Loral gets extension of exclusivity periods, approval for satellite sale amendment

By Jeff Pines

Washington, March 17 - Loral Space & Communications Ltd. scored a double victory over its committee of unsecured creditors when the court approved extensions to its exclusivity periods and approved an amendment to a contract for a proposed sale of six satellites. It also completed the sale of the satellites on March 17.

In an order filed on March 17, the U.S. Bankruptcy Court for the Southern District of New York, extended the New York-based satellite maker's exclusive period to file a reorganization plan to July 12. The unsecured creditors committee argued the company was not making any real progress towards a reorganization plan and did not deserve another extension.

Loral will have until Sept. 11 to solicit votes for its proposed plan.

In a separate order also filed on March 17, the court approved the amendment that Loral needed to sell the six satellites and related assets to Intelsat. The unsecured creditors objected to the amendment because it felt Loral was selling off its most valuable assets for less than what they were worth.

It also contested the amendment because it authorizes the insurance settlement from the failure of Loral's Telstar 4 satellite back in September to go to Intelsat instead of Loral. The settlement could go as high as $141 million, the committee said.

At the very least, the committee asked the judge to deny the transfer of the insurance settlement proceeds to Intelsat.

For the six satellites, the company received $1.027 billion, which includes $977 million for the satellites and a $50 million deposit for a new Intelsat satellite. The net proceeds will be used to repay $967 million of secured bank debt.

Loral said it plans to reorganize itself around its remaining satellites and manufacturing business. It still has four satellites in orbit and another is scheduled for launch later this year. In addition, it said it had booked $240 million in new orders in the first quarter of 2004.

Loral filed for bankruptcy on July 15, 2003. Its Chapter 11 case number is 03-41710.

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