spacetoday.net: Loral files for Chapter 11, to sell satellites

Posted: Tue, Jul 15, 2003, 9:52 AM ET (1352 GMT)

Loral Space and Communications announced Tuesday morning that it would file for Chapter 11 bankruptcy protection as part of a plan to sell six of its satellites to Intelsat. Loral said it would sell four satellites currently in orbit — Telstars 4, 5, 6, and 7 — as well as the Telstar 8 and 13 satellites yet to be launched to Intelsat for up to $1.1 billion. Intelsat will also order a new satellite from Loral as part of the agreement, and will make a $100 million down payment once the sale of the existing satellites are closed. Loral will use the proceeds of the sale to pay off its $959 million in outstanding bank debt. In order to sell the satellites "free and clear of any encumbrances", Loral filed for Chapter 11 bankruptcy protection this morning in New York. The six satellites all serve or will serve the North American market; Intelsat officials said the sale gives the company "a North American franchise that, given the scarcity of orbital locations, is virtually impossible to build on an organic basis." Loral has been struggling to deal with a massive amount of debt accumulated over the last several years. At the end of June it worked out a separate agreement with Intelsat to receive $55 million in satellite performance payments in a lump sum, rather than a larger amount spread out over several years, in order to satisfy Loral's creditors.