LORL - Loral Space & Communications

[given2invest]

Anyone involved in this?  I will post a longer thesis later but a bit lazy right now.  Basically, they operate two businesses:  Telesat and SS/L.  They announced in November they were exploring a sale of one or both and are way past the expected timeframe for completion of the process, hence why the stock has been hammered.

 

I think a sale could very well still happen based on the 8-k they filed last week which changed some of the terms of the stock options management owns.  This is the wording of the filing:

 

Item 1.01 Entry into a Material Definitive Agreement.

On June 8, 2011, Loral Space & Communications Inc. (the "Company"), along with Telesat Holdings Inc. (Telesat Holdings"), Telesat Canada ("Telesat"), the Public Sector Pension Investment Board ("PSP") and 4440480 Canada Inc., an indirect wholly-owned subsidiary of the Company (the "Special Purchaser"), entered into Grant Agreements (the "Grant Agreements") with Daniel Goldberg, Michael C. Schwartz and Michel G. Cayouette (each, a "Participant" and collectively, the "Participants"). Each of the Participants is an executive of Telesat, which is owned by the Company together with its Canadian partner, PSP, through their ownership of Telesat Holdings. The Grant Agreements amend and restate grants previously approved and made in September 2008. Mr. Goldberg's agreement is effective as of May 20, 2011, and the agreements for each of Messrs. Schwartz and Cayouette are effective as of May 31, 2011.

 

The Grant Agreements confirm grants of Telesat stock options to the Participants and provide for certain rights, obligations and restrictions related to such stock options, which include, among other things, the right of each Participant to require Telesat to cause the Special Purchaser to purchase a portion of the shares in Telesat owned by him, or that are issuable to him under Telesat's Management Stock Incentive Plan at the relevant time, in the event that more than 90% of Company's common stock is acquired by an unaffiliated third party that does not also purchase all of PSP's and its affiliates' interest in Telesat Holdings. Should Telesat and/or the Special Purchaser be prohibited by applicable law or under the terms of any credit agreement applicable to Telesat from purchasing such shares, or otherwise default on such purchase obligation, pursuant to the terms of the Grant Agreements, the Company may be required to purchase the shares in the place of Telesat and/or the Special Purchaser. The foregoing description of the Grant Agreements is not intended to be complete and is qualified in its entirety by reference to the Grant Agreements, copies of which are filed as Exhibits 10.1, 10.2 and 10.3 hereto.

 

I think the stock is worth between 80 and 100 in a takeout and will trade north of 80 even if the just announce an IPO of Telesat, which seems to be the worst case scenario.

 

Anyone own? 

[given2invest]

nobody heh?

 

interesting  :P

[Guest misterstockwell]

I used to own it long ago when it was starting the ill-fated Globalstar, and before they went bankrupt. Shifty characters running it then, but I have no idea now. Is Michael Schwartz related to Bernie? The addition of Telesat was new as well since the early 2000's. Satellites provide a high initial cost/great cash flow business for the 12-15 year satellite life. Telesat was never well run as a Canadian company, but I have no idea how they fared under Loral.

[valueinvestor]

A holding company that holds ~60% of Telesat Canada. They recently received ~$250M in distributions from their stake, and the company's market cap is ~$885M. Major holder is Carl Icahn's protege, who is not entirely shareholder friendly, but there are other shareholders who have prevented him from acting solely on his self-interests. Not to mention, they only have plans to distribute the distributions received from Telesat to shareholders of Loral.