Loral's $300 million private placement does not meet fairness standards, court says

By Devika Patel

Knoxville, Tenn., Sept. 22 - Loral Space and Communications Inc. said the Delaware Chancery Court held that MHR Fund Management LLC's $300 million investment in Loral did not meet the entire fairness standard under Delaware law.

The court ordered that MHR's preferred shares be converted into 9,505,673 non-voting common shares.

As a result of the decision, MHR will own 56% of Loral's total equity and 35.5% of the voting power, the same level of voting power it had prior to the financing.

Additionally, the court dismissed the action brought by the Loral Skynet noteholders, concluding that the early redemption of Loral Skynet's 14% senior secured cash/PIK notes due 2015 was proper and did not violate the covenant of good faith and fair dealing implied in the indenture governing the notes.

The court directed that the parties collaborate on an order to implement the decision and present it to the court within 15 days.

Loral is a satellite communications company based in New York.

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