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Loral Space & Communications to suggest alternative to MHR financing
By Sheri Kasprzak
New York, Oct. 27 - Loral Space & Communications Inc. said it will propose an alternative financing to the $300 million private placement it closed with MHR Fund Management LLC after shareholder Highland Capital Management, LP alleged the financing was unfair.
"MHR has indicated to Loral that it is pleased with the interest shown by shareholders and that its response will be forthcoming," said a statement released Friday by Loral.
On Tuesday, Highland Capital released a statement of its own, alleging insider trading connected to the Loral placement with MHR.
In a letter written to Loral's board of directors, Highland said it feels the offering "smacks of insider trading because of MHR's position with respect to Loral."
MHR is one of Loral's majority shareholders.
Highland contends that Loral did not consult its other stockholders about purchasing any of the securities before the offering was concluded.
"It is a mystery to us why you have put yourselves in the crosshairs of possible litigation and regulatory action by failing to exercise your fiduciary duties for the good of all stockholders and by approving this transaction," said the letter from Highland, in part. "We believe this proposed transaction is a disservice to all stockholders that are not within the MHR umbrella. It reeks of self-dealing, self-interest and is contrary to established market principles of fairness."
The offering closed Oct. 17 when Loral issued $41 million in series A and $259 million in series B convertible preferred stock to MHR. The 7.5% preferreds are convertible at $30.15 each.
Loral, headquartered in New York, is a satellite communications company.
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