Loral disclosure statement approved

By Caroline Salls

Pittsburgh, June 1 - Loral Space & Communications, Ltd.'s disclosure statement for its plan of reorganization was approved Wednesday by the U.S. Bankruptcy Court for the Southern District of New York, according to a company news release.

A hearing on confirmation of the plan, which was filed March 22, is scheduled for July 13.

With the approval of the disclosure statement, Loral said in the release that it remains on track to emerge from Chapter 11 bankruptcy shortly after the confirmation hearing.

Under the plan, the company will emerge with its two business units, Loral Skynet and Space Systems/Loral, intact and with current management in place.

Space Systems/Loral will have no debt. The reorganized parent company will be publicly held under current management and will seek listing on a major stock exchange.

Loral Orion's unsecured creditors will receive 80% of the stock of the reorganized company plus $200 million of preferred stock to be issued by the reorganized Skynet. They will also be able to subscribe to $120 million of Skynet notes.

The parent company's bondholders and some other unsecured creditors will receive 20% of the stock of the reorganized company.

Loral had previously told the court that objections to the disclosure statement by the equity committee and the Loral stockholders' protective committee "either raise confirmation issues, matters that have already been addressed or issues that are completely irrelevant to the disclosure statement."

Among the equity committee's objections are that the statement does not specifically address the examiner's valuations of each of Loral's separate business units, the statement does not provide an appropriate post-bankruptcy interest rate for unsecured claims, the statement fails to disclose "material business information" and that the statement does not include an explanation of what has changed from the second amended plan.

Loral called the equity committee's contentions "unfounded" and "meritless." The company said it provided sufficient information, including a revised disclosure statement. Loral also said the law does not require a company to address previous plans of reorganization.

Loral said the stockholders' committee's objection "largely is another diatribe against [Loral's] management and retained professionals."

The company added that the stockholders' questions of plan feasibility, best interests and valuation should be deferred until confirmation.

Loral, a New York-based satellite company, filed for bankruptcy on July 15, 2003. Its Chapter 11 case number is 03-41710.

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