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Loral starts exchange offer for convertible preferreds, suspends dividend payment
New York, Aug. 27 - Loral Space & Communications announced it is offering cash and stock in exchange for its 6% series C preferred stock due 2006 and 6% series D convertible preferred stock due 2007 - and added that it is suspending payment of dividends on the securities.
The offer is part of the New York, N.Y. satellite company's continuing effort to reduce debt and increase financing flexibility, Loral said in a news release.
By using some of its "substantial" positive cash flow from operations, Loral said the offer will further reduce its fixed obligations. The company noted it has previous carried out exchanges for its preferred stock.
Under terms of the offer, Loral will exchange $1.92 in cash and four shares of Loral common stock for each share of its series C and series D preferred stock.
Based on Tuesday's closing price of $0.51 for Loral stock, the offer represents a total of $3.96 for each preferred share.
At June 30, Loral had 8,084,174 shares outstanding of the series C preferreds and 3,391,688 shares outstanding of the series D preferreds. If all preferred shares are exchanged, Loral will pay $22 million in cash and issue 45.9 million common shares for preferred stock with a liquidation preference of $574 million.
Loral said the offer is contingent on at least 50% of the total of the two series of preferred stock being exchanged.
The exchange runs through 12:00 a.m. ET on Sept. 25 unless extended.
Loral also said that as part of the financial strategy it will suspend indefinitely future payment of dividends on the two series of preferred stock. The move will take effect with the quarterly dividend due Nov. 1 on the series C preferreds and Nov. 15 on the series D preferreds. Dividends will continue to accrue.
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