Subject: [NEXTEL-1] LORAL SPACE: Chapter 11 Filing Spurs S&P to Drop Ratings to D

From: [email-masked]
Date: Thu, 17 Jul 2003 12:13:59 -0400

LORAL SPACE: Chapter 11 Filing Spurs S&P to Drop Ratings to D
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Standard & Poor's Ratings Services lowered the corporate credit rating, senior
unsecured debt rating, and preferred stock rating on New York, New York-based
satellite leasing and manufacturing company Loral Space & Communications Ltd. to
'D' from 'CCC+', 'CCC-', and 'CC', respectively. The unsecured debt rating on the
company's wholly owned subsidiary Loral Orion Inc. is also lowered to 'D' from
'CCC+'. The rating actions follow the company's announced filing of Chapter 11
bankruptcy protection with the U.S.  Bankruptcy Court for the Southern District of
New York. At March 31, 2003, the company had about $2.2 billion of total debt
outstanding.
The bankruptcy filing will allow the company to sell six North American satellites
to Intelsat Ltd. free from encumbrances for as much as $1.1 billion in cash. The
actions do not affect the ratings on Mexican satellite service provider Satelites
Mexicanos S.A. de C.V. (CCC+/Negative/-), in which Loral has a 49% voting
interest. SatMex was not part of the bankruptcy filing and there are no
cross-defaults of debt at SatMex.
Loral has been hurt by weakness in demand for telecommunications services, along
with softness in its satellite manufacturing business. These factors, coupled with
an aggressive capital structure, have resulted in an extremely weak financial
profile for the company, with debt to annualized EBITDA totaling about 35x for the
quarter ended March 31, 2003.

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