Loral Space Reaches
Two Satellite Pacts
By ANDY PASZTOR
Staff Reporter of THE WALL STREET JOURNAL
February 23, 2005 4:56 a.m.
LOS ANGELES – Loral Space & Communications Ltd., making progress toward its goal of emerging from federal bankruptcy reorganization by spring, has landed an order to manufacture one satellite and reached an agreement allowing it to try to find a replacement buyer for another that already is built.
Together, the estimated value of the deals tops $250 million and could amount to significantly more under some scenarios.
Expected to be announced later Wednesday, the agreements not only will help the New York company's balance sheet but, according to Loral executives, also indicate a vote of confidence in the company and its current management as they strive to obtain creditor approval for a reorganization plan.
"We're very close to having the kind of consensual deal we want to have with the creditors," Bernard Schwartz, Loral's chairman and chief executive, told Dow Jones Newswires. He declined to elaborate on the potential terms.
As part of its recovery strategy, Loral has signed a deal with PanAmSat Corp. to build a hybrid communications satellite to serve North America with video, data and other services. It is the fifth spacecraft PanAmSat, of Wilton, Conn., has acquired from Loral's Space Systems unit, and comes amid a continuing weak global market for new spacecraft orders. Subject to bankruptcy-court approval, the contract calls for delivery in 2007.
Separately, later Wednesday Loral is expected to announce resolution of a long-standing dispute over a now-completed satellite originally ordered by China's premier satellite-services provider. The agreement with China Telecommunications Broadcast Satellite Corp., or ChinaSat, will remove a large cloud that has hung over Loral's finances for years as a result of the U.S. State Department's refusal to issue required licenses to export the satellite.
Under the pact, Loral won't have to repay funds ChinaSat had demanded in lieu of its satellite. Loral and ChinaSat also will have more leeway to find an alternate buyer for the finished spacecraft that has been sitting unused for years in Loral's factory. At one point, some estimates of Loral's liability for the licensing snafu prompted the Chinese to demand as much as $225 million.
Mr. Schwartz said the ChinaSat liability overhang was one of the principal reasons the satellite-maker and satellite-services provider was forced to seek federal bankruptcy protection in July 2003. But now, according to Mr. Schwartz, Loral has done "exactly what we said we would do" in resolving the dispute without depleting the company's cash reserves.
The latest developments are another sign that despite going through bankruptcy reorganization, "we are up to our game" and customers view Loral as a "reliable and steady" satellite supplier, Mr. Schwartz said.
Down the road, Loral also hopes to win part of a proposed German military communications satellite. And according to industry officials, the company has been hired by billionaire telecommunications pioneer Craig McCaw to help draw up plans for a medium-earth orbit spacecraft that would be part of the revised structure for his long-stalled ICO satellite project.
All told, Loral is planning as many as seven satellite launches this year. And Mr. Schwartz said that Loral has managed to finish assembly and final testing of one satellite for DitecTV Group Inc. two months ahead of schedule. |
