Canadian crown jewel MDA Corp. navigates dual citizenship

MDA Corp. is in the midst of a major transformation toward a more U.S.-focused company, starting with its chief executive, Howard L. Lance, formerly of Harris Corp. and a U.S. citizen, who assumed his post in May. The goal: position MDA and SSL for U.S. government work that currently is beyond its reach because of its Canadian status.

In a recent conference call with investors, Lance said MDA had created a U.S. holding company and filed with U.S. government agencies documentation to “[mitigate] MDA’s foreign ownership, control or influence on the new U.S. holding company’s operations,” a process that should be completed by this fall.

Once completed, he said, “we will be able to secure the necessary facility and security clearances … to bid and execute a much wider range of U.S. government and commercial contracts,” Lance said. “We moved the Canadian and U.S. operations under the holding company.”

How far MDA can go in Americanizing itself without losing its current advantage with Export Development Canada, Canada’s export-credit agency, is unclear. For now, SSL is eligible for EDC financial backing even when the bulk of the satellite development and manufacturing is done at SSL in California.

With the U.S. Export-Import Bank closed for major new business for the past year while awaiting U.S. congressional approval of a new director, EDC’s importance has grown. SSL’s competitors Boeing, Lockheed Martin, Orbital ATK do not have access to the Canadian agency.

The extent to which this has affected their contracting success is a subject of debate.

MDA Chief Financial Officer Anil Wirasekara insisted during the conference call that MDA was also suffering from the absence of the Ex-Im Bank because many satellite deals are financed with a combination of U.S., French and Canadian credit agency support. The French and Canadian agencies have struggled to fill the gap, especially since Ex-Im has been, with France’s Coface, the most-active export-credit agency in the satellite market in recent years.

“Ex-Im is closed for new business,” Wirasekara said. “That has made it challenging for EDC and Coface to take on the additional burden. Ex-Im’s not being around has delayed maybe one or two programs.”

Wirasekara said a $150 million satellite, launch costs and insurance plus nine months of operations mean a satellite owner is often looking for up to $500 million in financing in total.

“Two or three [credit agencies] syndicate together,” he said. “When one goes out, it becomes difficult. We would love to have Ex-Im back in the game.”