Loral Loses Satellite It Had Planned to Sell

After failing to reestablish contact with an orbiting telecommunications satellite over the weekend, Loral Space & Communications Ltd. declared it a total loss Monday.

Telstar 4, which was insured for $141 million, was one of six satellites -- three in orbit and two under construction -- that privately held Intelsat Ltd. had agreed to acquire for as much as $1.1 billion.

New York-based Loral lost contact with the satellite Friday when a short-circuit disrupted operations.

Despite the failure, Intelsat and Loral expect the acquisition to occur on schedule, but the incident could reduce the purchase price by $141 million -- the insured amount.

Susan Gordon, a spokeswoman for Intelsat, said the purchase price could be reduced by any insurance payment minus any service reduction payments that Loral might make to customers. The final purchase price could be further reduced if Loral fails to meet certain goals.

Loral filed for bankruptcy protection July 15 as part of its deal to sell its assets to Intelsat, listing $2.65 billion in assets and $3.06 billion in debt. Though Intelsat is the lead bidder, the Bankruptcy Court is accepting bids for Loral’s assets until Oct. 15. An auction is scheduled for Oct. 20.

Telstar 4, which covered all 50 states, Puerto Rico and the Virgin Islands and southern Canada, was launched in 1995 and was scheduled to be replaced by Telstar 8 in mid-2004. “Nearly all” customers using Telstar 4 have been shifted to neighboring Telstar 5, 6 and 7 satellites, Loral said.

Like many other out-of-service satellites, Telstar 4, which orbits at 22,000 miles above Earth, will be left to drift in space. Companies usually are required to leave just enough fuel in their satellites for them to rocket into deep space at the end of service. But because Loral has not been able to reestablish contact with its satellite, that is probably not an option.