LORAL TO SELL SPACE SYSTEMS/LORAL TO MDA IN A TRANSACTION THAT DELIVERS MORE THAN US$1 BILLION OF PRE-TAX VALUE TO LORAL
Investor Call and Webcast Discussion of the Transaction Tomorrow at 9:00 a.m. EDT
NEW YORK, NY – June 26, 2012 - 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:
“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.
About Loral Space & Communications Inc.
About Space Systems/Loral
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.