David:
Bad news for ABCN and Loral for that matter---
PALO ALTO, Calif.--(BUSINESS WIRE)--January 29, 1998--Space Systems/Loral (SS/L), a subsidiary of Loral Space & Communications (NYSE:LOR), today announced that it will eliminate up to 300 jobs, or approximately 9 percent of its work force of 3,400 employees over the next few months due to the suspension of work on three satellites for two Asian programs. SS/L's current backlog is approximately $1.8 billion after the de-booking of these projects.
SS/L has been building two high-power satellites for the Asia Broadcasting and Communications Network Public Company, Limited (ABCN) of Bangkok, to provide direct-to-home television services throughout India, Southeast Asia, China and Taiwan. The satellites, known as L-STAR 1 and L-STAR 2, were scheduled to be delivered to ABCN in the 2nd quarter, and the 4th quarter of 1998, respectively.
In addition, SS/L has been building one high-power multimedia satellite for P.T. Pasifik Satelit Nusantara of Jakarta, Indonesia. The satellite, M2A, was scheduled for delivery on orbit in early 1999, and is to provide multimedia and telephony services throughout Asia.
"The three satellites on which we have stopped work continue to be valuable, marketable assets which, if the current programs are not re-started, may be deployed to other customers who will benefit from early delivery," said Bernard L. Schwartz, Loral chairman and chief executive officer. "We anticipate that, in the event the satellites are not sold on schedule and additional market opportunities in Asia are deferred, SS/L could have a reduction in 1998 revenues of as much as $400 million, bringing expected revenues to $1.4 billion. EBITDA margins for 1998 (earnings before interest, taxes, depreciation and amortization) are not expected to be materially affected."
The impact of these events in Asia on SS/L's 1997 results is less than $20 million; however, net of other favorable operating performance, SS/L's results for 1997 are not expected to differ materially from previous forecasts.
"We continue to believe that the Asian market, where investments in satellites are critical to the establishment of a telecommunications infrastructure, remains a robust, sustainable long-term opportunity for Loral," Mr. Schwartz continued. "We continue to have a very strong backlog of orders and ample additional opportunities, and we believe SS/L is well-positioned and properly sized to take advantage of them."
Mr. Schwartz said that he did not expect the Asian currency crisis to have any impact on Loral's other businesses, including Globalstar, the Loral-led worldwide mobile satellite system.
Space Systems/Loral is a wholly owned subsidiary of Loral Space & Communications of New York City, a high technology company that concentrates on satellite manufacturing and satellite-based services. |
