Loral Files Consensual Plan Of Reorganization

SPACEMART

New York (SPX) Mar 29, 2005
Loral Space & Communications filed a revised plan of reorganization (the Plan) with the Bankruptcy Court on March 22.

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.

It is subject to confirmation by the Bankruptcy Court. The Plan provides, among other things, that:

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.

Implementation of the Plan and the treatment of claims and equity interests as provided in the Plan are subject to final documentation and confirmation by the Bankruptcy Court. Loral cannot predict with certainty when or if confirmation of the Plan will occur.

The Plan was made available March 22 on Loral's website.

The document was also made available via the court's website, at http://www.nysb.uscourts.gov/. Please note that a PACER password is required to access documents on the Bankruptcy Court's website. Loral's bankruptcy case number is 03-41710 (RDD).

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