Monday, March 21, 2005

Loral Files Consensual Plan of Reorganization

Loral Space & Communications filed a new reorganization plan with the bankruptcy court. The Plan, which revises the terms of a plan previously filed on December 5, 2004, reflects an agreement among the company, the Creditors' Committee and the Ad-Hoc Committee of Space Systems/Loral (SS/L) trade creditors on the elements of a consensual plan of reorganization. Some key points include:

  • Loral's two businesses, satellite manufacturing (New SS/L) and satellite services (New Skynet), will emerge intact as separate subsidiaries of reorganized Loral (New Loral).

  • New SS/L will emerge debt-free and continue its current activities,
    including completion of all satellites under construction or on order,
    and active pursuit of additional new awards.

  • New Skynet will continue to provide transponder leasing, network and professional services to current and prospective customers.

  • New Loral will emerge as a public company under current management and will seek listing on a major stock exchange.

  • Holders of allowed claims against SS/L and Loral SpaceCom will be paid in full in cash, including interest from the petition date to the
    effective date of the Plan.

  • Loral Orion unsecured creditors will receive approximately 80 percent of New Loral common stock and their pro rata share of $200 million of preferred stock to be issued by New Skynet. These creditors also will be offered the right to subscribe to purchase their pro-rata share of $120 million in new senior secured notes of New Skynet. This rights offering will be underwritten by certain Loral Orion creditors who will receive a fee which may be payable in additional New Skynet notes.

  • Loral bondholders and certain other unsecured creditors will receive approximately 20 percent of the common stock of New Loral.

  • Loral's existing common and preferred stock will be cancelled and no distribution will be made to the holders of such stock.


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