Loral CyberStar bondholders to swap notes for new notes, warrants

New York, Oct. 26 - Loral CyberStar, Inc. said some holders of its outstanding notes have agreed to an exchange offer intended to reduce its outstanding debt and it is now making that offer to all holders.

Eligible debt is the company's $443 million of 11¼% senior notes due 2007 and its 12½% senior discount notes due 2007, with $484 million principal amount and $469.5 million accreted value as of Oct. 15, 2001 outstanding.

If the exchange offer is accepted in full, a total of $675 million of new notes will be issued.

So far holders of 50.29% of the existing notes (49.04% of the senior notes and 51.43% of the senior discount notes) have agreed to tender their securities and consent to a simultaneous solicitation to amend the indentures of notes not tendered in the exchange. The consent solicitation is to eliminate substantially all the covenants and events of default.

Loral CyberStar said in a filing with the Securities and Exchange Commission disclosing the tender that the exchange is conditional on at least 85% of the notes by principal amount and accreted value being tendered.

For every $1,000 of the 11¼% senior notes tendered and accepted, holders will receive $750.247 principal amount of new Loral CyberStar 10% senior notes due 2006, guaranteed by Loral Space & Communications Ltd., and warrants to purchase 7.40 shares of common stock of Loral Space.

For every $1,000 principal amount of the 12½% senior discount notes tendered and accepted, holders will receive $707.935 principal amount of Loral CyberStar 10% senior notes due 2006, guaranteed by Loral Space, and warrants to purchase 6.98 shares of common stock of Loral Space.

If accepted in full, holders will receive warrants for 6,657,096 Loral Space shares in addition to the $675 million of new notes.

When the exchange is successfully completed, Loral SpaceCom Corp., a subsidiary of Loral Space, has agreed to cancel $79.7 million of inter-company notes issued to it by Loral CyberStar in exchange for the transfer to Loral SpaceCom of Loral CyberStar's data network services business and the issuance of a new of $29.7 million 10% pay-in-kind note due 2006, subordinated to the new Loral CyberStar 10% senior notes.

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