DA 05-2639

September 30, 2005

**AUTHORIZATIONS GRANTED**

**Applications of Loral Space & Communications Ltd. (DIP) for the
Transfer of Control of Licenses and Authorizations Held by Loral Orion,
Inc. (DIP), Loral SpaceCom Corporation (DIP) and Loral Skynet Network
Services, Inc. (DIP) to Loral Space & Communications Inc.**

**IB Docket No. 05-233**

By the Chief, International Bureau:

By this action, we grant Loral Space & Communications Ltd.,
Debtor-in-Possession ("Old Loral"), pursuant to Section 310(d) of the
Communications Act of 1934, as amended (the "Act"),[^1] approval to
transfer control of space and earth station licenses held by its
subsidiaries, Loral Orion, Inc. DIP ("Loral Orion"), Loral SpaceCom
Corporation DIP ("Loral SpaceCom") and Loral Skynet Network Services,
Inc. DIP ("Loral Skynet"), to Loral Space & Communications Inc. ("New
Loral").[^2] We also dismiss as moot, the application filed by CyberStar
Licensee, L.L.C. ("CyberStar") to assign its space station
authorizations to Loral Cyberstar L.L.C. ("Loral Cyberstar").[^3]
Hereinafter, the transfer of control applications will be referred to as
the "Applications" and the parties to the transaction will be referred
to as the "Applicants."

On June 28, 2005, Applicants filed the Applications seeking Commission
approval of the proposed transaction to permit Old Loral and certain of
its subsidiaries to emerge from bankruptcy under Chapter 11 of the U.S.
Bankruptcy Code.[^4] The Applications pertain to licenses for space and
earth stations.[^5] On July 18, 2005, the Commission placed the
Applications on Public Notice.[^6] No oppositions or comments were filed
on this transaction.

Under the proposed transaction, and in accordance with the Fourth
Amended Joint Plan of Reorganization ("Reorganization Plan")[^7] filed
by the Applicants in the Bankruptcy Court: (1) Loral Skynet will emerge
from DIP status and become Loral Skynet Network Services, Inc. and the
licenses and authorizations now held by Loral Skynet will be held by
Loral Skynet Network Services, Inc.; (2) Loral SpaceCom will emerge from
DIP status and become Loral SpaceCom Corporation and the licenses and
authorizations now held by Loral SpaceCom will be held by Loral SpaceCom
Corporation; and (3) Loral Orion will emerge from DIP status and will
change its name to Loral Skynet Corporation and the licenses and
authorizations now held by Loral Orion will be held by Loral Skynet
Corporation.[^8] Hereinafter, Loral Skynet Network Services, Inc., Loral
SpaceCom Corporation, and Loral Skynet Corporation will be referred to
as the "New Loral Licensees."

Further, as proposed, the ownership structure of the New Loral Licensees
will be as follows: Loral CyberStar, L.L.C.,[^9] a Delaware limited
liability company, will be wholly owned by Loral Skynet Network
Services, Inc., a Delaware corporation, which in turn, will be wholly
owned by Loral SpaceCom Corporation, also a Delaware corporation. Loral
SpaceCom Corporation, in turn, will be wholly owned by Loral Skynet
Corporation, a Delaware corporation, which in turn, will be wholly owned
by Loral Space & Communications Holding Corporation, a Delaware
corporation. Loral Space & Communications Holding Corporation, in turn,
will be wholly owned by New Loral. Thus, all of the issued common stock
of the New Loral Licensees will be indirectly owned and controlled by
New Loral. New Loral will control all policy decisions and all aspects
of the day-to-day operations of the New Loral Licensees through its
control of its wholly owned direct subsidiary, Loral Space &
Communications Holding Corporation. New Loral, through certain of its
subsidiaries and affiliates, including the New Loral Licenses, primarily
will be involved in satellite services and manufacturing. Loral Space &
Communications Holding Corporation will not conduct any operating
business.

New Loral will issue common stock to the creditors of Old Loral and to
creditors of certain of its subsidiaries. Certain investment funds
managed by MHR Fund Management LLC ("MHR") will, in the aggregate, hold
approximately 36 percent of the initially issued common stock of New
Loral. Specifically, the MHR investment funds, each of which will hold a
direct interest in New Loral, are: MHR Capital Partners LP; MHR Capital
Partners (100) LP; MHR Institutional Partners LP; MHRM LP; MHRA LP; MHR
Institutional Partners II LP; MHR Institutional Partners IIA LP. All of
these investment funds are Delaware limited partnerships. The exact
percentage of New Loral common stock that will be held by each of these
entities will not be known with certainty until the claims resolution
process set forth in the Reorganization Plan is completed. However,
under no circumstances will the investment funds hold (or MHR Fund
Management LLC indirectly control through its management of the
investment funds) more than 39% of the initially issued New Loral common
stock. No other entity will hold 10 percent or more of the voting stock
of New Loral.

Loral Skynet Corporation will issue Series A 12% Non-Convertible
Preferred Stock (the "Perferred Stock"), whereby MHR is expected to
indirectly control, in the aggregate, approximately 38 percent of Loral
Skynet Corporation's initially issued Preferred Stock through its
management of the MHR investment funds that will hold the preferred
shares. The holders of the Preferred Stock will not have voting rights
over the day-to-day operations or policy decisions of Loral Skynet
Corporation. The holders of a majority of the Preferred Stock will have
the right to elect two additional directors to the board of directors of
Loral Skynet Corporation (which otherwise will be composed of nine
directors) in the event that Loral Skynet Corporation fails to pay the
stated dividend on the Preferred Stock. Apart from the directors
appointed by the holders of the Preferred Stock, if any, the
organizational documents of New Loral and Loral Skynet Corporation
provide that their respective boards of directors will be composed of
the same individuals. In addition, so long as two-thirds of the
Preferred Stock initially issued remains outstanding, the vote of the
holders of a majority of the Preferred Stock will be required to
approve: (i) amendments to the certificate of incorporation, mergers,
and other similar corporate actions by Loral Skynet Corporation that
would adversely affect the priority dividend rights or other rights of
the Preferred Stock; and (ii) dividends paid to holders of Loral Skynet
Corporation common stock..

MHR is a Delaware limited liability company whose primary business is
investment management, which it conducts through the management of its
investment funds. Dr. Mark Rachesky, M.D., a U.S. citizen, controls MHR
and therefore will indirectly control the New Loral common stock and the
Loral Skynet Corporation Preferred Stock that MHR will indirectly
control though its management of the MHR investment funds. Dr. Rachesky
also holds a direct ownership interest in certain of these funds. As a
result of this ownership interest, Dr. Rachesky indirectly will hold a
beneficial ownership interest in less than 2 percent of the initially
issued New Loral common stock and the Loral Skynet Corporation Preferred
Stock. In addition to this indirect beneficial ownership interest, Dr.
Rachesky, through his ownership of certain affiliates of MHR, also will
hold a majority interest in MHR's right to 20 percent of the profits
accrued by the funds managed by MHR from their ownership interests in
New Loral common stock and Loral Skynet Corporation Preferred Stock.

We find that approval of the proposed Applications will serve the public
interest.[^10] As a preliminary matter, there is no evidence in the
record to suggest that New Loral lacks the basic qualifications to be a
Commission licensee.[^11] Further, the record contains no evidence that
the proposed transaction would harm competition in the relevant U.S.
telecommunications markets.[^12] Based on the record, we find that
approval of the proposed transaction is likely to bring about public
interest benefits by allowing Old Loral to emerge from bankruptcy and
facilitating increased use of its assets; providing for an infusion of
capital and stimulation of investment in the Loral satellite system;
fostering competition in the fixed satellite service market by
strengthening the commercial viability of Loral's satellite network; and
ensuring continued provision of Loral's satellite services. In addition,
the record indicates that the reorganization is designed to help
preserve and revitalize Space Systems/Loral, Inc. in the design and
manufacture of satellites and satellite systems for commercial and
government applications, and might thereby benefit U.S. satellite
manufacturing competition. Thus, upon consideration of the record, the
International Bureau finds that grant of the Applications will serve the
public interest, convenience and necessity.[^13]

The transaction shall be completed within 60 days from the date of
authorization.[^14] Within 30 days of consummation, the Commission shall
be notified by letter of the date of consummation and the file numbers
of the Applications involved in the transaction.[^15] Failure to comply
with all relevant Commission rules and policies, and any specific
condition of this grant, could result in the imposition of fines and
forfeitures. Pursuant to section 1.103 of the Commission's rules, the
grant is effective upon release of this Public Notice.[^16] Petitions
for reconsideration under section 1.106 or applications for review under
section 1.115 of the Commission's rules may be filed within 30 days of
this Public Notice.[^17]

\### FCC \###

**APPENDIX A**

**(IB Docket No. 05-233)**

  ------------------------ ------------------------- ---------------------- -------------------------
  **[File                  **[(Previous)             **[Call                **[New
  Numbers]{.underline}**   Licensee]{.underline}**   Signs]{.underline}**   Licensee]{.underline}**

  SAT-T/C-20050628-00140   Loral Orion, Inc. DIP     F-2, S2462, S2357,     Loral Skynet Corporation
                                                     S2670                  

  SAT-T/C-20050628-00141   Loral Orion, Inc. DIP     S2344, S2383, S2219,   Loral Skynet Corporation
                                                     S2218, S2161           

  SES-T/C-20050628-00837   Loral Skynet Network      E000127 (Lead) (45     Loral Skynet Network
                           Services, Inc. DIP        total)                 Services, Inc.

  SES-T/C-20050628-00838   Loral SpaceCom            E000584 (Lead) (36     Loral SpaceCom
                           Corporation DIP           total)                 Corporation

  SES-T/C-20050628-00839   Loral SpaceCom            E020101, E030029       Loral SpaceCom
                           Corporation DIP                                  Corporation
  ------------------------ ------------------------- ---------------------- -------------------------

**NEW OWNERSHIP STRUCTURE**

100%

100% 100%

100%

100%

100%

[^1]: 47 U.S.C. §310(d).

[^2]: *See* File Nos. SAT-T/C-20050628-00140, SAT-T/C-20050628-00141,
    SES-T/C-20050628-00837, SES-T/C-20050628-00838, and
    SES-T/C-20050628-00839.

[^3]: We note that on September 26, 2005, the International Bureau
    released an order holding that the authorization to construct,
    launch, and operate the CyberStar 1 satellite (call sign S2163) at
    115º W.L. and the CyberStar 2 satellite (call sign S2152) at 93º
    W.L. by CyberStar Licensee, L.L.C. in the frequency bands 18.55-18.8
    GHz, 19.7-20.2 GHz, 28.35-28.6 GHz and 29.5-30.0 GHz was null and
    void under its own terms. *See CyberStar Licensee, LLC, Application
    for Authority to Construct, Launch, and Operate a Ka-band Satellite
    System in the Fixed Satellite Service*, Order, DA 05-2526 (*Int'l
    Bur. rel., Sept. 26, 2005*). Accordingly, we dismiss the assignment
    application filed by CyberStar Licensee, L.L.C.
    (SAT-ASG-2005-0628-00138) related to the assignment of call signs
    S2163 and S2152 to Loral Cyberstar L.L.C. as moot.

[^4]: *Loral Space & Communications Ltd. et al*., Consolidated Case No.
    03-41710 (Chapter 11) (Bankr. S.D.N.Y.). The case was filed in the
    United States Bankruptcy Court for the Southern District of New York
    ("Bankruptcy Court").

[^5]: *See* File Nos. SAT-T/C-20050628-00140, SAT-T/C-20050628-00141,
    SES-T/C-20050628-00837, SES-T/C-20050628-00838,
    SES-T/C-20050628-00839, and SAT-ASG-20050628-00138. File No.
    SAT-T/C-20050628-00139 was dismissed as moot, *see* *Public Notice,
    IB Docket No. 05-233, DA 05-2031 (Int'l Bur. rel. July 18, 2005)*;
    and File No. SAT-ASG-20050628-00138 is dismissed as moot as
    discussed herein. *See supra*. note 2.*.*

[^6]: The Commission placed the applications on public notice and
    established a pleading cycle. *See* Public Notice, IB Docket No.
    05-233, DA 05-2031 *(Int'l Bur. rel. July 18, 2005).*

[^7]: On August 1, 2005, the Bankruptcy Court issued an order confirming
    the Fourth Amended Plan of Reorganization.

[^8]: Under the Reorganization Plan, CyberStar Licensee, L.L.C. was to
    assign its licenses to Loral CyberStar L.L.C. However, because of
    the recent action taken by the International Bureau finding
    CyberStar Licensee L.L.C.'s Ka-band satellite system authorizations
    null and void, we find the request for approval to assign these
    authorizations to Loral CyberStar is moot. *See supra* note 2.

[^9]: At this time, Loral CyberStar, L.L.C. holds no Commission
    licenses.

[^10]: 47 U.S.C. § 310(d).

[^11]: 47 U.S.C. **§** 308(b).

[^12]: Loral, through its various subsidiaries and affiliates, is
    engaged in the satellite services and manufacturing businesses. Its
    satellites are used by television and cable networks to broadcast
    video programming, and by communications service providers,
    resellers, corporate and government customers for broadband data
    transmission, internet services and other communications services.
    Loral is also in the business of designing and manufacturing
    satellites and satellite systems for commercial and government
    applications.

[^13]: 47 U.S.C. § 310(d). *See* Appendix A attached to this Public
    Notice.

[^14]: 47 C.F.R. § 25.119(f).

[^15]: *Id.*

[^16]: 47 C.F.R. § 1.103.

[^17]: 47 C.F.R. §§ 1.106, 1.115.