Loral Files for Chapter 117/20/2003 08:00:00 PM Eastern
Loral Space & Communications filed for Chapter 11 bankruptcy protection last week and also agreed to sell its six North American satellites to Intelsat for $1.1 billion, a move that ensures that Loral customers won't have to worry about the future of their contracts and gives Intelsat a domestic U.S. presence.
"We have a fleet of 26 satellites and carry a significant amount of traffic into and out of the U.S., but we don't have the right coverage with our existing satellites to provide up and down coverage in the U.S.," says Intelsat Executive Vice President and CFO Joe Corbett. "This acquisition gives us the very coverage we've been missing."
The Chapter 11 filing opened the door so that Loral could sell both the satellites and related contracts to Intelsat.
Corbett says existing Loral customers can rest assured their communications will be carried.
The satellites include Telstar 4, 5, 6 and 7, which provide North American coverage from the 89, 97, 93, and 129 degrees west orbital locations, and two still-to-be-launched satellites, Telstar 8 and 13. The deal is expected to close in first quarter 2004, and Loral will use most of the proceeds to repay all $959 million of its outstanding secured bank debt.
The company will reorganize around its remaining fleet of five satellites and its satellite-manufacturing operations.