Loral Hopes to Emerge From Chapter 11
Wednesday March 17, 4:06 pm ET -Associated Press
Loral Space Hopes to Emerge From Chapter 11 Bankruptcy Protection by End of Year
WASHINGTON (AP) -- Despite strained talks with creditors, satellite-maker Loral Space & Communications Ltd. hopes to emerge from Chapter 11 bankruptcy protection by the end of the year, the company's chairman and chief executive Bernard Schwartz said Wednesday.
ADVERTISEMENT
The New York-based company reached a milestone in its reorganization Tuesday when the U.S. Bankruptcy Court in Manhattan gave final approval to amendments to the company's sale of its North American satellite operations to Intelsat Ltd., which should smooth the closing.
The bankruptcy court Tuesday also granted Loral an extension of its exclusive period to file a turnaround plan through July 12, as it had requested. In an interview, Schwartz said the company is still a few months away from filing a plan to reorganize around its remaining operations.
Under the Bankruptcy Code, the exclusive period gives a debtor company the sole right to file a reorganization plan for its assets, preventing creditors from filing competing plans. Extensions are common in large Chapter 11 cases.
Loral is in regular talks with its creditors. Schwartz said he'd like to say the talks were going well, but there is some tension between creditors and management.
The committee of unsecured creditors in the case has objected to Loral's request for more exclusivity, saying the value of the Intelsat deal fell by $170 million, the company's Telstar 4 satellite failed in orbit and other problems have arisen since its July 2003 bankruptcy filing. The creditors committee said Loral hasn't had any meaningful talks with the committee regarding plan terms, and its business plan wasn't realistic.
After adjustments, the sale of the six North American satellites to Intelsat will bring Loral $982 million, plus a $50 million deposit on a satellite it is building for Intelsat, according to Schwartz. The sale is expected to close within the next 36 hours, he said.
The company plans to retain six other satellites in orbit above other parts of the world, as well as its satellite building business, the company's annual report said.
Loral is working with Intelsat staff to ensure no interruption of service for its customers, the executive said. He added that it has been providing training to Intelsat, and Intelsat has hired Loral's satellite tracking, telemetry and control unit to provide additional services for at least six months.
The funds from the Intelsat deal will go toward paying off $970 million in bank loans, Schwartz said. Following that, Loral will still have outstanding debt from bonds that total $1 billion.
Loral filed for Chapter 11 bankruptcy protection July 15, 2003, saying it wanted to trim its debt and sell its North American satellites. |
