Loral Skynet CEO Details Post-Chapter 11 Path

By | October 4, 2004 | Feature

Patrick Brant, the new president of Bedminster, N.J. Loral Skynet, has a vision of turning the company into a provider of hybrid networking services that will use satellites, fiber and other technologies to meet the communications needs of customers worldwide.

Brant is bringing that vision to what had been the cash-cow operating unit of the Loral Space and Communications holding company. As demand for in-orbit satellites services weakened, so did Loral Skynet’s performance and that of its financially struggling parent. As a result, Loral Skynet’s four in-orbit North American satellites and another one under construction were sold to rival Intelsat for nearly $1 billion last March.

Loral Space filed a proposed plan of reorganization with the U.S. Bankruptcy Court for the Southern District of New York Aug. 19. That plan, supported by the official committee of unsecured creditors appointed in Loral’s ongoing Chapter 11 bankruptcy court case, calls for Loral’s two businesses, satellite operator Loral Skynet and spacecraft manufacturer Space Systems/Loral, to emerge intact as separate subsidiaries of the reorganized parent company that would be called New Loral. The revamped parent company is expected to exit chapter 11 under current management before year-end.

Brant served as an executive at Loral Cyberstar from 1999 to 2003, ultimately becoming its president and COO. He left the company in early 2003 after helping to integrate Loral Cyberstar into Loral Skynet but he agreed to return last August to put to use his sales, marketing and business-development background gained from senior-management posts at Orbital Communications and American Mobile Satellite Corporation, now called Mobile Satellite Ventures.

Loral Skynet is positioning itself a source for all broadcast, data network, Internet access, IP and systems integration needs, as well as a provider of secure, high-quality global connectivity and communications. “The response from the marketplace has been encouraging,” Brant said.

The sale of the company’s North American satellite assets for roughly $1 billion left Loral Skynet with an unsustainable cost structure that Brant needed to cut shortly after his arrival. With a workforce of slightly more than 400 people, the company cut 88 jobs in recent weeks, and it likely will trim an additional 30 to 40 positions by year’s end. It would not be a surprise if further cuts took place during first quarter 2005 to help the company better match costs to its much lower revenues, following the sale of its North American satellites.

Brant’s challenge will be to downsize the organization while at the same time creating an aggressive sales environment, rebuilding morale and regaining momentum lost during the bankruptcy.

“We are right-sizing our organization,” Brant said.

Loral Skynet retains some very interesting assets — both in terms of the spacecraft themselves and their orbital locations. “Creating a viable, stand-alone business from these assets is a big challenge, possibly bigger than the challenge of monetizing their individual value through separate transactions,” said Andrea Maleter, technical director at Bethesda, Md.-based Futron Corp.

D.K. Sachdev, president of the Vienna, Va.-based SpaceTel Consultancy, told us Loral Skynet’s challenge is to identify market niches and develop them aggressively. Urgency exists to do so because satellites have limited life spans and at least one of the company’s birds may need to be replaced soon, he added.

The decisions occurring within the Loral Skynet management team are aimed at putting the company in a position to grow, he added. The plan is to provide the “right services to the right places,” Brant said. “Europe and North America are overdeveloped with fiber, satellite and other technologies.” At the same time, Asia, Latin America and the Middle East are underserved, Brant explained. Loral Skynet will use its satellites above Asia and other regions outside north America to provide hybrid VSAT/fiber global network infrastructure.

The Telstar 10 that is 85 percent fully leased, a promising new one to serve the same region. Launched in 1997, Telstar 10 is located at 76.5 degrees East longitude and carries 27 C-band and 24 Ku-band transponders (36 megahertz equivalents). The C-band payload provides coverage of Asia, Australia, parts of Europe and Africa. The Ku-band payload covers Korea, Taiwan, Macau and China, including Hong Kong.

The company deployed and completed testing of its powerful new Telstar 18 satellite to serve Asia in late August.

Moving Forward With IP

Loral Skynet’s Internet Protocol (IP) product, called Skyreach, is rolling out to provide two-way broadband services for secure private networks or high-speed Internet access. The company introduced Skyreach as a way to incorporate a high-speed terrestial network.

“We are poised to take advantage of our technical support in private networks, second generation Internet services and expertise in Internet Protocol, and virtual private network,” Brant said. “As we emerge out of bankruptcy, there is no question in my mind we will have minimal debt and a strong balance sheet to capitalize on opportunities as we move forward. We have a green field in front of us.”

(Patrick Brant, Loral Skynet, 212/338-5345; Andrea Maleter, Futron Corp., 301/347-3450; D.K. Sachdev, SpaceTel Consultancy, 703/757-5880)

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