Loral amends, extends preferred stock exchange offer

New York, Sept. 26 - Loral Space & Communications said on Wednesday that it had amended and extended its previously announced exchange offer of its outstanding preferred stock. That offer, which was to have expired at midnight ET on Sept. 24, will now expire at 11:59 p.m. ET on Oct. 8, subject to possible further extension.

Under its improved offer, Loral is offering to exchange $1.92 in cash and 6.54 shares of Loral common stock for each share of its Series C and Series D preferred stock (this represents an increase from the four shares of common stock in the original offer; there is no change in the cash portion of the offer). Further, the company has removed its condition of 50% minimum participation, in the aggregate, of all outstanding shares of the two series of preferred stock.

Loral added that it does not expect to offer any further improvements to the economic terms of the offer. The company explained that the terms of Loral's bond indenture prevent it from increasing the cash component of this offer, and New York Stock Exchange rules preclude Loral from issuing more common shares without shareholder approval. Moreover, said Loral, the originally announced indefinite suspension of dividends for both series of preferred stock will apply to the dividends that otherwise would have been paid in November. Accordingly, the company will be prohibited from offering cash in future preferred exchanges.

Loral said that if all of the preferred shares participate, it will exchange $22 million in cash and 75.1 million common shares for preferred stock that has a liquidation preference of $574 million (an increase in the total number of common shares to be offered from the originally announced 45.9 million). It said that as of the close of business on the original expiration date, Sept. 24, some 286,440 shares of Series C preferred stock and 1,132,700 shares of Series D preferred stock had been tendered. Morrow & Co., Inc. (call 800 607-0088) is the information agent for the offer; exchanges will be effected by The Bank of New York, the exchange agent for the offer.

Loral originally announced the exchange on Aug. 27, saying it had begun an offer to exchange cash and common shares for all of its outstanding preferred stock, as part of its ongoing strategy to reduce debt and increase its financial flexibility. Loral said it would exchange $1.92 in cash and four shares of Loral common stock for each share of its Series C and Series D preferred stock (the equity component of the exchange offer was subsequently increased). The initial offer represented a total of $3.96 (in cash and common stock) for each share of Series C and D preferred stock, based on Aug. 27 closing price of $.51 for Loral common. Loral said that as of June 30, it had 8,084,174 shares of the Series C preferred stock and 3,391,688 shares of the Series D preferred stock outstanding. If all of the preferred shares were to be exchanged under the offer, Loral would exchange $22 million in cash and 45.9 million common shares (the latter figure was subsequently increased) for preferred stock having a liquidation preference of $574 million.

Loral set 12 midnight ET on Sept. 25 as the expiration deadline for the offer (this was subsequently extended). It said the offer would be contingent on participation of a minimum of 50%, in the aggregate, of all outstanding shares of the two series of preferred stock. In connection with this financial strategy, Loral's Board of Directors approved a plan to suspend indefinitely the future payment of dividends on the two series of preferred stock. Accordingly, Loral will defer the payment of quarterly dividends due on its Series C preferred stock on Nov. 1 and due on its Series D preferred stock on Nov. 15; however, dividends on the two series will continue to accrue.

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