TORONTO -- Loral Space & Communications Inc. has signed a deal with the Public Sector Pension Investment Board and Telesat Canada to combine Loral and Telesat into a new public company.

Loral, which also announced a special dividend of $1.50 per share, holds a 62.7 per cent economic interest Telesat Canada, an operator of telecommunications and direct broadcast satellites.

Under the plan, Loral shareholders, together with PSP Investments and certain current and former management shareholders of Telesat will own the new company in approximately the same proportion as their current, indirect ownership in Telesat.

MHR Fund Management LLC will own 36.6 per cent in the new company while PSP Investments will hold 36.7 per cent. Management shareholders will own 0.7 per cent.

Loral stockholders not affiliated with the funds managed by MHR Funds will own 26.1 per cent of the new company.

The plan, which is subject to customary closing conditions, including approval by Loral shareholders and certain regulatory approvals, is expected to close in the second or third quarter of 2021.