Loral to Sell Space Unit to MDA for $1 Billion

Loral Space & Communications Inc. has brokered a deal with MacDonald, Dettwiler and Associates Ltd. to sell (SS/L) for nearly $1 billion in cash dividends and other payments, Loral announced Wednesday.

MDA will purchase SS/L’s equity for $774 million in cash and will buy about $101 million worth of real estate used by SS/L. MDA will also spend about $112 million on cash payments to Loral from SS/L plus an incremental per diem amount equating to $5.8 million per month from March 31, 2012 to the date of the closing of the transaction.

Loral will maintain responsibility for litigation related to ViaSat.

“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 deal between the two companies was approved by the Boards of Directors of both Loral and MDA, according to Loral. The sale is expected to close by year’s end after regulatory approvals and other closing conditions are satisfied. Loral plans to return the money generated from the sale of SS/L to its shareholders.

Credit Suisse and J.P. Morgan were financial advisors for the deal, and Willkie Farr & Gallagher LLP served as Loral’s legal advisor.

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.