Loral Space & Communications' bank debt held steady last week, although the company reported a malfunction on its Telstar 4 satellite. Market players said Loral's bank debt maintained its 96 -98 levels, despite announcements that the satellite is no longer operational. Telstar 4 was one of the six satellites slated to be sold to Intelsat for up to $1.1 billion in cash as a part of Loral's restructuring. Proceeds from this sale are earmarked to repay lenders with $959 million of outstanding secured bank debt claims.
Loral still expects the satellite sale to be completed in a timely manner, according to a company statement. But the purchase price for the sale will be reduced by proceeds from insurance on the satellite. Telstar 4 was insured for $141 million. Dianne Vanbeber, v.p. investor relations for Intelsat, explained that the asset purchase agreement between Loral and Intelsat contemplated how the sale would be affected if something happened to one of the satellites. The companies had looked at Telstar 4 in particular. Calls to a Loral spokesperson were not returned.