Loral preferred stock holders ask for official status

By Ellen Chang

Houston, March 17 - Loral Space & Communications Ltd.'s ad hoc committee of preferred shareholders asked to be give official status in the company's Chapter 11 proceedings, saying that new information indicates they may now be entitled to a distribution in the reorganization.

The investors made their request following an independent report saying the company's reorganization plan understates its actual value.

The committee said it is making its request - the third time it has asked - after an investigation by court-appointed examiner Harrison Goldin found that the company's reorganization plan undervalues the company by $281 million to $463 million. Goldin's report was filed with the U.S. Bankruptcy Court for the Southern District of New York on Monday.

Creating an official committee would protect the holders' "legitimate interests," according to a filing Thursday with the court.

They point out that not only did Goldin conclude that Loral's plan understates the company's value by $281 to $463 million but it excludes value from non-operating assets. In total Loral's "real value" could be as high as $1.263 billion plus an additional amount for its unused orbital slots, real estate and intellectual property.

With pre-petition claims no higher than $1.3 to $1.4 billion, the preferred shareholders are within $100 million of being in the money, using the high end of the examiner's range and including no contribution from the non-operating assets.

"With the incremental addition of any reasonable values for those separate, unvalued classes of assets, the holders of preferred shares clearly are meaningfully in the money, and legally entitled to receive some distribution in these cases," the ad hoc committee said.

The committee said it holds 31% of the 4.5 million shares of class C and D preferred shares with a total liquidation preference of $224 million.

A hearing will be held March 30.

Holders of Loral's common stock have already asked to be given official status, citing the company's improving condition and Goldin's report.

Loral, however, has said it believes there are "material errors" in the examiner's report.

Loral, a New York-based satellite company, filed for bankruptcy on July 15, 2003. Its Chapter 11 case number is 03-41710.

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