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Loral Files Consensual Plan of Reorganization

NEW YORK — March 22, 2005 Loral Space & Communications Ltd. (OTCBB: LRLSQ) today filed a revised plan of reorganization (the Plan) with the Bankruptcy Court.

The Plan, which revises the terms of a plan previously filed on December 5, 2004, reflects an agreement among the company, the Creditors' Committee and the Ad-Hoc Committee of Space Systems/Loral (SS/L) trade creditors on the elements of a consensual plan of reorganization. It is subject to confirmation by the Bankruptcy Court. The Plan provides, among other things, that:

  • Loral's two businesses, satellite manufacturing (New SS/L) and satellite services (New Skynet), will emerge intact as separate subsidiaries of reorganized Loral (New Loral).

  • New SS/L will emerge debt-free and continue its current activities, including completion of all satellites under construction or on order, and active pursuit of additional new awards.

  • New Skynet will continue to provide transponder leasing, network and professional services to current and prospective customers.

  • New Loral will emerge as a public company under current management and will seek listing on a major stock exchange.

  • Holders of allowed claims against SS/L and Loral SpaceCom will be paid in full in cash, including interest from the petition date to the effective date of the Plan.

  • Loral Orion unsecured creditors will receive approximately 80 percent of New Loral common stock and their pro rata share of $200 million of preferred stock to be issued by New Skynet. These creditors also will be offered the right to subscribe to purchase their pro-rata share of $120 million in new senior secured notes of New Skynet. This rights offering will be underwritten by certain Loral Orion creditors who will receive a fee which may be payable in additional New Skynet notes.

  • Loral bondholders and certain other unsecured creditors will receive approximately 20 percent of the common stock of New Loral.

  • Loral's existing common and preferred stock will be cancelled and no distribution will be made to the holders of such stock.

Implementation of the Plan and the treatment of claims and equity interests as provided in the Plan are subject to final documentation and confirmation by the Bankruptcy Court. Loral cannot predict with certainty when or if confirmation of the Plan will occur.

The Plan will be available today, Tuesday, March 22, 2005, on Loral's website at www.loral.com. The document also will be available via the court's website, at www.nysb.uscourts.gov/. Please note that a PACER password is required to access documents on the Bankruptcy Court's website. Loral's bankruptcy case number is 03-41710 (RDD).

Loral Space & Communications is a satellite communications company. It owns and operates a fleet of telecommunications satellites used to broadcast video entertainment programming, distribute broadband data, and provide access to Internet services and other value-added communications services. Loral also is a world-class leader in the design and manufacture of satellites and satellite systems for commercial and government applications including direct-to-home television, broadband communications, wireless telephony, weather monitoring and air traffic management.

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This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. In addition, Loral Space & Communications Ltd. 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 by the company with the Securities and Exchange Commission, press releases or oral statements made with the approval of an authorized executive officer of the company. Actual results could differ materially from those projected or suggested in any forward-looking statements as a result of a wide variety of factors and conditions. These factors include those related to the filing, on July 15, 2003 by Loral and certain of its subsidiaries, of voluntary petitions for reorganization under chapter 11 of title 11 of the United States Code in the United States District Court for the Southern District of New York and parallel insolvency proceedings in the Supreme Court of Bermuda in which certain partners of KPMG were appointed as joint provisional liquidators. Additional factors and conditions are also described in the section of the company's annual report on Form 10-K for the fiscal year ended December 31, 2004, entitled "Commitments and Contingencies," and the company's other filings with the Securities and Exchange Commission. The reader is specifically referred to these documents.