New York — July 25, 2005 Loral Space & Communications Ltd. (OTCBB: LRLSQ) today announced that the U.S. Bankruptcy Court for the Southern District of New York has confirmed Loral's Plan of Reorganization, paving the way for the company to conclude its chapter 11 reorganization. Loral currently expects that, after it satisfies customary regulatory and certain other conditions, including obtaining FCC approval, its Plan of Reorganization will become effective and the company will emerge from chapter 11 early in the fourth quarter of 2005.

Bernard L. Schwartz, chairman and chief executive officer, said: "We are grateful for the support of our employees, customers, suppliers and business partners during the reorganization process. Thanks to their loyalty, Loral has managed over the past two years not only to maintain but to strengthen its critical skills, trim costs significantly and win new contracts and customers despite the challenges inherent in the chapter 11 reorganization process.

He continued, "The approved plan enables us to harness the positive momentum we've built and capitalize on an improving industry environment. Coming out of chapter 11, we will have a strengthened balance sheet, little debt, an experienced management team and two core businesses that are technology and service leaders in their respective segments - all the ingredients needed to build on Loral's recent successes."

Loral did not require any debtor-in-possession (DIP) financing during the reorganization period. In addition, the company continued to fund all of its pension obligations on a regular basis.

At the confirmation hearing in New York that concluded today, the Court ruled that Loral had met the statutory requirements to confirm the plan. The plan provides, among other things, that:

  • Loral will emerge as a public company under its current management and will seek to be listed on NASDAQ.

  • Loral's two businesses, satellite manufacturing (Space Systems/Loral) and satellite services (Loral Skynet), will emerge intact as separate subsidiaries of reorganized Loral Space & Communications.

    • Space Systems/Loral, which will emerge debt-free, has received orders for nine satellites from seven customers during the reorganization period -- a 33 percent share of the number of contracts awarded world-wide and a 40 percent share of the estimated total dollar value of those contracts, an impressive growth of market share for commercial satellites. The company has delivered and launched nine satellites over the past 24 months.

    • Loral Skynet expanded its FSS capacity in the high growth Asian and Latin American markets and introduced its SkyReach IP-based communications service during the reorganization. In addition, XTAR - a joint venture between Loral and Hisdesat -- commenced service earlier this year. XTAR provides previously unavailable commercial X-band service to the U.S. and allied governments.

  • The general unsecured creditors, including the trade creditors, of SS/L and Loral SpaceCom will be paid in full in cash, plus interest from the petition date.

  • Loral Orion unsecured creditors will receive approximately 77 percent of new Loral common stock and their pro rata share of $200 million of preferred stock to be issued by Loral Skynet.

    • These creditors have also been offered the right to subscribe to purchase their pro-rata share of $120 million in new senior secured notes to be issued by Loral Skynet. This rights offering, which expires July 29, 2005, will be underwritten by certain Loral Orion creditors who will receive a fee which is payable in additional Loral Skynet notes.

  • Loral bondholders and certain other unsecured creditors will receive approximately 23 percent of the common stock in reorganized Loral.

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

Copies of Loral's Plan of Reorganization, as confirmed, and Disclosure Statement are available on the Loral website at www.loral.com. The documents also are 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.