase of our debt.

Also, to mention for the nine months ended September 30th, 2023, our net income was $545 million, the significant net income was primarily due to the U.S. C-band clearing proceeds recognized in the second quarter of 2023, combined with the year-to-date gain on the repurchase of our debt.

For the nine months ended September 30th, 2023, the cash inflow from operating activities of $156 million, and the cash flows generated from investing activities were $264 million. The cash flows generated from our investing activities was due to the proceeds received from Phase 2 -- as mentioned and partially offset by capital expenditures.

In terms of capital expenditures incurred, they were primarily related to a lower orbit constellation, Telesat Lightspeed, and the newly acquired an NH4F satellite. Turning to guidance, as you will also have noted in our earnings release this morning, we've maintained a previously provided revenue and adjusted EBITDA 2023 guidance.

The guidance assumes a Canadian dollar to U.S. dollar exchange rate of Canadian 1.25. Telesat continues to expect its full year 2022 revenues be between $690 million and $710 million. In terms of adjusted EBITDA, Telesat continues to expect between $500 million to $515 million.

In respect to capital expenditures, we continue to expect our 2023 cash flows used in investing activities to be in a range of $175 million to $225 million.

To meet our expected cash requirements for the next 12 months, including interest payments and capital expenditures, we have approximately $1.8 billion of cash and short-term investments at the end of March, as well as approximately $200 million borrowings available under our revolving credit facility, approximately $1.3 billion in cash was held in our unrestricted subsidiaries.

In addition, we continue to generate a significant amount of cash from our ongoing operating activities. At the end of the third quarter, leverage as calculated under the terms of amended senior secured credit facilities was 5.46 times to one. Telesat has complied with all the covenants in our credit agreement and indenture.

As Dan has indicated, in the third quarter and including the subsequent period, we have repurchased debt with a principal aggregate amount of $195.3 million, at a cost of $137.4 million combining these repurchases with repurchases done in 2022, we have repurchased a total amount of $587 million dollars at an aggregate cost of $332.7 million.

In addition, this also results in interest savings of approximately $40 million annually. Since the end of 2020, when Telesat were paid approximately $340 million of its term loan B. Our overall debt has been reduced by approximately 28%.

A reconciliation between our financial statements and financial covenant calculations is provided in the report we filed this morning, our 6-K provides an audited interim condensed consolidated financial information in the MD&A. The non-guarantor subsidiary shown or essentially the unrestricted subsidiaries with minor differences.

So that concludes our prepared remarks for the call, and now we'll be very happy to answer any questions you may have. And with that, we'll now turn back to the operator. .

[Operator Instructions]. Our first question is from Walter Piecyk from LightShed. Please go ahead. .

Thanks. Just wanted to focus on the reaffirmation of guidance, I think as it relates to CapEx that would require obviously a pretty big step up in the fourth quarter. And then I also connect that question to OpEx. If I look at your SG&A and things like that, it didn't really move much sequentially.

So, I guess the question is, is fourth quarter the quarter when we're going to start seeing some of these LEO project costs kick in? I think on a prior call I asked if anything, like if things, OpEx costs are capitalized until the satellites are launched. I think the answer was no.

But if you can just kind of refresh us on when those expenses are going to start to ramp up.

And if they aren't, why would CapEx guidance be maintained at, I think that your guidance is $175 million to $225 million, which would imply a pretty big step up in the fourth quarter?.

Well, Walter, this is Andrew. I think you -- in that is, is the timing when we will commence our program. And so, we've made assumptions that we will commence in quarter four and hence we will see the additional CapEx being spent in the quarter.

And in terms of SG&A and OpEx, as you know, given our high margins, we really control that very, very closely. But also, we are preparing, as you will imagine in terms of head count and other resources getting ready for the commencement of the program.

That's why historically, if you look at our SG&A is pretty well sort of flat and very well contained. And in terms of sort of the capitalization of the OpEx in our previous calls, we said that that's not the case.

There is some to do with sort of engineering people involved, but once we get going we're very excited to get going and hopefully that will be Q4. I think a lot of this will be more apparent. .

So, and can you give us any sense on, at least on the OpEx side of things, because obviously CapEx you've already guided to. How long it takes, how many quarters it takes to really get that engine going in terms of expenses.

How much of a vertical ramp are we going to see in SG&A in the upcoming quarters?.

What I would say to Walter that when we give our full year numbers, I think we will give pretty comprehensive guidance, I think around LEO and about the steps in LEO and what our ramp will be in OpEx in addition to geo. So, I think we'll make it very clear. So, it'll be very clear. So, it would be very obvious looking at a boat of our companies. .

And maybe I'll just -- Hey, Walter, it's Dan. Maybe, I'll just add a couple things. One we're ramping up now. I mean, we're -- I think I mentioned in my remarks we're out there staffing up as is MDA, so we're out there right now hiring a lot of people. Not everyone's on board at this point in time, but we've certainly had a lot of our offers accepted.

So, the team's ramping up really nicely, and as Andrew said, we'll give detailed guidance for 2024. A lot of the spending that we're doing though, a lot of that's going to be capitalized. So, a lot of the engineers that we're hiring and Andrew will go over all that I know, when we give our guidance, but that's our expectation. .

What is the -- since the last earnings call, has there been any alteration in kind of how you're planning out the constellation itself? And then similarly, have you seen any initial traction in getting additional capacity commitments ahead of the launch or when -- and if not, when what quarter do or how much before the actual first, TSATs go up in the air, would you start to see additional revenue or excuse me, capacity commitments?.

So, on the first one, since we announced the deal with MDA two months ago, everything's I mean, we've kicked off we're working hand in glove with MDA, as we move the program forward. I mentioned that, we're spending an MDA is spending a lot of time in the supply chain right now, and that all seems to be going well.

So there hasn't been, I think you had asked has there been any alterations or something in the plan? And the answer there is no. What -- and look, we've been working on this for a long time, so things are, I'd say pretty well set in terms of what the program looks like.

And so that's all kicked off, and going well, and then as far as sort of a backlog, I mean, I think, we've said we've already got order of magnitude around $ 500 million US and kind of committed backlog to the program. Our first launch is mid-2026, and we do expect to be ramping backlog between now and then.

I think that, look we're engaged with the customer community right now. There's a huge amount of interest in Lightspeed and it's been gratifying to see that now that we've announced the program, I think that there will be things that is customer commitments that we'll be able to announce over the course of next year.

We're not sort of giving any guidance about exactly what that looks like, but based on the discussions that we're having with folks, my expectation is that we'll be signing additional customer backlog commitments throughout the course of next year. And we'll update on that as go through..

Right. Which you've said before.

So, when you think about those conversations, are the verticals -- the business verticals, the applications different at all from what you were thinking about when you size this market initially and you looked at kind of the low hanging fruit, what do you think in terms of enterprise applications or otherwise that people are going to gravitate to your constellation? In terms of some of these commitments that we may see next year?.

No, I'd say, look, I mean, these are markets that were active in, like, every day, right? It is back-haul connectivity with mobile network operators and ISPs. It is providing capacity for maritime and aeronautical services. It is engaging with governments.

Those are exactly the verticals that we have always expected Lightspeed to have a real competitive edge in. And so, nothing is changed there. That continues to be our expectation. And so, when we are announcing things, between now and being in service. And again, my expectation is we will have some commitments over the course of next year.

We will talk about, where those are coming from. But those are the verticals that we expect to get really good traction in..

And the....

Walter, I am not going to monopolize you on our call..

Alright. I will let you go to the next one then. I will circle back in. I appreciate the answers..

Thank you. Our following question is from Caleb Henry from Quilty Space. Please go ahead..

A couple of questions. One about the launch. So, noticed there is 14 rockets from SpaceX, and each can carry up to 18 satellites each. Just kind of quick math there, kind of equals 252 satellites, which is more than what has been ordered currently planned. So, I was wondering if you can walk through the logic.

I know it is up to 18 per mission, but what's the reason for kind of having so many launches planned there?.

Caleb, thanks. Listen, we have worked with SpaceX for a long time. We have got a good relationship with SpaceX by committing to the number of launches that we did. We think that we have been able to get kind of an overall compelling case in terms of just the overall value proposition for the launch capacity that we have lined up.

And as you know, our expectation, we have rights from MDA to add more satellites over time. We have said that, to the extent that we do that, it is all going to be demand driven. SpaceX has been very constructive in terms of working with us to position, the timing of the rocket’s kind of, when we think we need them. So that's really what it is.

It was a function of the good commercial terms that we have with SpaceX to provide those rockets, wanting the certainty in terms of our ability to expand the constellation over time and then having a constructive launch partner that allows us to line up those rockets, kind of consistent with what we are seeing in the market and our commercial plans..

Okay. Thanks. I appreciate it. It didn't see segment numbers from you guys this quarter.

If that's something you are still sharing, can you kind of break out revenue in terms of broadcast enterprise? Anything else?.

I mean, for sure, it's in the 6-K..

Okay. My apologies..

I mean, order of magnitude, it's like, I am looking at my colleagues, like, 48% broadcast -- order of magnitude, 48% broadcast, 48% enterprise, and sort of 2% other. But I am staring at my colleagues, is that that I know of? Okay. So, there you go. But it will be in the 6-K as well..

Okay. Thanks. And then it looks like, Telesat have reported better-than-expected gross margins for this quarter.

I'm just wondering if that's something that you expect to see sustained or if that's going to change kind of on the assumption that more third-party capacity will be needed to kind of bridge the gap between now and lights speed?.

Yeah. Maybe I'll take the first crack at that and then Andrew can talk about it. We are as always really focused on managing our cost structure as tightly as we can. And I think as a result we've always sort of had industry leading operating margins, but there are headwinds for the business.

And we renewed with bell on NIMIQ 4 that would've been in early October, but as we've said, it was at a lower rate than what the old rate was. And so, there will be some kind of revenue headwinds as we head into 2024 and the beauty of a fixed cost business is when you're ramping revenues up you can grow your operating margins nicely.

Sadly, the converse is true as well when you're facing some of these revenue headwinds and you're facing revenue declines, you can't really reduce your cost structure kind of in a proportionate way.

So, I'd say on balance heading in the next year there, there's definitely going to be some downward pressure on operating margins and we'll just do the best job we can, as we always do in trying to manage through that in terms of being as disciplined as we can around the cost structure. .

That's right Dan. And just to add that indeed our margins are probably one of the highest in the industry and our previous comments around OpEx and CapEx investments in to LEO. Obviously when we start full blast with our program next year, then of course we will see that investment coming through if both CapEx and indeed in better operating expenses. .

Okay. Thanks so much, guys..

Our following question is from Arun Seshadri from BNP Paribas. Please go ahead..

First just wanted to confirm the cash balances, I think you said $1.8 billion total with $1.5 billion in the restricted group. So, I could just, the assumption there is that the C-band cash inflow just went into the unrestricted group.

Do you expect to do you expect to fund more in the near term from the restricted group into the unrestricted entities?.

So, it's Michael Bolitho. Yeah, the C-band proceeds. We have one, we said we had $1.3 billion in cash in the unrestricted entities. The C-band proceeds went to the unrestricted entities. And we've been fairly consistent, certainly in our discussions with investors.

There is still a little bit of money to be funded to the unrestricted entities from the restricted group. The general basket of $150 million is available to fund that. .

Got it. Thank you, Michael.

And then as far as the additional funding the vendor financing and the government contributions, can you -- is there any update in terms of the terms of the Canada and the Quebec funding and any updates in terms of the vendor financing and the smaller bits of additional financing that were required?.

We don't have any updates on the terms yet. When that's all nailed down, we'll share more information about it. We are -- as we said at the outset of the call, making good progress, I think with the government partners, kind of federal and provincial to move the funding forward.

We had said before that funding was subject to the government completing confirmatory diligence and putting definitive agreements in place. And from where I sit, that all seems to be going well, and moving in the right direction. So, our expectation is that we'll reach financial close either late this year or sometime early next year.

And at that point we'll be able to share more information about the funding terms and whatnot. But I'd note also, and it's probably a sign of our confidence that we're going to get there in the near term, we're moving out on the program, and that's why CapEx is ramping in Q4.

That's why we've been ramping the hiring of all the people that we've been doing. Like we're moving out. So, but again, we'll share more specifics about the financing once it's all wrapped up. .

Got it. Thanks Dan. And then as far as the buybacks, nice to see them continue this quarter and after the quarter. Just two questions there. Do you expect to continue to do buybacks with the cash that sits in the restricted group? In other words, have you any thoughts around other users of cash? Number one.

And then number two, I assume as usual, that the choices on what you bought back were primarily governed by liquidity in the appropriate instruments. If you could confirm that as well..

Yes, I mean, Andrew, if you want, I'll take the first shot at it. So, I mean, consistent with things we've said before, there is cash that has been building up in the restricted group. And we always try to make use of that cash in a way that we think strengthens the business.

And so, over the past few quarters, we have used a considerable amount of it to repurchase our debt, and we think that's been the right thing to do.

But equally, we're open-minded about other uses for that cash if it would strengthen the business, including looking at other satellite programs, particularly geo programs that, would be accretive to the business. We've looked at a number of opportunities to do that. To date, we haven't closed a business case.

We've always said we're never going to invest in a nickel and CapEx if we're not persuaded that we have a compelling business plan and can achieve the kinds of returns that our shareholders expect.

And so, so I guess a long way to say that we will be open-minded about additional debt repurchases going forward, but equally, we will evaluate other ways to use that cash that can strengthen the business. And then as far as what we've bought, it's a range of different considerations. You mentioned liquidity, that's certainly one.

We noted that, we bought some of the term loan be back over the last quarter, certainly, because that floats, that's sort of a more expensive part of the outstanding debt that's out there right now. So that's obviously a consideration. So, it's a range of different variables that we think about when we do engage in those debt repurchases.

And I would say, we are just kind of pragmatic about all that..

Absolutely, Dan. I mean, just to add the comments. As Dan had said, our business, our margins are so high, which means we generate very, very good amounts of cash and we will do going forward. And we assess our liquidity needs, cash balances, and requirements.

And then indeed, as you see, we bought back 587,000,000 face value of bonds, which is pretty attractive and that's a good use of cash. And I simply would add that, since December 2020, we have reduced our overall debt by 28% that we kind of mentioned. But indeed, we are very focused..

Got it. Thank you. Last question for me is, is this really in terms of capacity deals in the works? Are there any new deals that you kind of working on either from a geographic or a specific business standpoint to sort of add to the capacity commitments that you already have on Lightspeed? Thanks..

Thanks for the question. I wouldn't note anything, in particular. But just suffice to say we are engaged with customers in each of the verticals that we are focused on, in pretty much every region of the world.

I mean, the benefit of being an existing operator is that, we are already doing business in virtually every country in the world where, we have regular engagement with the key satellite users, in all those different verticals. And so, there is no one that I would highlight. And again, as we sign material deals, we will announce them.

And then we will talk about them on the calls that we do. So, folks will have good visibility into that..

Thank you. Our following question is from Brandon Karsch from Kennedy Lewis. Please go ahead..

Hi. Thanks for taking the questions. Just turning back to guidance here. If I back out the implied Q4 revenue from what you have done year-to-date, it looks like a pretty steep decline here. And I know there is some noise in Q4 last year from some non-recurring equipment sales.

Is the rest of the delta just the Bell Canada renewal, or is there anything else I am missing, or should I view this guidance as conservative at this point? It just looks like a pretty big step down even from the recent run rate..

I'm trying to, I mean, and the decline was what, year-over-year, it is 4%, on the quarter. Year-to-date, it is 5% top-line adjusted for FX. So certainly, declines would be driven by the renewal with Bell. So, there was that. And we noted that there was some softness in Latin America. That, we experienced over the quarter.

And I would say, kind of, throughout the first three quarters of this year. But anyway, those would be the things that have acted as a headwind and that I think, as I mentioned, will carry on in the next year, given the timing of the Bell renewal and alike..

And I would just add in terms of the OpEx in quarter four as there are earlier comments that, as we continue to ramp, we will anticipate sort of the higher run rate of OpEx from ANC [ph] coming in quarter four. So hence, that's part of the equation also. .

And then maybe one other colleague has just flagged for me, I guess in Q4, last year, we recognized sort of a one-time with DARPA, this is the US government sort of research lab that we've been winning different projects for LEO related activities.

And so, I think we had said at the time, we had called it out that that's sort of -- there's other work that we're doing with DARPA, but that's that kind of revenue opportunity is lumpier in nature. And I think we even called out the exact amount because I think we're required to it was -- I mean, it's significant. It was $25 million in the quarter.

So, certainly, that would be a big contributor if you're trying to do the math on the guidance and extrapolate from that. .

Yeah, I had been adjusting that out of my number and it still looked like a somewhat meaningful decline, which is why I was asking. But think you've answered my question there. .

Then it would be mostly the bell renewal. .

And as we said, the provision for OpEx as well as we said would like. .

And then on the enterprise side, could you provide a little bit more color on some of that softness in Latin America as well as just general update on the geo side for enterprise?.

Yeah. I mean, LATAM it's been, I mean, like all these things, it is sort of contract by contract that comes up for renewal. I think, the biggest softness that we had in LATAM over the quarter was one particular contract in Peru, if memory serves, it had been a long-standing contract of ours that came up for renewal.

Some of that moved to one of our competitors, something that we expected would be coming. It was a customer that had already made a commitment to a new satellite that was coming on the market, and once that new satellite came online, they migrated traffic off of us over to them. So, there was that.

And then beyond that, I'd say, just kind of taking a step back more broadly, the market's competitive. I mean, for sure it's been competitive for some years now. But it continues to be a competitive market in the enterprise segment, and we're certainly starting to see the impact of Starlink coming into the market.

I mean, the reality is enterprise users, like, the value proposition and the performance advantages that you get from low earth orbit satellite constellations, which is why we're so bullish around our Lightspeed constellation. But I'd say that the enterprise segment remains competitive and I'd say increasingly Starlink is featuring into that. .

And then just one last one following-up on Starlink previously that it'd be more of a consumer use case, but I've impressed about them moving more into the enterprise space.

Have you seen a meaningful pickup in competitive intensity just from their pivot into more of the enterprise use cases?.

I'd say we see it mostly, at this point in time in the maritime space, they've been pretty successful in attracting some of the cruise line requirements and some of the other sort of maritime shipping requirements. So, I'd say it's most evident there. We knew -- and we know that we'll be competing with Starlink for some of the enterprise activities.

But I'd say if I had to highlight any particular area, it's been more there. And we've said before for Lightspeed, our focus is on enterprise and government services.

A lot of what's Starling's doing right now is on the consumer side, and I think that they're getting good traction on the consumer side, but that's not an area that we're focusing on with Lightspeed or really that we focus on with our existing business. .

The following question is some [Indiscernible] Securities. Please go ahead..

Hi, thank you. So just a question on Lightspeed and the funding. So, when I read the press release, it says that the, it's fully funded, however, subject to concluding definitive funding agreements through global service delivery.

Is this just nailing down your contracts funding with the Canadian Provincial Governments, or is this also entail someone else?.

It is in the main, the funding arrangements with the federal and provincial partners here in Canada. I mean, we've said, that in the aggregate is about $2 billion worth of funding. We've got $1.6 billion that Telesat is contributing. So that's exactly what it is. And we had flagged that back in August when we announced the contract with MDA. .

Right.

So, when you're talking about through global service delivery, is this meaning your commitment to provide connectivity in areas that they want? Is that what that means?.

I think what we're -- I don't know exactly the words that you're focused on, but I think what we've said is with the $1.6 billion, the Telesat’s contributing the $2 billion in federal and provincial government funding that gives us sufficient capital to launch the first 156 satellites plus all the other CapEx in terms of the rockets, the ground infrastructure, and the other capital investments that we need to make that gives us full global coverage and a very capable system.

And then we've noted that we'll be launching another 42 satellites to bring us to 198 satellites. Those final 42 satellites will get funded with the cash flows that the constellation is generating. That's the plan. .

Yes.

So, when you talked about closing with the government maybe later this year or early next year, what does closing mean? Does that mean that they've entered into a commitment to find that certain dates based on certain milestones? Does that mean they're actually going to give you the cash right away?.

Yes, I mean, that all, once we're closed off of the government, we'll provide more details about exactly all the mechanics around the financing.

But yes, I mean, what that means is that the government of the federal and our provincial partners will have committed all to the funding that we need so that we can pay MDA, that we can pay SpaceX and our other vendors. It'll be -- yes, I mean that, we'll close our financing.

Those funds will be available for us to make the payments that we need to make. .

[Operator Instructions]. Our following question is from Matt Lapides from Abry Partners. Please go ahead..

Thanks for all the color here. Couple of clarifying ones for me.

So, the C-band proceeds, which went into the unrestricted group, can you just clarify whether or not that used any of the $150 million general basket that's available in the credit agreement? Or is the $150 million that's available today after those proceeds were moved to the unrestricted entity?.

No, Matt. The C-band assets were in an unrestricted sub and have been for a couple of years. So, the $150 million didn't have anything to do with $150 million is available..

Got it. I appreciate the clarification. And then can you just remind us, you mentioned some interest rate hedges rolling off last year.

What the current hedge position, both on rate on interest rates and FX looks like for the business?.

Sure. Effectively, Matt, with that balance of cash, the cash balances, which obviously, the rates you earn on that flow had a spread, a negative spread to the base rate, but they flowed. So effectively from a floating interest rate exposure viewpoint were hedged or close enough to it that we don't need any hedges in place.

And we have not hedged the foreign exchange in a number of years..

And there again, there is kind of a natural hedge with our business because we are receiving mix of U.S. and Canadian dollars..

That's right. And then the last thing I would add there is, we hope most of our cash balances in U.S. dollars, not Canadian..

Got it. Okay. Thanks guys. Appreciate the clarifications. That's it for me..

We have no further questions registered at this time. I would now like to turn the meeting back over to Mr. Goldberg..

Okay. Operator, thank you, and thank you all for joining us this morning. And we look forward to speaking again when we release our Q4 and full-year numbers. Thank you very much..

Thank you. The conference has now ended. Please disconnect your lines at this time. And we thank you for your participation..