CEO:Loral is "on plan" after Alcatel settlement
Tuesday July 1, 4:42 pm ET
NEW YORK, July 1 (Reuters) - Loral Space & Communications Ltd. (NYSE:LOR - News) Chief Executive Bernard Schwartz said the satellite maker and operator was "on plan" after it settled a protracted legal dispute with Alcatel (Paris:CGEP.PA - News).
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The loss-making New York based company had already factored the resolution of the dispute into its cash guidance for the year, Schwartz told Reuters in a telephone interview. As a result of the agreement, revealed on Monday, Loral got $55 million from a customer and agreed to pay Alcatel $13 million.
"The clearing up of these items was a positive step ... It means we are on plan," said Schwartz referring to the company's projection it would have $65 million in cash at year-end.
Schwartz does not plan to update Loral's earnings guidance until the next quarterly conference call but said the settlement would not impact earnings before interest, tax, depreciation and amortization ( EBITDA) targets.
In May Schwartz warned that Loral's 2003 EBITDA would fall short of his previous guidance of $155 million.
Loral, which has been hurt by investment write-offs and a sharp downturn in demand among manufacturing and telecommunications clients, is considering selling assets to reduce its $2.1 billion of debts.
The company is up-to-date with payments to its note holders and its banks, and could still have made June payments without the $55 million it received from Intelsat, which it worked for in partnership with Alcatel, said Schwartz.
Loral is still working to reduce its debt, Schwartz said. He would not comment on asset sales and said the important thing for Loral is to be ready for an recovery in satellite manufacturing and telecommunications.
"I think we're beginning to see activity among customers and interest that there may be a turnaround soon, but we've been in a mode of promise for some time without realization," Schwartz added.
Loral's satellite manufacturing business was originally founded by Loral, Alcatel, Alenia Aerospazio and Aerospatiale in 1991. In 1997, Loral purchased the other companies's stakes in exchange for stock.
As part of the deal, Loral agreed to cooperate with Alcatel on certain satellite programs but as Alcatel became one of its largest competitors, Loral decided to pull out on Feb. 22 2001, giving one year's notice and triggered the dispute.
Loral's shares closed down 26 cents, or 8 percent at $2.79 on the New York Stock Exchange (News - Websites), giving back much of the gains it made the day before when its stock rose to $3.05 after the settlement was revealed. |
