Canada's famous Canadarm space crane has been repatriated by a group of Canadian pension funds after nearly two years under U.S. control. And the new owners have sealed the deal at a knock-down price.
Yesterday, a group that includes CAI Capital Partners and Co. II LP of Montreal, the Ontario Teachers Pension Plan Board and B.C. Investment Management Corp. (BCIMC) bought 12.35 million shares of the Canadarm's builder -- MacDonald Dettwiler and Associates Ltd. -- with an option to buy another 5.65 million shares by May 31 from its U.S. owner.
That would give the pension funds 52 per cent of MDA for about $252-million.
"It was important to us to have a solid shareholder group, which is friendly and supportive," said Manfred Yu, the Montreal investor who put yesterday's deal together. "We're hoping for great things for Canada."
Mr. Yu noted that the Canadarm will be launched into space next Thursday, and it will be truly Canadian again for the first time in nearly two years.
The Canadarm was designed and built by Toronto's Spar Aerospace Ltd., a company that was broken up by so-called vulture investors in early 1999.
It was sold to MDA, a space company based in Richmond, B.C., that was controlled by U.S. space company, Orbital Sciences Corp. of Dulles, Va. But Orbital Sciences ran into serious cash flow and regulatory problems in the United States and had to sell its non-core assets in a hurry to raise ready cash.
That's when Mr. Yu stepped in. He quickly put together a deal with a group of blue-chip Canadian investors that would acquire Orbital Sciences' stake in MDA.
Mr. Yu's group says it is determined to continue building MDA as a stable and growing Canadian company.
Mr. Yu did the deal for $14 a share, well under MDA's current share price of $20.10 on the Toronto Stock Exchange. The investors have entered into an agreement that restricts the resale of shares.
Under the deal, CAI will pick up 1.35 million shares of MDA, giving it a total of 5.75 million shares or 17 per cent, while Teachers will buy 10 million shares or 29 per cent and BCIMC will add one million shares, giving it a total of six million.
CAI is talking to several potential investors who would pick up the remaining Orbital Sciences options by May 31. "We're looking for a group that is similar to Teachers, friendly and supportive of MDA," he said.
Mr. Yu said he was able to buy the Orbital Sciences holding for such a low price under an option agreement he negotiated with the company in 1999.
Lee Fullerton, a spokeswoman for Teachers, said her group was invited to join CAI because it had a reputation as solid, long-term investors who could put the necessary cash together in a hurry.
"CAI approached us with the opportunity," Ms. Fullerton said. "Orbital Sciences needed to sell off some non-core assets, and we can act very quickly." Teachers opted to go for the maximum stake that it was allowed under its internal rules, 29 per cent.
Ms. Fullerton said Teachers was very pleased with the deal. "We've got a large interest in a very valuable company," she said. "It was a great opportunity for us."
Like CAI, Teachers said it invested in MDA for the long haul. "We're long-term patient investors," Ms. Fullerton said. "We're not going to flip it."
MDA became Canada's premier space company with the purchase of Spar Aerospace in early 1999. That deal gave it the Canadarm, and a wide range of highly sophisticated robotics, satellites and space equipment.
MDA was already a highly regarded aerospace company, with interests in the Canadian Radarsat earth-sensing satellite, the international space station and space mapping.
MDA spokesman Ted Schellenberg said the aerospace sector accounts for half of its business. But MDA also provides sophisticated charts, maps and aerial surveys for government and private users.