Loral Keeps Head Above Water Amidst Bankruptcy Brouhaha
Despite Loral Space & Communications’ bankruptcy battle, the company made several major announcements Wed., including the early completion of DirecTV 8 satellite construction and its selection by PanAmSat to build the Galaxy 18 satellite. The company filed for Chapter 11 protection in July 2003.
Space Systems/Loral (SS/L) finished DirecTV 8 assembly, integration and tests more than 2 months ahead of the contracted schedule, and executed the spacecraft pre-shipment readiness reviews at its facility in Palo Alto. The Ku-/Ka- band hybrid satellite will maintain DBS service to existing DirecTV customers and the Ka-band payload will enhance the company’s ability to collect and deliver programming. A DirecTV spokesman said: “This is almost unheard of in the satellite industry.”
DirecTV 8, which will launch aboard International Launch Services’ Proton rocket, will support current and next generation higher-coding rate services, officials said. The Ka-band payload will use the full 1,000 MHz of bandwidth to link DirecTV facilities as part of the company’s infrastructure development associated with the introduction of local digital and HD services in the Ka-band. The spacecraft has a 15-year life.
The Galaxy 18 hybrid communications payload -- the 5th spacecraft built for PanAmSat by SS/L -- will host 24 Ku-band and 24 C-band transponders from the planned 123 degrees W orbital location. Galaxy 16 is also under construction and is planned for delivery in 2006. When delivered in 2007, the spacecraft will cover the contiguous U.S., Alaska, Hawaii and Puerto Rico, in addition to Canada and Mexico. The contract is subject to standard bankruptcy court approval, officials said.
Another feather in Loral’s cap announced Wed. is a favorable settlement with ChinaSat regarding the SS/L-built ChinaSat 8 satellite and its delivery. The decision amicably resolves all outstanding differences between the 2 companies and officials said SS/L would continue to seek the required State Dept. approvals to ship the spacecraft overseas. SS/L has been trying to get back the export license for ChinaSat 8 that the govt. rescinded in 1998 when licensing authority was transferred from the Commerce Dept. to State, an SS/L spokesman told us. Pursuant to the agreement, ChinaSat now has the authority to sell the satellite to a 3rd party under certain circumstances, officials said. Fearing ChinaSat could cancel the contract and demand the $130 million or more paid to SS/L, SS/L has listed this ongoing turmoil as a risk factor in its SEC filings more than 5 years. A spokesman called that “a pretty big liability hanging over our heads.”
The company also said Loral Skynet’s traditional business TV services (BTV) unit will be acquired by dbsXmedia, a subsidiary of Ariel Way. DbsXmedia will acquire Skynet’s BTV client base for cash, Ariel Way stock and ongoing contracts for infrastructure support from Loral. The ownership change isn’t expected to change services for current customers under an agreement that maintains the existing teleport and satellite infrastructure provided by Skynet. DbsXmedia also agreed that some of Skynet’s BTV employees will transfer to dbsXmedia’s new offices in Plymouth, England and Frederick, Md.
Meanwhile, Loral is preparing for its next bankruptcy hearing, March 2, which will examine the company’s disclosure statement -- the document that explains to creditors how the bankruptcy proceedings will pan out, what creditors will get and how the company plans to proceed. U.S. Bankruptcy Court, N.Y.C., must approve the statement before it’s circulated and voted on by creditors.