Loral reaches agreement on plan of reorganization, creditors to get equity

New York, July 22 - Loral Space & Communications Ltd. said it has reached agreement with its official committee of unsecured creditors on the principal terms of a plan of reorganization.

Under the proposed plan, the pre-petition institutional debt will be exchanged for "substantially all" the equity of the reorganized company.

Other pre-petition general unsecured creditors will be offered the choice of either a discounted cash payment or a payout over time.

Holders of the existing common and preferred stock will get nothing.

The New York satellite manufacturer and operator said the plan will leave Loral under current management, with its two businesses, Space Systems/Loral and Loral Skynet, intact and substantially debt-free.

Loral said it expects the new stock to be listed on a major exchange in due course.

"We believe that the plan that has been negotiated presents the best opportunity to maintain Loral's industry position over the long term," said Bernard L. Schwartz, Loral's chairman and chief executive officer, in a news release.

He added: "We deeply regret the unavoidable exclusion of the present equity holders."

Loral expects to emerge from Chapter 11 by the end of the year.

The company filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of New York on July 15, 2003. Its Chapter 11 case number is 03-41710.

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