Alcatel and Loral reach $13 million settlement

Alcatel has formally terminated its joint ventures with Loral following the announcement that it will acquire Loral Space & Communication’s 47% share of the Europe*Star satellite system.

Alcatel has announced that it will acquire Loral Space & Communication’s 47% share of the Europe*Star satellite system as part of a transaction that terminates Alcatel’s joint ventures with Loral and resolves Alcatel’s litigation against Loral and its subsidiary, Space Systems/Loral, Inc.

Acquiring Loral’s share in Europe*Star will increase Alcatel’s stake to 95%. The Europe*Star transfer is subject to German antitrust review, which Alcatel expects to complete this summer. Loral also agreed to pay Alcatel $13 million in cash, with $5 million due immediately and $8 million due within the next 12 months.

In addition, Loral has transferred its interest in the SkyBridge satellite project to Alcatel, while Alcatel has given up its interest in Loral’s Cyberstar partnership. As part of these arrangements, Alcatel plans to terminate its arbitration and lawsuits against Loral.

At the same time, Alcatel, Intelsat and Loral have agreed that Intelsat will pay Alcatel directly, rather than through Loral, for Alcatel’s share of orbital incentives on the Intelsat IX and VII satellite programs. Alcatel expects these direct payments to reach in the range of $60 million over the next few years.

Alcatel’s litigation against Loral began in the spring of 2001, when Alcatel obtained a federal court order in New York prohibiting Loral and SS/L from violating joint venture arrangements dating back to 1991.

Alcatel then initiated an ICC arbitration in Switzerland against Loral for breach of contract. Alcatel won partial awards in that arbitration upholding all of Alcatel’s claims and rejecting all of Loral’s counterclaims.