Loral Appears to Win Bidding for Ford Aerospace : Defense: The electronics giant offered $1.3 billion for the Newport Beach firm, sources say. It apparently beat out groups led by Hughes Aircraft and Westinghouse Electric.

A Ford Motor Co. committee that is reviewing offers for its Newport Beach-based Ford Aerospace subsidiary has recommended that the company accept the bid of Loral Corp., a defense electronics giant, sources close to the negotiations said Sunday.

Ford Motor Chairman Harold A. Poling could approve the deal as early as this week, the sources said, but no formal agreement has been reached.

Ford Aerospace President Donald Rassier confirmed that the committee has made a recommendation, but he declined to identify the company. He said he did not know when a formal agreement would be reached.

“Nothing is final until the chairman (Poling) says it’s final,” Rassier said.

Sources inside Ford Aerospace and among the bidders said New York-based Loral’s bid included $800 million in cash and assumption of Ford Aerospace liabilities--such as retiree benefit payments and other debt obligations--that would make the total offer about $1.3 billion.

Loral’s offer for the defense and communications firm beat out competing bids from two groups, one led by Hughes Aircraft Co. and another by Westinghouse Electric Corp.

Ford Motor had asked for cash bids of $1.2 billion, but, given the defense downturn, no bidders were willing to offer that much, the sources said.

If Poling approves the recommendation, the two companies would have to hammer out a definitive agreement. Any sale agreement would also have to be approved by the federal government, which would review antitrust and national security issues. The process could take several months.

Spokesmen for both Loral and Ford Motor declined comment. Ford put its aerospace unit up for sale on Jan. 12, saying it wanted to focus on its automotive operations.

Ford Aerospace has 17,000 employees, including more than 3,000 in Newport Beach. The company makes the Sidewinder air-to-air missile, space communications satellites, communications security equipment and sophisticated radars.

Loral has aggressively expanded through acquisitions in the past several years. In 1987, it purchased Goodyear Aerospace, and last year it bought the Electro-Optics division of Fairchild Weston and Honeywell Inc. Loral, which reported sales of $1.2 billion in 1989, is about two-thirds the size of Ford Aerospace, which last year had sales of $1.8 billion.

In December, Loral pleaded guilty in federal court to conspiracy charges in connection with the Pentagon’s Ill Wind procurement fraud investigation. It was fined $5.7 million.

Westinghouse issued an unusual press release Friday, promising not to break up Ford Aerospace. Loral and Hughes have made no such public statements. The Westinghouse statement was viewed as an attempt to gain an advantage in the bidding, but Rassier at Ford Aerospace said the release was unsolicited, and the company would not be influenced by outside sources.

Since the decision to sell was announced, company officials have said they want Ford Aerospace to remain intact.

Westinghouse led a team that consists of the Carlyle Group investment firm and Aerospatiale, a French aerospace concern with $5.3 billion in sales. Hughes had teamed with Alcatel of France.

Sources said the Westinghouse team bid $700 million in cash and agreed to other terms--such as assuming debt, leasing, credit and retiree obligations--that would bring the total value of its bid to $1.3 billion. Westinghouse planned to bring in former Secretary of Defense Frank Carlucci as chief executive of Ford Aerospace if its bid was successful.

Sources familiar with the Hughes offer said the team led by Hughes was likely rejected because the foreign partner, Alcatel, wanted to buy 100% of Ford’s communications satellite business. That arrangement may have made it difficult to win government approvals.

Hughes spokesman Richard Dore declined to comment on Friday.

In addition, Hughes apparently did not want to purchase BDM International Inc., the Virginia-based engineering and consulting subsidiary that Ford Aerospace acquired for $425 million in 1988. Purchase of BDM would have created a potential conflict of interest for Hughes.

BDM often studies proposed defense projects and recommends to the government criteria for contract awards. If it were part of a larger defense company, the odds were strong that BDM would draw up the criteria for a project that Hughes would later bid upon.

Hughes recognized this drawback and brought in another partner that apparently was willing to pay about $100 million for BDM, according to sources among the bidders.

An official with one of the bidders speculated that Loral’s bid may have seemed most attractive since it included no foreign bidders, but Rassier said foreign ownership was not a major concern. In addition, he said, all the final bidders had demonstrated sufficient financing to back their offers.