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Loral Space & Communications to modify terms on $300 million convertible preferreds offering
By Sheri Kasprzak
New York, Feb. 26 - Loral Space & Communications, Inc. said it plans to head back to the drawing board on its previously announced $300 million convertible perpetual preferred stock offering to MHR Fund Management LLC after a shareholder accused the company of insider trading last year.
Loral said in a statement released Monday that it received confirmation from Nasdaq that it would not need shareholder approval to conduct the offering, but the company must first make some amendments to the deal to comply with Nasdaq rules. However, the company said it could not abide by those amendments, which include rescinding and renegotiating the offering.
"Accordingly, the company and MHR are preparing modifications to the terms of the transaction that will satisfy Nasdaq requirements," said the news release from Loral. "As a result of these modifications, in the event of a change of control in which a 'make-whole' payment is triggered and holders elect to convert their shares of preferred stock to common stock, holders will now receive under all circumstances non-voting stock as a 'make-whole' payment."
In October, Highland Capital Management LP, one of Loral's shareholders, announced that it opposed the $300 million offering and threatened to backstop the deal by purchasing all of the company's remaining convertible preferred stock.
Highland alleged that the offering "smacks of insider trading" because MHR is Loral's majority shareholder and Loral allegedly did not consult its other stockholders before the offering was completed.
Loral, based in New York, is a satellite communications company.
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