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Loral stockholders committee objects to $25 million DIP request
By Caroline Salls
Pittsburgh, April 28 - Loral Space & Communications Ltd.'s stockholders protective committee filed an objection to the company's request for $25 million in inter-company debtor-in-possession financing Thursday with the U.S. Bankruptcy Court for the Southern District of New York.
The committee said it is objecting to the DIP request "on the grounds that more discovery is necessary to determine if the recent increases in business at [Loral] render the DIP funding unnecessary."
A hearing on the motion is scheduled for May 2.
Loral requested the $25 million in DIP financing for Space Systems/Loral on April 8.
The lender on the proposed financing is Loral Orion, Inc.
The term loan will mature on the earlier of the first anniversary of the closing date, the effective date of a plan of reorganization and the fifth business day after the receipt by Loral of at least $75 million in net cash proceeds from its insurance claim in respect to the launch of its EdS satellite.
The DIP financing will be used to fund operating expenses, to fund cure payments in connection with pre-bankruptcy agreements and for working capital, capital expenditures and other general corporate purposes.
Interest will be Libor plus 350 basis points.
Under the agreement, Orion will receive an allowed administrative expense claim in Loral's Chapter 11 case that will have priority over any other administrative expenses.
As of December 31, 2004, Loral reported $1.2 billion in assets and liabilities totaling $2.3 billion.
Loral, a New York satellite company, filed for bankruptcy on July 15, 2003. Its Chapter 11 case number is 03-41710.
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