Intelsat Wins Loral Auction


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Tuesday, Oct. 21, 2003
Intelsat Wins Loral Auction

NEW YORK (Reuters) - Satellite operator Intelsat Ltd. said on Monday it won an auction for certain assets of bankrupt satellite maker and operator Loral Space & Communications Ltd. (LRLSQ.OB) with a $1.1 billion bid.

The bid trumped rival EchoStar Communications Corp. (DISH.O), but analyst and company comments suggest the deal, which needs court approval, might not be sealed yet.

EchoStar, the No. 2 U.S. Television satellite provider, which recently tried to buy the whole company but bid $1.029 billion last week to enter the auction for Loral's North American assets, said it was still interested in buying Loral.

"Clearly EchoStar wasn't bidding to win today. The question is if they did this tactically in order to put a bid for the whole company on Wednesday," SG Cowen analyst Tom Watts said.

Loral rejected EchoStar's recent $1.85 billion bid for the entire company earlier this month. It filed for bankruptcy in July as a condition of an agreement with its preferred bidder Intelsat that included the sale its North American satellites.

Loral, which has been burdened by debt and a global slump in demand for new satellites and for network capacity, plans to reorganize around its remaining fleet of five satellites and its satellite manufacturing business.

If EchoStar succeeds this could not happen. EchoStar also tried to halt orders from its arch rival Hughes Electronic Corp.'s (GMH.N) DirecTV for new satellites from Loral, forcing DirecTV to sweeten its offer.

Spokesman Steve Caulk did not say what EchoStar's next move would be, but he read a statement saying the company remains "interested in the entirety of Loral's assets."

"Our offer of $1.85 billion for these assets remains on the table," Caulk said.


Loral's unsecured creditors filed an objection to Intelsat's original offer last month suggesting that other potential suitors including EchoStar could create more value. But it is unclear if this will pave the way for more bids.

"The outcome on Wednesday will depend on how much clout the court will grant to the unsecured creditors," Watts said.

Intelsat, which aims to use Loral's fleet to get a foothold in the North American market, originally agreed to a $1 billion price tag that could increase up to $1.1 billion depending on whether Loral signed on a certain customer.

The latest offer includes a firm valuation for this customer contract, 4 in-orbit Loral satellites and one satellite scheduled for launch next year. A sixth satellite that Intelsat also agreed to buy failed since the agreement.

As part of the earlier agreement Intelsat had also promised a $100 million down payment for a new satellite it would commission Loral to make.
Damn! I was hoping for a E* rate increase to pay off the purchase. shucks.

*Cyclone kicks a stone across the floor and shuffles along*
I am expecting a rate increase of Top 100 and Top 150 packages next year during the first four months of 2004. I figure Top 100 will be $34.99 and Tp 100 will be $44.99 while Top 50 would remain at $24.99 as it is guaranteed until 2005.

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