Loral and Creditors' Committee Finalize Terms of Reorganization

Space Systems/Loral's Assembly, Integration and Test (AIT) facility in Palo Alto, California. (Loral Space photo)

NEW YORK, Oct. 18/Satnews Daily/ — Loral Space & Communications Ltd. (BULLETIN BOARD: LRLSQ) and the Creditors' Committee appointed in the chapter 11 cases of Loral and its subsidiaries have reached an agreement on the revised economic terms of a proposed plan of reorganization.

With the agreement, Loral said it is set to file a revised Plan and a Disclosure Statement with the Bankruptcy Court by October 22, 2004. Approval of the plan will allow Loral to exit chapter 11 under current management in the first-quarter of 2005. The plan revises the terms of a plan previously filed on August 19, 2004.

Under the revised plan, Loral's two businesses, Space Systems/Loral and Loral Skynet, will emerge intact as separate subsidiaries of reorganized Loral (New Loral). Space Systems/Loral, the satellite design and manufacturing business, will emerge debt-free.

The common stock of New Loral will be owned by Loral bondholders, Loral Orion bondholders and certain other unsecured creditors. In addition, bondholders of Loral Orion and other unsecured creditors of Loral Orion will receive an aggregate of $200 million in new senior secured notes to be issued by reorganized Loral Skynet, New Loral's satellite services subsidiary.

Loral Orion unsecured creditors also will be offered the right to subscribe to purchase their pro-rata share of $30 million in new senior secured notes to be issued by reorganized Loral Skynet.

Based upon current estimates, creditors of Space Systems/Loral, Loral SpaceCom Corp. and Loral Satellite, Inc. will be entitled to share in a recovery consisting primarily of cash, as well as New Loral common stock that is expected to result in a blended recovery of approximately 33%, subject to significant decrease in the event claims materially exceed current estimates.

Approval by the Bankruptcy Court of the plan will enable the New Loral to emerge as a public company that will seek listing on a major stock exchange. Under the plan, existing common and preferred stock will be cancelled and no distribution will be made to current shareholders, Loral said.

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