OK, I think I understand why Intelsat required this:
LOR isn't meeting its convenant requirements in the BofA term loans. SO the following applies (from the Annual Rpt)
"the amendment also imposed additional restrictions on LSC ..including further restricting their ability to incur cap ex, sell assets (like six satellites), incur debt, provide vendor financing and make investments".
"LSC (lor space com) requires the consent of its lenders in order for the launch and insurance of Telstar 8"
Also
"LSC may not, subject to certain limited exceptions, incur any further capital expenditures".
So, bk prevents the acceleration of debt by 50 basis points (see agreement in the annual rpt), and out of bk will be an agreement that guarantees that Intelsat will actually get the satellites that haven't been launched yet up in the air.
OK. So Loral pays back the lenders and these restrictions are lifted. They get an additional SAT order from Intelsat after that (as BLS has promised in the BK PR), and then will be allowed to launch their own (remaining) satellites they have on order.
I don't see in this instance why the re-org will wipe out the common. LOR should be able to pay its debt through 2005 with the proceeds from the Intelsat sale. The 9.5 and 10% (Orion) notes for 1.2B aren't due until 2006.
Presumably, LOR will have to refinance these, which they may be allowed to do if they pay Bof A off. They may win part of the MOUS contract in 2005, as well as see a return to normal economy through 2004. They'll be saving a little on interest, too, as well as be allowed to amend their own vendor financing and make a few additional investments. The restructure should not require wiping the common.
So, I guess I'll wait a few months before I wall paper the bathroom with LOR stock certificates.... |
