Loral Exits Chapter 11 With 2 Core Businesses
Loral said it has finished a 2.5-year reorganization and announced its emergence from Chapter 11 Tues. The firm’s 2 core business units -- Space Systems/Loral for satellite manufacturing and Loral Skynet for FSS services -- are intact, and the firm is exiting Chapter 11 with $180 million cash, said officials. Longtime Loral CEO Bernard Schwartz called the new company a “stronger, leaner and more efficient Loral.”
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Loral carries $126 million in debt in the form of notes issued by Loral Skynet, Loral officials said. Loral Skynet also has issued $200 million in preferred stock to certain creditors of Loral Orion, they said. Adhering to the approved reorganization plan, Loral said it’s issuing 20 million shares of new common stock to certain creditors. As of Nov. 21, prior Loral common and preferred stock was cancelled with no distribution to holders, officials said. When shares begin trading on the NASDAQ, they will be under “LORL,” they said.
Loral is barred contractually from offering FSS service in the U.S. until March 2006 under its 2003 sale of domestic satellite authorizations to Intelsat. By March 2006, the U.S. FSS market could be very different if Intelsat and PanAmSat merge. But in comments last week to the FCC, Loral said “the transaction will not diminish Loral’s opportunity” to re-enter the U.S. FSS business. Loral told the FCC it’s studying ways to re-enter the market when the non-compete provision in the Intelsat agreement expires.
At the manufacturing end, SS/L’s order backlog as the 3rd quarter ended was $902 million, compared with $399 million a year earlier, Loral officials said. SS/L is working on next-generation spacecraft for Mobile Satellite Services firms TerreStar and ICO, plus XM’s 5th satellite and others. It’s most recently launched craft was Shin Satellite’s broadband bird, iPSTAR.