Loral Space Gets Interim Approval To Use Cash Collateral
Dow Jones 07/17/03
WASHINGTON -- Loral Space & Communications Ltd. (LOR) received interim authorization to use intercompany loans as well as cash collateral
securing loans provided to some of its subsidiaries before the company filed Tuesday for Chapter 11 protection.
Judge Robert D. Drain of the U.S. Bankruptcy Court in Manhattan granted the approval after a hearing Tuesday.
Pending a final hearing Aug. 13, the order, obtained Wednesday by Dow Jones Newswires, allows Loral and its subsidiaries to use the funds in keeping
with a budget agreed upon by the lenders, led by Bank of America, who financed the company before its bankruptcy filing.
In a filing Tuesday, the New York-based satellite communications company said the cash collateral use and intercompany, debtor-in-possession loans are
"critical" to maintaining the going concern value of its units, and "essential" to their reorganization effort.
The company's Loral SpaceCom Corp. unit owed the lenders about $535 million on loans and about $12.7 million on letters of credit, besides interest and
fees. Another Loral unit, Loral Satellite Inc., owed the lenders about $426.5 million, plus interest and fees under an earlier loan agreement.
As adequate protection for the use of their cash collateral, the lenders will have priority on claims in the bankruptcy case and replacement liens on the
assets of the Loral units who are parties to the loans.
The Loral units will make current payments of all interest as well as all fees and expenses due under the credit agreements. The lenders also will receive the
proceeds of sale of some collateral by the Loral units.
The interim order provides that Loral SpaceCom will on the last day of July and August pay Loral Satellite the rent due on such dates under a master lease
agreement. The company's court filing didn't disclose the amount of the rent payments, but said that Loral Satellite will immediately "relend" the amount
received as DIP financing to Loral SpaceCom, who will in turn provide Loral Cyberstar with DIP loans up to $1 million.
Objections to final approval of the cash collateral use and intercompany advances are due Aug. 11.
Loral said it intends to use its time under bankruptcy protection to sell its six North American telecommunications satellites to satellite operator Intelsat Ltd.
for up to $1.1 billion, subject to higher bids at a bankruptcy auction.
The company said it plans to reorganize around its remaining five-satellite network and its satellite-building operations |
