Loral Space & Communications has completed its previously announced transactions with Intelsat yielding $1.027 billion, consisting of $977 million for Loral's North American fleet and related assets, after adjustments, and a $50 million deposit for the construction of a new Intelsat satellite to be built by Loral's manufacturing unit, Space Systems/Loral (SS/L), of Palo Alto, Calif.
The completion of the Intelsat transactions represents the achievement of a major milestone in Loral's plan for reorganization under chapter 11.
Proceeds from the transaction will be used to pay in full Loral's $967 million of outstanding secured bank debt, nearly half of the company's total of $2.0 billion in principal debt obligations.
Announced in July, the agreement with Intelsat provides for the sale of the in-orbit Telstar satellites 5, 6, 7 and 13, as well as Telstar 8, which is scheduled to be launched in the third quarter of 2004. The agreement also includes rights to the 77 degrees West longitude orbital slot, formerly occupied by Telstar 4.
Loral intends to reorganize around its remaining satellite services fleet and manufacturing business. Loral Skynet's satellite services fleet currently comprises four international satellites, with an additional satellite, Telstar 18, scheduled for launch in mid-2004. SS/L received orders in late 2003 for the construction of four new satellites – one each for Intelsat and PanAmSat Corporation and two for DIRECTV, Inc.
As of December 31, 2003, Loral's external backlog for its remaining businesses totaled approximately $1.2 billion excluding approximately $240 million associated with the new manufacturing orders that were booked in the first quarter of 2004.
