Loral to Sell Space Systems/Loral to MDA in a Transaction That Delivers More Than US$1 Billion of Pre-Tax Value to Loral
NEW YORK, NY -- (Marketwire) -- 06/26/12 -- Loral Space & Communications Inc. (NASDAQ: LORL) today announced its entry into a definitive agreement with MacDonald, Dettwiler and Associates Ltd. (TSX: MDA) related to the sale of Loral's wholly-owned subsidiary, Space Systems/Loral (SS/L). The transaction provides for Loral to receive consideration from MDA of US$875 million and cash dividends and other payments from SS/L which are expected to be in excess of US$135 million under a formula described below.
The principal components of the transaction include:
- MDA's purchase of all of the equity of SS/L for US$774 million, payable in cash;
- MDA's purchase of certain real estate used in connection with SS/L's business for US$101 million, payable through a bank guaranteed three year promissory note;
- Cash dividends and other payments from SS/L to Loral equal to approximately US$112 million (representing the amount of SS/L's cash balances as of March 31, 2012) plus an incremental per diem amount (equating to approximately US$5.8 million per month) from March 31, 2012 to and including the closing date of the transaction; and
- The transaction includes other potential adjustments, and Loral will retain principal responsibility for the ViaSat litigation.
"Combining the world-recognized communications capabilities of MDA with SS/L creates a powerful space communications leader and enhances the business prospects, both commercial and government, for each of MDA and SS/L," said Michael B. Targoff, Chief Executive Officer of Loral Space & Communications. "With this transaction, SS/L's employees, customers and suppliers should be confident as to the long term prospects and direction for this highly valued contributor to the global communications infrastructure."
"Both Space Systems/Loral and MDA are already important suppliers to the worldwide satellite industry," said John Celli, President of Space Systems/Loral. "The combination is a very good strategic fit for both companies. Together, we will be in an even stronger position to support the growth requirements of both new and existing customers."
"We are pleased with the transaction and proud of our management team's success in solidifying SS/L's position as the leading commercial satellite provider in the world," said Dr. Mark Rachesky, Chairman of the Board of Directors of Loral. "We look forward to completing this transaction, as it validates the Board's continued commitment to realizing significant value for all Loral shareholders."
The agreement between Loral and MDA has been approved by the Boards of Directors of each of Loral and MDA. The sale is expected to close later this year after the receipt of certain regulatory approvals and the satisfaction of other customary closing conditions. RBC Capital Markets has provided fully committed debt financing to MDA in connection with the transaction.
Loral and its Board of Directors intend to evaluate alternatives for returning to shareholders the after-tax proceeds resulting from the divestiture of SS/L.
In connection with the transaction, Credit Suisse and J.P. Morgan acted as financial advisors and Willkie Farr & Gallagher LLP acted as legal advisor to Loral.
Loral's Chief Executive Officer Michael B. Targoff will host a conference call and web cast on Wednesday, June 27 at 9:00 a.m. ET to discuss the transaction and respond to questions from shareholders. To participate, please dial (973) 200-3060 or toll free at (877) 831-3841 approximately ten minutes prior to the scheduled start of the call. A listen-only web cast of the call is available on the Investor Relations section of Loral's web site (http://investor.loral.com/events.cfm). A replay of the web cast will be available for 30 days.
About Loral Space & Communications Inc.
Loral Space & Communications is a satellite communications company. It is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including fixed satellite services, direct-to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management. Loral also owns 64 percent of Telesat Canada, a global operator of telecommunications and direct broadcast satellites used to distribute video entertainment programming, broadband data, and provide access to Internet services and other value-added communications services. For more information, visit Loral's web site at www.loral.com. LORL-F
About Space Systems/Loral
Space Systems/Loral, a subsidiary of Loral Space & Communications (NASDAQ: LORL), has a long history of delivering reliable satellites and spacecraft systems for commercial and government customers around the world. As the world's leading provider of commercial satellites, the company works closely with satellite operators to provide spacecraft for a broad range of services including television and radio distribution, digital audio radio, broadband Internet, and mobile communications. Billions of people around the world depend on SS/L satellites every day. For more information, visit www.ssloral.com.
This document contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. When used in this press release, the words "believes," "expects," "plans," "may," "will," "would," "could," "should," "anticipates," "estimates," "project," "intend" or "outlook" or other variations of these words or other similar expressions are intended to identify forward-looking statements and information. In addition, Loral Space & Communications Inc. or its representatives have made or may make forward-looking statements, orally or in writing, which may be included in, but are not limited to, various filings made from time to time with the Securities and Exchange Commission, and press releases or oral statements made with the approval of an authorized executive officer of the company. Actual results may differ materially from anticipated results as a result of certain risks and uncertainties which are described as "Risk Factors" and in the "Commitments and Contingencies" note to our financial statements in the current Form 10-K and in Loral's quarterly reports on Form 10-Q. The reader is specifically referred to these documents, as well as the Company's other filings with the Securities and Exchange Commission.
Risks and uncertainties include but are not limited to (1) risks associated with financial factors, including swings in the global financial markets, financial covenants in SS/L's credit agreement, increases in interest rates and access to capital; (2) risks associated with satellite manufacturing, including competition, cyclicality of SS/L's end-user markets, contractual risks, creditworthiness of customers, performance of suppliers and management of our factory and personnel; (3) risks associated with satellite services, including dependence on large customers, launch delays and failures, in-orbit failures and competition; (4) regulatory risks, such as the effect of U.S. export control and economic sanction laws; (5) risks related to the proposed sale of SS/L, including the effect on the business of SS/L prior to the consummation of the sale and the ability to satisfy the contractual conditions to closing the sale, including the receipt of regulatory approval; and (6) other risks, including litigation. The foregoing list of important factors is not exclusive. Furthermore, Loral operates in an industry sector where securities values may be volatile and may be influenced by economic and other factors beyond Loral's control.
Source: Loral Space & Communications