LORAL SPACE & COMMUNICATIONS LTD, S-3, 1998-04-28

LORAL SPACE & COMMUNICATIONS LTD
S-3, 1998-04-28
RADIOTELEPHONE COMMUNICATIONS

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 28, 1998
REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------

LORAL SPACE & COMMUNICATIONS LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------

<TABLE>
<S> <C>
BERMUDA 13-3867424
(STATE OR OTHER JURISDICTION (I.R.S. EMPLOYER
OF INCORPORATION) IDENTIFICATION NO.)
</TABLE>

600 THIRD AVENUE
NEW YORK, NEW YORK 10016
(212) 697-1105
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
------------------------

ERIC J. ZAHLER, ESQ.

600 THIRD AVENUE
NEW YORK, NEW YORK 10016
(212) 697-1105
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
WITH COPIES TO:

<TABLE>
<S> <C>
BRUCE R. KRAUS, ESQ. ROBERT ROSENMAN, ESQ.
WILLKIE FARR & GALLAGHER CRAVATH, SWAINE & MOORE
ONE CITICORP CENTER WORLDWIDE PLAZA
153 EAST 53RD STREET 825 EIGHTH AVENUE
NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10079
(212) 821-8000 (212) 474-1000
</TABLE>

------------------------
APPROXIMATE DATE OF THE COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As
soon as practicable after the effective date of this Registration Statement as
determined by market conditions.
If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box: [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering: [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering: [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box: [ ]
CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
===========================================================================================================================
PROPOSED MAXIMUM PROPOSE MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED(1) PER SHARE(2) PRICE(2) REGISTRATION FEE(2)
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Shares, $0.01 par value........ 18,400,000 $30.5625 $562,350,000 $165,894
===========================================================================================================================
</TABLE>

(1) Includes shares subject to over-allotment option.

(2) Estimated solely for purposes of calculating the registration fee pursuant
to Rule 457(c), based upon the high and low sales prices of the Common
Shares quoted on the New York Stock Exchange on April 27, 1998.
------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON
SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(a) MAY DETERMINE.

================================================================================
<PAGE> 2

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

Subject to Completion, dated April 27, 1998
PROSPECTUS
, 1998
16,000,000 Shares

[LORAL SPACE & COMMUNICATIONS LTD. LOGO]
Common Stock
------------------------

All the common shares, par value $.01 per share (the "Common Stock"),
offered hereby are being offered by Loral Space & Communications Ltd., a Bermuda
company ("Loral" or the "Company"). Of the 16,000,000 shares of Common Stock
offered, 12,800,000 shares are being offered initially in the United States and
Canada in a United States offering (the "U.S. Offering") by the U.S.
Underwriters and 3,200,000 shares are being offered outside the United States
and Canada in a concurrent offering (the "International Offering") by the
International Managers (together with the U.S. Underwriters, the
"Underwriters"). These offerings are collectively referred to herein as the
"Offering."

The Common Stock is traded on the New York Stock Exchange ("NYSE") under
the symbol "LOR". On April 24, 1998, the last reported sale price of the Common
Stock was $31 1/8 per share. See "Price Range of Common Stock."

THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 9.
------------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
=======================================================================================================================
UNDERWRITING DISCOUNTS PROCEEDS TO THE
PRICE TO PUBLIC AND COMMISSIONS(1) COMPANY(2)
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share...................... $ $ $
- -----------------------------------------------------------------------------------------------------------------------
Total(3)....................... $ $ $
=======================================================================================================================
</TABLE>

(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $ .

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an aggregate of 2,400,000 additional shares of Common Stock on the same
terms and conditions as set forth herein solely to cover over-allotments, if
any. If such option were exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to the Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------------

The shares of Common Stock offered by this Prospectus are offered by the
U.S. Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
U.S. Underwriters and to certain further conditions. It is expected that
delivery of the shares of Common Stock will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about May , 1998.
------------------------
LEHMAN BROTHERS
BEAR, STEARNS & CO. INC.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

BANCAMERICA ROBERTSON STEPHENS CIBC OPPENHEIMER
C.E. UNTERBERG, TOWBIN NATIONSBANC MONTGOMERY SECURITIES LLC
<PAGE> 3

Subject to Completion, dated April 27, 1998
PROSPECTUS
, 1998
16,000,000 Shares

[LORAL SPACE & COMMUNICATIONS LTD. LOGO]
Common Stock
------------------------

All the common shares, par value $.01 per share (the "Common Stock"),
offered hereby are being offered by Loral Space & Communications Ltd., a Bermuda
company ("Loral" or the "Company"). Of the 16,000,000 shares of Common Stock
offered, 3,200,000 shares are being offered initially outside the United States
and Canada in an international offering (the "International Offering") by the
International Managers and 12,800,000 shares are being offered inside the United
States and Canada in a concurrent offering (the "U.S. Offering") by the U.S.
Underwriters (together with the International Managers, the "Underwriters").
These offerings are collectively referred to herein as the "Offering."

The Common Stock is traded on the New York Stock Exchange ("NYSE") under
the symbol "LOR". On April 24, 1998 the last reported sale price of the Common
Stock was $31 1/8 per share. See "Price Range of Common Stock."

THE SHARES OF COMMON STOCK OFFERED HEREBY INVOLVE A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" COMMENCING ON PAGE 9.
------------------------

(1) The Company has agreed to indemnify the several Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."

(2) Before deducting expenses payable by the Company estimated at $ .

(3) The Company has granted to the Underwriters a 30-day option to purchase up
to an aggregate of 2,400,000 additional shares of Common Stock at the same
terms and conditions as set forth herein solely to cover over-allotments, if
any. If such option were exercised in full, the total Price to Public,
Underwriting Discounts and Commissions and Proceeds to the Company will be
$ , $ and $ , respectively. See "Underwriting."
------------------------

The shares of Common Stock offered by this Prospectus are offered by the
International Managers subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
International Managers and to certain further conditions. It is expected that
delivery of the shares of Common Stock will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about May , 1998.
------------------------

LEHMAN BROTHERS
BEAR, STEARNS INTERNATIONAL LIMITED

DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL

BANCAMERICA ROBERTSON STEPHENS CIBC WOOD GUNDY OPPENHEIMER
C.E. UNTERBERG, TOWBIN NATIONSBANC MONTGOMERY SECURITIES LLC
<PAGE> 4

[GRAPHIC SHOWING: ORBITAL SLOTS HELD BY LORAL
AND ITS AFFILIATES; GLOBALSTAR CONSTELLATION; SERVICES, NETWORK,
AND HARDWARE AND TECHNOLOGY OF LORAL AND ITS AFFILIATES]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SUCH
TRANSACTIONS MAY INCLUDE THE PURCHASE OF COMMON STOCK FOLLOWING THE PRICING OF
THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON STOCK OR FOR THE
PURPOSE OF MAINTAINING THE PRICE OF THE COMMON STOCK, AND THE IMPOSITION OF
PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES RELATING TO THIS OFFERING,
SEE "UNDERWRITING."
i
<PAGE> 5

AVAILABLE INFORMATION

Loral, its subsidiary Loral Orion Network Systems, Inc. ("Orion"), and its
affiliates, Globalstar Telecommunications Limited ("GTL") and Globalstar, L.P.
("Globalstar"), are subject to the informational requirements of the Securities
Exchange Act of 1934 (the "Exchange Act") and in accordance therewith file
reports, proxy statements or other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements and other
information may be inspected and copied at public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549;
Seven World Trade Center, 13th Floor, New York, New York 10048; and Citicorp
Center, 500 West Madison Street, Chicago, Illinois 60661. Copies of such
material can be obtained from the Public Reference Section of the Commission,
Washington, D.C. 20549 at prescribed rates. The Commission maintains a Web site
at http://www.sec.gov that contains reports, proxy and information statements
and other information regarding Loral, Orion, GTL and Globalstar. The Common
Stock is listed on the NYSE, and any reports, proxy and information statements
and other information filed under the Exchange Act may also be inspected and
copied at the offices of the New York Stock Exchange, 120 Broad Street, New
York, New York 10005.

Loral has filed with the Commission a Registration Statement on Form S-3
(together with all exhibits and amendments, the "Registration Statement") under
the Securities Act, with respect to the Common Stock. This Prospectus does not
contain all of the information set forth in the Registration Statement and the
exhibits and schedules thereto, certain portions of which are omitted as
permitted by the rules and regulations of the Commission. For further
information with respect to Loral and the Common Stock, reference is made to the
Registration Statement, including the exhibits and schedules. The Registration
Statement may be inspected, without charge, at the Commission's principal office
at 450 Fifth Street, NW, Washington, D.C. 20549, and also at the regional
offices of the Commission listed above. Copies of such material may also be
obtained from the Commission upon the payment of prescribed rates. Statements
contained in the Prospectus as to any contracts, agreements or other documents
filed as an exhibit to the Registration Statement are not necessarily complete,
and in each instance reference is hereby made to the copy of such contract,
agreement or other document filed as an exhibit to the Registration Statement
for a full statement of the provisions thereof, and each such statement in the
Prospectus is qualified in all respects by such reference.

FORWARD-LOOKING STATEMENTS

The statements contained in this Prospectus that are not historical facts
are "forward looking statements" within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act, which can be identified by
the use of forward-looking terminology such as "believes," "expects," "may,"
"will," "should," or "anticipates" or the negative thereof or other variations
thereon or comparable terminology, or by discussions of strategy that involve
risks and uncertainties. The Company's actual results, performance or
achievements could differ materially from the results expressed in, or implied
by, these forward-looking statements. Potential risks and uncertainties that
could affect the Company's future operating results include, without limitation:
uncertainties regarding implementation of the Company's business strategies;
technological risks; changes in the regulatory environment affecting the
Company; and actions of the Company's competitors and other factors set forth
under "Risk Factors."

ii
<PAGE> 6

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by the detailed
information and financial statements and the notes thereto included elsewhere or
incorporated by reference in this Prospectus. As used herein, the terms
"Company" and "Loral" refer to Loral Space & Communications Ltd. and its wholly
owned subsidiaries and, as the context requires, its operating affiliates and,
with respect to events occurring before April 23, 1996, to the space and
communications operations of Loral Corporation, a New York corporation ("Old
Loral"), that were contributed to the Company at that time, prior to the
distribution of the Company's shares to Old Loral stockholders. Loral's wholly
owned subsidiaries include Loral SpaceCom Corporation (which operates the Loral
Skynet ("Skynet") business as a division), Space Systems/Loral, Inc. ("SS/L"),
and Loral Orion Network Systems, Inc. ("Orion"); Loral's operating affiliates
include Globalstar, L.P. ("Globalstar"), Satelites Mexicanos, S.A. de C.V.
("SatMex") and CyberStar, L.P. ("CyberStar").

THE COMPANY

Loral is one of the world's leading satellite communications companies,
with substantial interests in the design, manufacture and operation of
geosynchronous ("GEO") and low-earth-orbit ("LEO") satellite systems. Since its
formation in 1996, Loral has assembled the building blocks essential to the
creation of a seamless, global networking capability for the information age.

Loral's principal businesses are: (i) providing GEO satellite services
through the activities of Skynet, Orion, SatMex and the proposed Europe*Star
joint venture (collectively, the "Skynet Global Alliance"), (ii) providing
worldwide wireless telephony and data communications through the Globalstar(TM)
System, which is expected to commence operations in early 1999, (iii) designing
and manufacturing satellites and space systems for a broad variety of customers
through SS/L, and (iv) delivering worldwide high-speed broadband data
communications through CyberStar, which plans to offer business and home users
worldwide a variety of low-cost, interactive multimedia communications services
via high-speed digital signals, which is expected to commence operations in the
second half of 1998.

Loral's strategy is to capitalize on its innovative capabilities, market
position and advanced technologies to offer value-added satellite-based services
as part of the evolving worldwide communications networks and, where
appropriate, to form strategic alliances with major telecommunications service
providers and equipment manufacturers to enhance and expand its satellite
communications service opportunities. Loral believes that demand for
satellite-based communications services will continue to grow beyond the limits
of the terrestrial infrastructure due to accelerating demand for high speed data
services, growing demand for Internet and intranet services, especially outside
the United States, increased size and scope of television programming
distribution, worldwide deregulation of telecommunications markets and
continuing technological advancement.

Following its acquisition of the Skynet business from AT&T in March 1997,
Loral has rapidly established itself through a series of subsequent acquisitions
and joint venture transactions as one of the world's leading providers of GEO
satellite-based services. Through its acquisitions of Skynet and Orion, its 49%
interest in SatMex, the joint venture that recently acquired the dominant
provider of Mexican fixed satellite services ("FSS"), and its proposed
Europe*Star joint venture with a subsidiary of Alcatel Alsthom, S.A.
("Alcatel"), Loral can offer its customers an integrated portfolio of satellite
capacity that provides "one stop shopping" for local, regional and global GEO
satellite services. The Skynet Global Alliance currently has seven satellites in
service providing a total of 138 C-band and 156 Ku-band 36MHz
transponder-equivalents. The Skynet Global Alliance expects to launch five
additional satellites in the next 18 months, which, together with its existing
satellites, will provide a total of 226 C-band and 357 Ku-band 36MHz
transponder-equivalents, and will have a footprint covering almost all of the
world's population. Customers include the ABC and Fox television networks in the
United States, Telmex, Bancomer, Pemex and Cemex in Mexico and Viacom, Siemens,
Asea Brown Boveri and Telecom Denmark in Europe.

The Globalstar System has been designed to enable local service providers
to offer low-cost, high quality wireless voice telephony and data services in
virtually every populated area of the world. The Globalstar System has launched
eight of the 56 satellites (including eight in-orbit spares) that will complete
its full

1
<PAGE> 7

constellation and is scheduled to commence service in early 1999. Globalstar's
designated service providers (including Loral, which, together with other
strategic partners, will act as the Globalstar service provider in Canada,
Mexico and Brazil) have agreed to offer Globalstar service and seek to obtain
all necessary local regulatory approvals in 116 nations, accounting for
approximately 88% of the world's population. See "Business-Globalstar."
Globalstar's local service providers have already obtained some or all of the
national regulatory approvals they will need to obtain in 28 nations, including
China, the United States, Russia, Indonesia, Saudi Arabia and Ukraine. Loral is
the managing general partner of Globalstar, and has announced plans to increase
its fully diluted ownership therein from approximately 38% to up to 42%. See
"Recent Developments -- The Globalstar Offer."

SS/L is a worldwide leader in the design, manufacture and integration of
satellites used in space-based applications. SS/L draws on its 40-year history,
during which satellites manufactured by SS/L have achieved more than 630 years
of cumulative on-orbit experience. SS/L also provides Loral with visibility into
emerging and new satellite-based technologies and applications, the latest of
which is CyberStar, a satellite-based service supporting high speed broadband
data communications. SS/L satellites support telecommunications, weather
forecasting and direct broadcast applications. SS/L is the leading supplier of
satellites to Intelsat, an international consortium of 135 member nations which
is currently the world's largest operator of commercial communications
satellites. Other significant SS/L customers include News Corp., TCI, PanAmSat,
Chinasat, Globalstar, Skynet and CD Radio.

Loral is developing CyberStar, a worldwide high-speed broadband data
communications system, which is expected to commence commercial operations in
the second half of 1998. CyberStar will leverage satellites, terrestrial
networks and a sophisticated network operations center to deliver information
securely and reliably at speeds of up to 27 Mbps to multiple locations
simultaneously, using an Internet protocol multicasting technique. CyberStar
plans to offer business and home users worldwide a variety of low-cost,
interactive multimedia communications services via high speed digital signals.
CyberStar's satellite-based services will include high-speed Internet access,
data broadcasting, broadband interconnection, intranet multicasting, real-time
streaming and other data services. CyberStar service will be delivered to
consumers, businesses and private networks worldwide through a network of local
and regional service providers.

RECENT DEVELOPMENTS--THE GLOBALSTAR OFFER

Loral has made an offer to purchase 30% of the Globalstar limited
partnership interests (i.e., 4.2 million partnership interests in the aggregate
corresponding to 8.4 million shares of GTL common stock) held by the founding
strategic partners of Globalstar for $420 million in cash (the "Globalstar
Offer"), or the equivalent of $50 per share of GTL common stock. Strategic
partners who accept the offer will be required to reinvest one half of their
proceeds (up to $210 million in the aggregate) in the Globalstar System by
establishing an escrow account to be used solely for the purchase of Globalstar
gateways and user terminals. Loral will use up to $175 million of Offering
proceeds to finance the Globalstar Offer and the remaining balance of up to $245
million will be provided through the concurrent, pro rata sale by Loral of up to
4.2 million shares of GTL common stock (the "Soros Investment") that Loral
currently owns to persons or entities advised by or associated with Soros Fund
Management L.L.C. ("Soros"). If the Globalstar Offer is accepted only in part,
the portion of the proceeds of the Offering used for the Globalstar Offer, and
the Soros Investment, will be reduced proportionately. See "Use of Proceeds."

If the Globalstar Offer is fully subscribed, Loral's fully diluted
ownership in Globalstar will increase from approximately 38% to 42%, after
giving effect to the Soros Investment. Soros will acquire from Loral, in lieu of
Globalstar limited partnership interests, shares of GTL common stock, which are
restricted for U.S. securities law purposes, and for which GTL has agreed to
file a shelf registration statement and have such registration statement
declared effective within one year. Accordingly, Soros has agreed to pay a
premium to Loral of $8.333 per share of GTL common stock over the price paid by
Loral in the Globalstar Offer.

2
<PAGE> 8

THE OFFERING

<TABLE>
<S> <C>
Common Stock offered by the Company(1):
U.S. Offering........................ 12,800,000 shares
International Offering............... 3,200,000 shares
-----------
Total............................. 16,000,000 shares
===========
Common Stock outstanding:
prior to the Offering(2)............. 219,214,692 shares
after the Offering(2)................ 235,214,692 shares
Use of Proceeds........................ The net proceeds of the Offering (at an assumed
public offering price of $31 1/8 per share based
upon the last reported sale price of the Common
Stock on April 24, 1998 and after deducting the
underwriting discounts and commissions and estimated
offering expenses) are estimated to be approximately
$484 million, of which Loral will use up to $175
million to fund the Globalstar Offer and the
remainder for investment in its core businesses and
to pursue emerging satellite service opportunities
worldwide. See "Recent Developments -- The
Globalstar Offer."
NYSE symbol............................ LOR
</TABLE>

- ------------------------------
(1) Excludes 2,400,000 shares of Common Stock issuable upon exercise of the
Underwriters' overallotment option.

(2) Excludes 83,170,570 shares issuable upon conversion of Series A Preferred
Stock and Series C Preferred Stock and options outstanding under the
Company's option plans to purchase 10,003,640 shares of Common Stock. All
share information in this table is based on the number of shares of Common
Stock outstanding as of March 31, 1998.

3
<PAGE> 9

LORAL SPACE & COMMUNICATIONS LTD CORPORATE STRUCTURE

[CHART DEPICTING LORAL CORPORATE STRUCTURE]

The Company was organized on January 12, 1996 as a Bermuda company and has
its registered and principal executive offices at Cedar House, 41 Cedar Avenue,
Hamilton HM12, Bermuda. The executive office of Loral SpaceCom Corporation, the
subsidiary that supervises the activities of the subsidiaries of the Company in
North America, is located at 600 Third Avenue, New York, New York 10016 and its
telephone number is (212) 697-1105.

4
<PAGE> 10

SUMMARY HISTORICAL FINANCIAL INFORMATION

The following summary historical financial information of Loral, SS/L and
Globalstar has been derived from, and should be read in conjunction with, the
related financial statements and other financial information presented in
Loral's Annual Report on Form 10-K for the year ended December 31, 1997, which
report is incorporated herein by reference. Historical financial information as
of and for the three years in the period ended March 31, 1996, represents the
space and communications operations of Old Loral. In 1997, Loral increased its
ownership in SS/L to 100% and, accordingly, the 1997 financial information
includes the results of SS/L. In prior years SS/L was accounted for using the
equity method. At December 31, 1997, Loral had a 38% fully diluted interest in
Globalstar, and accounted for its investment using the equity method. On March
14, 1997 Loral acquired Skynet from AT&T; Loral's financial information includes
the results of Skynet from that date. On November 17, 1997, Loral acquired a 49%
interest in SatMex, which is accounted for using the equity method. Loral's
acquisition of Orion was accounted for as a purchase and was completed on March
20, 1998 and, accordingly, Loral's historical financial information does not
include the results of Orion.

LORAL SPACE & COMMUNICATIONS LTD.
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
NINE MONTHS YEAR ENDED MARCH 31,(1)
YEAR ENDED ENDED ------------------------------
DECEMBER 31, 1997 DECEMBER 31, 1996 1996 1995 1994
----------------- ----------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues......................................... $1,312,591
Management fee from affiliate.................... $ 5,088 $ 5,608 $ 3,169 $ 2,981
Operating income (loss).......................... 13,552 (12,201) 2,587 (33) 398
Equity in net income (loss) of affiliates(2)..... (47,273) (4,709) (8,628) (8,988) 1,174
Net income (loss)................................ 40,004 8,877 (13,785) (7,873) (3,694)
Preferred dividends and accretion(3)............. (26,315)
Net income (loss) applicable to common
shareholders................................... 13,689 8,877 (13,785) (7,873) (3,694)
Earnings (loss) per share -- basic and diluted... .06 .04 (.08) N/A N/A
CASH FLOW DATA:
Used in operating activities..................... $ 230,248 $ 3,003 $ 1,319 $ 8,439 $ 587
Used in investing activities..................... 1,022,772 1,962 115,031 92,055 25,288
Provided by (used in) equity transactions........ (18,097) 602,413 116,362 100,494 25,875
Provided by financing transactions............... 316,912 583,292
Dividends paid per common share.................. N/A N/A N/A
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,(1)
------------------------------------- ------------------------------
1997 1996 1996 1995 1994
----------------- ----------------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents........................ $ 226,547 $1,180,752 $ 12
Total assets..................................... 3,004,936 1,699,326 354,396 $251,819 $163,479
Convertible preferred obligations(3)............. 583,292
Debt............................................. 435,398
Non-current liabilities.......................... 179,482 26,834
Shareholders' equity(4)/Invested equity.......... 1,973,245 1,070,069 354,396 251,819 159,198
</TABLE>

- ------------------------------
(1) Financial information as of and for the three years in the period ended
March 31, 1996 represents the space and communications operations of Old
Loral. The results of operations for the three years in the period ended
March 31, 1996 include allocations and estimates of certain expenses of
Loral based upon estimates of actual services performed by Old Loral on
behalf of Loral. Interest expense was allocated to Loral based on Old
Loral's historical weighted average interest rate applied to the average
investment in affiliates.

(2) The Company's affiliates are Globalstar and, since November 17, 1997,
SatMex. Loral sold its interest in K&F Industries, Inc. in 1997.

(3) Convertible preferred obligations were exchanged for 6% Series C Preferred
Stock and were reclassified to shareholders' equity in 1997 upon approval by
the Company's shareholders.

(4) As of December 31, 1997, the book value per share of the Series A Preferred
Stock and the common stock (which the Company is required to disclose herein
in accordance with applicable Bermuda law) was $4.98 and $4.97,
respectively. Book value per share represents the quotient obtained by
dividing shareholders' equity, reduced by the Series C Preferred Stock
redemption value, by the number of outstanding shares of common stock,
giving effect to the conversion of the Series A Preferred Stock, plus, in
the case of such preferred stock, the $.01 liquidation preference thereof.

5
<PAGE> 11

SPACE SYSTEMS/LORAL, INC.(1)
(IN THOUSANDS)

<TABLE>
<CAPTION>
NINE MONTHS
ENDED YEAR ENDED MARCH 31,
DECEMBER 31, --------------------------------------------------------
1996 1996 1995 1994
------------------ ------------------ --------------- ---------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................... $1,017,653 $1,121,619 $633,717 $596,267
Gross profit............................... 64,157 34,406 27,785 24,964
Net income................................. 31,025 12,367 5,554 3,591
</TABLE>

<TABLE>
<CAPTION>
MARCH 31,
DECEMBER 31, --------------------------------------------------------
1996 1996 1995 1994
------------------ ------------------ --------------- ---------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents.................. $ 19,181 $ 126,863 $ 52,222 $ 26,578
Total assets............................... 1,059,064 908,677 766,475 743,016
Long-term debt............................. 127,586 65,052 34,040 92,249
Shareholders' equity....................... 478,893 447,868 435,501 429,947
</TABLE>

- ---------------
(1) Prior to consolidation in Loral's consolidated financial statements for
1997.

GLOBALSTAR, L.P.
(IN THOUSANDS)

<TABLE>
<CAPTION>
CUMULATIVE
MARCH 23, 1994 MARCH 23
(COMMENCEMENT (COMMENCEMENT
OF OPERATIONS) TO YEAR ENDED DECEMBER 31, OF OPERATIONS) TO
DECEMBER 31, ------------------------------ DECEMBER 31,
1997 1997 1996 1995 1994
----------------- -------- -------- -------- -----------------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................... $ -- $ -- $ -- $ -- $ --
Operating loss.................... 257,349 88,071 61,025 80,226 28,027
Net loss applicable to ordinary
partnership interests.......... 255,238 88,788 71,969 68,237 26,244
</TABLE>

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------------------
1997 1996 1995 1994
---------- -------- -------- --------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents......................... $ 464,154 $ 21,180 $ 71,602 $ 73,560
Total assets...................................... 2,149,053 942,913 505,391 151,271
Vendor financing liability........................ 197,723 130,694 42,219
Debt.............................................. 1,099,531 96,000
Redeemable preferred partnership interests(1)..... 303,089 302,037
Ordinary partners' capital(1)..................... 380,828 315,186 386,838 112,944
</TABLE>

- ---------------
(1) GTL called for the redemption on April 30, 1998, of all its outstanding
6 1/2% Convertible Preferred Equivalent Obligations due 2006 (the "CPEOs").
GTL expects that all or substantially all of the CPEOs will be converted
before the redemption date into GTL common stock at a conversion price of
$30.81 per share which will result in the conversion of the redeemable
preferred partnership interests into ordinary partnership interests.

6
<PAGE> 12

LORAL ORION NETWORK SYSTEMS, INC.
(IN THOUSANDS)

On March 20, 1998, Loral acquired all of the outstanding stock of Orion in
exchange for Loral Common Stock. Loral issued 17.9 million shares of its Common
Stock and assumed existing Orion options and warrants to purchase 1.9 million
shares of Loral Common Stock, representing an aggregate purchase price of $467
million. Loral will include Orion's results from the date of acquisition using
the purchase method of accounting. The following summary historical financial
information of Orion has been derived from, and should be read in conjunction
with, the related consolidated financial statements of Orion included in Loral's
Current Report on Form 8-K filed April 6, 1998, which is incorporated herein by
reference.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------
PRO FORMA
1997(1) 1997 1996 1995
--------- --------- -------- --------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $ 72,741 $ 72,741 $ 41,847 $ 22,284
Operating loss............................................ 43,498 43,081 36,353 46,831
Interest expense.......................................... 83,769 89,432 27,764 24,738
Net loss.................................................. 105,740 108,099 27,195 26,915
BALANCE SHEET DATA: DECEMBER 31,
Cash and cash equivalents................................. $ 70,009 $ 32,187
Restricted and segregated cash and cash equivalents....... 356,890 10,000
Total assets.............................................. 896,492 358,264
Long-term debt (less current portion)(2).................. 790,671 218,237
Limited partners' interest in Orion Atlantic.............. -- 10,130
Redeemable preferred stock(2)............................. 76,734 20,902
Total stockholders' deficit............................... (46,849) (436)
</TABLE>

- ---------------
(1) Adjusted to reflect the pro forma effects of certain Orion financings which
are discussed in more detail in Note 4 to the Unaudited Pro Forma Condensed
Consolidated Financial Statements for the year ended December 31, 1997,
included in Loral's Current Report on Form 8-K/A filed April 27, 1998, which
is incorporated herein by reference.

(2) In connection with the acquisition of Orion by Loral on March 20, 1998, $50
million of outstanding long-term debt and all outstanding redeemable
preferred stock were converted into common stock.

7
<PAGE> 13

UNAUDITED PRO FORMA FINANCIAL INFORMATION

(IN THOUSANDS, EXCEPT PER SHARE DATA)

The following unaudited pro forma statement of operations data reflects, on
a pro forma basis, the effects of (i) the increase in Loral's ownership of SS/L
to 100%, (ii) its acquisition of Skynet on March 14, 1997, (iii) its acquisition
of a 49% interest in SatMex on November 17, 1997 and (iv) its acquisition of
Orion on March 20, 1998 as if such transactions had occurred on January 1, 1997.
Such unaudited pro forma statement of operations data may not be indicative of
the results that actually would have occurred if the acquisitions had taken
place on January 1, 1997, or future results. The unaudited pro forma balance
sheet data reflects, on a pro forma basis, the effect of the Orion acquisition
as if it had occurred on December 31, 1997. This unaudited pro forma information
has been derived from and should be read in conjunction with the unaudited pro
forma condensed consolidated financial statements and related footnotes set
forth in Loral's Current Report on Form 8-K/A filed April 27, 1998 incorporated
by reference herein.

In addition, the unaudited pro forma as adjusted balance sheet data
presents the effects of the Offering, the Globalstar Offer, and the Soros
Investment, as if such transactions had occurred as of December 31, 1997.

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------
LORAL
ACTUAL PRO FORMA
------------ ------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $1,312,591 $1,378,441
Operating income (loss)................................... 13,552 (42,867)
Equity in net income (loss) of affiliates(1).............. (47,273) (60,628)
Net income (loss)(1)...................................... 40,004 (59,571)
Preferred dividends and accretion......................... (26,315) (26,315)
Net income (loss) applicable to common shareholders(1).... 13,689 (85,886)
Earnings (loss) per common share -- basic and
diluted(1)............................................. .06 (.32)
</TABLE>

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------
LORAL PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
---------- ---------- -----------
<S> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 226,547 $ 296,556 $ 605,556
Restricted and segregated cash and cash
equivalents....................................... -- 356,890 356,890
Total assets......................................... 3,004,936 4,389,009 4,908,009
Debt................................................. 435,398 1,331,075 1,331,075
Non-current liabilities.............................. 179,482 149,286 149,286
Shareholders' equity................................. 1,973,245 2,440,245 2,959,245
</TABLE>

- ---------------
(1) As a result of the Globalstar Offer and the Soros Investment, Loral's
ownership interest in Globalstar will increase approximately 4%, which would
have increased equity in net loss of affiliates and pro forma net loss by
$3.1 million (or $.01 per share) if it had occurred January 1, 1997.

8
<PAGE> 14

RISK FACTORS

Prospective investors should carefully consider the following risk factors,
in addition to the other information contained elsewhere in this Prospectus, in
evaluating whether to purchase the Common Stock. The following risk factors
relate to the Company and its operating affiliates, including Globalstar, SatMex
and CyberStar.

RISKS OF OPERATIONS IN THE SPACE ENVIRONMENT

Satellites operate in a distant, hostile environment. Despite costly
high-reliability parts and significant on-ground testing to assure reliability
for their design lives, satellites remain vulnerable to complete or partial
failure or degradation from hazards which include space debris, solar and other
astronomical events, acts of war and component failure. Repair of satellites in
space is not practicable. In addition, a number of factors affect the useful
lives of the Company's satellites, including the quality of construction,
expected gradual environmental degradation of solar panels and the durability of
component parts. Random failure of satellite components on occasion result in
damage to or loss of a satellite ("cold failures").

The first-generation Globalstar satellite constellation (including spares)
is designed to operate at full performance for a minimum of 7 1/2 years, after
which performance is expected gradually to decline. However, there can be no
assurance of the constellation's useful life. Globalstar anticipates using funds
from operations to develop a second generation of satellites. If sufficient
funds from operations are not available and Globalstar is unable to obtain
financing for a second-generation constellation, Globalstar will not be able to
replace its first-generation satellites at the end of their useful lives.

GEO satellites have design lives of up to 20 years. However, satellites
have in the past experienced and may in the future experience material
operational anomalies and failures. For example, in 1994 and 1997, Skynet
experienced the total losses of its Telstar 402 and Telstar 401 satellites,
respectively, resulting in lost service and a corresponding adverse effect on
Skynet's results of operations. In November 1995, an Orion 1 component
supporting nine transponders serving the European portion of Orion 1's footprint
experienced an anomaly that resulted in a service interruption lasting
approximately two hours. Full service was restored using redundant equipment,
but, if the currently operating component fails, Orion 1 would experience a
significant loss of usable capacity, resulting in lost service and a
corresponding adverse effect on Orion's results of operations. The SatMex
Solidaridad 1 satellite is operational but has experienced anomalies, including
the loss of command receiver redundancy, a microfracture of its propulsion
subsystem and space debris-induced degradation of its telemetry encoder units
that could shorten its operational life.

In 1997, two in-orbit satellites built by SS/L experienced solar array
circuit failures. One of the customers has asserted that, in light of the
failures and uncertainty as to further failures, it has not accepted the
satellite. Loral believes that the customer was contractually required to accept
the satellite at completion of in-orbit testing and that risk of loss has passed
to the customer. In addition, another customer has requested that SS/L structure
an arrangement whereby a satellite under construction would be sold to another
customer. Management believes that these matters will not have a material
adverse effect on the financial condition or results of operations of Loral.

Certain of SS/L's contracts provide that a portion of the total contract
price is payable in the form of "incentive" payments earned during the life of
the satellite in orbit as its mission is performed. Although SS/L generally
receives the present value of such incentive payments in the event of launch
failure or one caused by customer error, it forfeits such revenues if the loss
is caused by system failure or an error on its part. While insurance against
loss of such payments has been available in the past, its cost and availability
are subject to substantial fluctuations. In addition, SS/L is prohibited under
agreements with certain of its customers from insuring its orbital incentives.
Certain of SS/L's contracts call for on-orbit delivery, allocating launch risk
to SS/L. It is SS/L's intention to obtain insurance for that exposure. However,
SS/L cannot predict whether, and there can be no assurance that, insurance
against launch failure and loss of incentive payments will continue to be
available on reasonable terms.

9
<PAGE> 15

As a vertically integrated space communications company that both
manufactures and operates communications satellites, Loral is exposed to space
environment-related risks in both capacities, which may not be fully covered by
insurance, if insurance is available at all upon economically reasonable terms.

LAUNCH RISK AND VEHICLE ACCESS

About 15% of commercial satellite launches have historically resulted in
loss before the payload reaches its planned orbit ("hot failures"). While Loral
ordinarily obtains insurance against loss due to hot failures, such events can
nevertheless disrupt and delay business schedules and cause substantial
uninsured losses above and beyond the insured cost of the lost satellite.
Loral's ability to place satellites in orbit, and SS/L's ability to perform its
on-orbit delivery contracts depend on the availability of launch vehicles and
the requisite insurance. Launch slots are limited, and the launch insurance
market has been subject to considerable fluctuation. Different launch facilities
and vehicles have different success records, but Loral, for business or
scheduling reasons does not always use, or have available to it, the most
successful facilities and vehicles for its launches. The cost and availability
of launch insurance may vary, therefore, there is no assurance that such
insurance will shield every future loss. Moreover, the availability of launches
from the republics of the former Soviet Union and the People's Republic of China
are affected by U.S. government policies and international agreements. Changes
in governmental policies or political leadership in the United States, Russia,
Kazakhstan or China could adversely affect Loral's ability to launch from these
countries or materially increase the costs to it of doing so. See "-- Risks of
Conducting International Business."

RISKS RELATED TO GLOBALSTAR

The Globalstar System will consist of 56 satellites (including eight
in-orbit spares) in low earth orbit together with ground facilities in numerous
remote regions. Its operating facilities will be in more than 100 countries,
many of which are based on emerging economies, eventually connecting hundreds of
thousands of mobile and fixed telephone handsets. While Loral believes that each
component of the Globalstar System, and the Globalstar System as a whole, is
capable of performing as designed, no such complex, dispersed space/earth
communications network has ever been operated commercially. Until the Globalstar
System has operated as a whole in its actual space/earth environment, there can
be no assurance that losses due to delays, failures and unforeseen additional
costs will not occur. Globalstar's financial objectives are, in part, based on
estimates as to the potential market for Globalstar System services and the
price that users will be willing and able to pay, which cannot be practically
validated until commercial operations have begun. There can be no assurance that
such economic assumptions are justified.

Globalstar is scheduled to begin commercial operations in early 1999.
Successful commencement of operations will require successful implementation of
each of the elements of the Globalstar System -- space and ground segments,
digital communications technology, user terminal supply, service provider
arrangements and licensing. Globalstar will be dependent upon its service
providers in the various countries in which it will operate to obtain local
regulatory approvals, build gateways, distribute handsets and market Globalstar
service successfully to end users. Globalstar has launched eight satellites to
date, and expects to launch an additional 36 satellites during 1998 and 12
satellites, including eight in-orbit spares, in early 1999. However, there can
be no assurance that schedule delays will not occur and that the final cost of
implementing the Globalstar system will not be higher than anticipated.

Loral's equity in net loss attributable to its interest in Globalstar for
the year ended December 31, 1997, was $42.5 million as compared to $18.1 million
for the nine months ended December 31, 1996 (or $45.6 million and $19.9 million,
respectively, after giving pro forma effect to the Globalstar Offer and the
Soros Investment, assuming the Globalstar Offer is fully subscribed). Globalstar
is expending significant funds for the construction, testing and deployment of
the Globalstar System and such losses are expected to continue for several years
following commencement of revenue generating service operations.

10
<PAGE> 16

DEPENDENCE ON SS/L

Currently, SS/L generates a significant portion of Loral's revenue and
operating income. Loral intends to capitalize on SS/L's capabilities, market
position and advanced technologies to identify and develop additional
space-based communications services opportunities. There can be no assurance
that current or future satellite-based ventures entered into by Loral will
result in revenues or operating income that will materially reduce its
dependence on SS/L.

In connection with delayed payment in 1997 by two Asian customers for three
GEO satellites, SS/L stopped work, reduced backlog by $291 million, which will
reduce future sales, and recorded a charge of $23 million, representing the
excess of the amount of the applicable contract receivables over the net
realizable value of the associated inventory. If the current programs for these
three satellites are not restarted, the satellites are expected to be sold to
other customers. For the year ended December 31, 1997, sales by SS/L to foreign
customers, primarily in Asia, accounted for 30% of SS/L's revenues.

SS/L has historically derived a large portion of its total revenues from a
limited number of customers, and its revenues and operating results may be
adversely affected in the event completed or canceled contracts are not promptly
replaced.

The financial results of long-term fixed-price contracts are recognized
using the cost-to-cost percentage of completion method. Loral's statement of
operations reflects revisions in revenue and profit estimates in the period in
which the conditions that require the revision become known and can be
estimated. Adjustments for profits and losses may therefore have a material
effect on results for the period in question. The risks inherent in long-term,
fixed-price contracts include the forecasting of costs and schedules, contract
revenues related to contract performance (including revenues from orbital
payments) and the potential for component obsolescence in connection with
long-term procurements.

COMPETITION

Each of Loral's businesses is subject to intense competition from entities,
including several of the world's largest corporations (such as Hughes Space &
Communications, Inc., a subsidiary of General Motors Corporation, and Lockheed
Martin Corporation) as well as governments and quasi-governmental organizations
(such as Intelsat and Inmarsat), which are larger and which may bring greater
financial and operating resources to bear in competing as to marketing,
regulation and technology. Loral competes for customers and for local regulatory
approval in jurisdictions in which both Loral and a competing party may wish to
operate. In addition, Loral competes for allocation of scarce frequency
assignments and geosynchronous orbital slots. Competition comes not only from
entities carrying on or proposing to carry on the same activities as Loral (such
as PanAmSat Corporation, Iridium LLC and Teledesic Corporation), but from others
using alternative technologies such as terrestrial telecommunications and cable
television, which themselves are constantly pursuing advanced technologies in
order to enhance their competitive positions. To the extent that these entities
offer products and services which are more sophisticated, efficient or reliable
than those of Loral, there could be a material adverse effect on the financial
condition or results of operations of Loral.

COMPETITIVE BIDDING

SS/L generally obtains its contracts through competitive bidding. There can
be no assurance that SS/L will continue to be successful in having its bids
accepted or, if accepted, that awarded contracts will result in profitability
for SS/L. SS/L has in the past submitted bids which would result in minimal or
no profit due to a high level of non-recurring engineering costs. Such contracts
are generally bid with the expectation of more profitable follow-on contracts as
to which there is generally no advance assurance. To the extent that actual
costs exceed the projected costs on which bids or contract prices were based,
SS/L's profitability could be adversely affected.

11
<PAGE> 17

REGULATION

Loral's activities, particularly its satellite operations, are subject to
licensing and regulation by authorities in more than 100 jurisdictions,
including the United States, the International Telecommunication Union ("ITU")
and the European Union. Regulated activity includes the occupation of orbital
positions ("orbital slots"), the pricing and quality of services, the use of
frequency bands, competitive behavior, the export of space-related products and
services (which frequently require licenses from the Department of State or the
Department of Commerce), and other matters essential to conduct of the business.
The regulatory authorities, depending on the location, often have broad
discretion over such activities, including, frequently, the power to modify,
withdraw or impose charges or conditions upon, or delay the grant of, the rights
required for the conduct of the business. In particular, in determining whether
to grant Loral authorization, the FCC must evaluate whether certain FCC
standards and financial qualification requirements are met. Many of the licenses
Loral holds or has applied for have been contested by third parties, including
competitors, which increase the risk of regulatory decisions adverse to Loral.
In particular, certain of Loral's orbital slots are in positions that are
subject to prior claims of parties from other countries. While regulation is an
expected incident of international telecommunications business, and Loral
expects to obtain the rights and licenses which it requires under satisfactory
conditions, the broad reach of the Globalstar System, the expansion of Skynet's
operations beyond the domestic U.S. market, the expansion of SatMex's Latin
American presence, the international service offerings of Orion, the proposed
launch and operation of Orion 2 and Orion 3 and the development of other
satellite services businesses, by becoming subject to such a large number of
diverse regulatory regimes and political systems, entail unusual risks of
unforeseen costs, delays and other burdens on planned performance. In addition,
as part of the regulatory process for orbital slot allocation of its satellites,
Loral is required to engage in frequency coordination with other satellite
operators. Although Loral has in the past been able to coordinate its existing
satellites, there can be no assurance that satisfactory coordination will be
achieved in the future for any of Loral's satellites.

Orion has begun construction of Orion 2 and Orion 3 before completion of
the required consultations with Intelsat and Eutelsat, receipt of final
authority from the FCC (in the case of Orion 2) and completion of the ITU
coordination process. Failure to obtain one or more necessary approvals on time
would have an adverse effect on Orion's business or results of operations.

POTENTIAL CONFLICTS OF INTEREST; LACK OF FULL CONTROL

Although Loral is the managing general partner of Globalstar, its
management control over Globalstar is limited by the supermajority rights of
Globalstar's limited partners. Additionally, primary operational control of
SatMex is vested in Mexican nationals, as required by Mexican law, subject to
certain supermajority rights of Loral. The proposed Europe*Star joint venture
was initiated by Alcatel and will be under Alcatel's control, subject to
supermajority rights of Loral. Future Loral/Alcatel joint ventures within the
Skynet Global Alliance will be under the control of the initiating party,
subject to supermajority rights in favor of the non-initiating party. Alcatel is
an investor in CyberStar, and has supermajority rights therein. In addition,
although Orion is a wholly owned Loral subsidiary, its outstanding debt is
non-recourse to Loral, which could result in conflicting duties under certain
circumstances. As a result, the rights of third parties and fiduciary duties
under applicable law could result in such entities taking actions that are not
in Loral's own best interests or in refraining to take actions that Loral deems
advisable. To the extent that such entities are or become customers of SS/L,
such conflicts could become acute.

Both Skynet and Orion own or are building satellites whose footprints
overlap with present and proposed satellites of SatMex and Europe*Star and may,
therefore, compete directly with SatMex and Europe*Star for customers in some of
their markets. Although Skynet, SatMex and Orion have adopted (and Europe*Star
is expected to adopt) a marketing policy which will provide for cross-selling of
capacity, situations may arise where conflicts will remain. These conflicts will
become particularly acute if there is an oversupply of satellite transponder
capacity in the market.

12
<PAGE> 18

Partners and affiliates of Globalstar, including companies affiliated with
Loral, will be among Globalstar's service provider customers and may, therefore,
have conflicts with Globalstar and/or Loral as to service provider agreements.

LEVERAGE AT SUBSIDIARY AND AFFILIATE LEVELS

Loral's core businesses are capital-intensive and generally require
substantial investment before anticipated returns on investment can be realized.
Moreover, Loral is subject to substantial financial risks in the face of
possible delays or reductions in revenue realization, unforeseen capital
requirements or unanticipated expenses attributable to the factors described in
this Prospectus. Such risks could result not only in adverse financial results
due to ongoing debt service charges, but also in the necessity for additional
financing, which could result in increased debt and debt service costs,
potential dilution of equity interests resulting from issuances of debt or
equity, rights to distributions senior to those of the holders of the Common
Stock and covenants restricting distributions to holders of the Common Stock.

Although Loral Space & Communications Ltd. has no material indebtedness for
borrowed money, and has not (except as noted below with respect to the SatMex
government obligation and a portion of Globalstar's bank debt) guaranteed or
otherwise assumed responsibility for the obligations of its subsidiaries and
operating affiliates, some of those entities are highly leveraged, and the
instruments and agreements evidencing such debt severely limit their ability to
pay dividends or make other distributions to their respective corporate parent.
Any material and continuing failure on the part of such subsidiaries or
affiliates to meet the obligations in respect of outstanding indebtedness could
result in Loral Space & Communications Ltd.'s being required to make additional
investments therein or risk the partial or total loss of its equity investments
therein and control thereof.

As of December 31, 1997, $435 million was outstanding under an $850 million
credit facility provided to Loral SpaceCom Corporation by a group of banks. At
December 31, 1997, Loral had a consolidated ratio of earnings to fixed charges
of 1.9:1. In addition, Loral had outstanding at December 31, 1997, Series C
Convertible Redeemable Preferred Stock having a redemption value of $746
million, which may be payable at Loral's option in cash, Common Stock, or a
combination thereof. Giving pro forma effect to the Orion acquisition, Loral
would have had $1.3 billion in consolidated debt on December 31, 1997.

A significant portion of the SatMex purchase price was financed with debt,
including a $125.1 million obligation to the Mexican government. Loral and
Telefonica Autrey have agreed to maintain assets in a collateral trust in an
amount equal to the value of the government obligation through December 30, 2000
and, thereafter, in an amount equal to 1.2 times the principal amount of the
government obligation until maturity.

Globalstar is still in the development stage. At December 31, 1997,
Globalstar had outstanding long-term indebtedness of $1.1 billion and expects to
incur additional indebtedness in 1998. Loral is contingently liable with respect
to approximately $68 million of Globalstar's $250 million revolving line of
credit, which is undrawn as of the date hereof.

On April 17, 1998, Orion made an offer to purchase its $445 million
principal amount of senior notes due 2007 (the "Senior Notes") and $484 million
principal amount of senior discount notes due 2007 (the "Senior Discount
Notes"), which senior discount notes had a projected accreted value of
approximately $311,555,640 as of May 27, 1998. This offer to purchase was made
pursuant to the terms of Orion's governing indentures, which required Orion to
make an offer to noteholders to repurchase the notes within 30 days of the
occurrence of a change of control. A change of control occurred on March 20,
1998 when Orion was merged with a subsidiary of Loral.

The offer to purchase is being made at 101% of the Senior Notes and 101% of
the accreted value of the Senior Discount Notes. On April 14, 1998, the prices
of the Senior Notes and the Senior Discount Notes were trading at a premium of
14.75% over par and 22.1% over accreted value, respectively. Accordingly, Loral
does not expect the holders of the notes to tender into the offer.

13
<PAGE> 19

OBSOLESCENCE DUE TO RAPID TECHNOLOGICAL CHANGE

Like other high technology enterprises, Loral's businesses are subject to
obsolescence due to new technological developments. The rapid pace of
technological change exposes Loral to risk of loss due to the deployment of
superior technologies by competitors. Loral is also dependent upon technologies
developed by third parties to implement key aspects of its strategy to integrate
its satellite systems with terrestrial networks. As land-based
telecommunications services expand, demand for certain types of satellite-based
services may be reduced. New technology used by competitors could render
satellite-based services less competitive by satisfying consumer demand in
alternative ways or through the use of incompatible telecommunications
standards. In addition, SS/L's success depends on its ability to introduce
innovative new products and services on a cost-effective and timely basis.

RISKS OF CONDUCTING INTERNATIONAL BUSINESS

Operations in numerous countries outside the United States carry
substantial managerial, operational, legal and political uncertainties apart
from the technical risks of initiating a previously untried telecommunications
system. Such operations are subject to changes in government regulations and
telecommunications standards, tariffs or taxes and other trade barriers. In
addition, Loral's agreements relating to local operations may be enforceable
only in foreign jurisdictions so that it may be difficult for Loral to enforce
its rights. Also, limited availability of U.S. currency in local markets may
prevent a service provider from making payments in U.S. dollars and exchange
rate fluctuations may adversely affect Globalstar's, SatMex's and Orion's
revenues.

Various agencies and departments of the U.S. government regulate the
ability of Loral to pursue business opportunities outside the United States.
Exports of space-related products, services and technical information frequently
require licenses granted by the U.S. government. There is no assurance that
Loral or SS/L will be able to obtain necessary licenses or approvals, and the
inability to do so, or a failure to comply with the terms thereof when granted,
could have a material adverse effect on their respective businesses. The Company
is aware of a grand jury investigation being conducted by the office of the U.S.
Attorney for the District of Columbia with respect to possible violations of
U.S. export control laws that may have occurred in connection with SS/L
personnel's participation, along with representatives of another U.S. satellite
manufacturer and operator, in a committee that reviewed an investigation by
Chinese authorities of the failure of a Chinese launch vehicle that destroyed an
SS/L-made satellite in 1996. The Company has received and complied with
subpoenas issued in connection with this matter, and, based upon its own
internal review of the facts, does not believe that it has violated the U.S.
export control laws or the regulations promulgated thereunder, and, therefore,
does not anticipate any material adverse effect on its business as a result of
the government investigation.

YEAR 2000 ISSUE

The Company is evaluating the potential effect on its information
processing systems to determine what actions will be necessary or appropriate in
connection with the "Year 2000 Issue." The Year 2000 Issue is the result of
computer programs which were written using two digits rather than four to
signify a year (i.e., the year 1997 is denoted "97" and not "1997"). Computer
programs written using only two digits may recognize the year 2000 as the year
1900. This could result in a system failure or miscalculations causing
disruption of operations. It is not known at this time what modifications, if
any, will be required. All costs associated with any modification will be
expensed as incurred. In addition, the Company has requested, and will continue
to seek, information from third-party entities on which it relies, certifying
that their computer systems will not negatively affect Loral's operations. No
assurance can be given that there will not be some unforeseen issue, in
particular, in connection with third parties' systems, that may materially
affect Loral's operations.

RELIANCE ON KEY PERSONNEL

The success of Loral is dependent upon the ability of Loral to attract and
retain highly qualified personnel. Except for Mr. Bernard L. Schwartz, Loral's
Chairman and Chief Executive Officer, none of the officers of Loral has an
employment contract with Loral nor does Loral expect to maintain "key man" life

14
<PAGE> 20

insurance. The loss of any of these individuals and the subsequent effect on
business relationships could have an adverse effect on the business or results
of operations of Loral.

SHARES ELIGIBLE FOR FUTURE SALE; DILUTION

As of March 31, 1998, the Company had outstanding 219,214,692 shares of
Common Stock. In addition, 45,896,977 shares of Common Stock will be issuable
upon conversion of the Series A Convertible Preferred Stock and 37,273,593
shares of Common Stock will be issuable upon the conversion of the 6% Series C
Convertible Redeemable Preferred Stock. As of March 31, 1998, an aggregate of
10,003,640 options were outstanding to purchase shares of Common Stock under the
Company's stock option plans. Sales of substantial amounts of Common Stock in
the public market, or the perception that such sales could occur, could
adversely affect the market price of the Common Stock. In addition, the Company
may sell additional equity interests in the future, diluting the percentage
ownership in the Company represented by the Common Stock.

VOLATILITY

The trading price of the Common Stock has been volatile. See "Price Range
of Common Stock." Factors such as announcements of fluctuations in the Company's
or its competitors' operating results and market conditions for growth stocks or
technology stocks in general could have a significant impact on the future
trading price of the Common Stock. In particular, the trading price of the
common stock of many technology companies has experienced extreme price and
volume fluctuations, which have at times been unrelated to the operating
performance of such companies whose stocks were affected. In addition, the
trading price of the Common Stock could be subject to significant fluctuations
in response to variations in the Company's prospects and operating results which
will in turn be affected by the performance of its operating affiliates and
other factors. There can be no assurance that these factors will not have an
adverse effect on the trading price of the Common Stock.

15
<PAGE> 21

USE OF PROCEEDS

The net proceeds of the Offering (at an assumed public offering price of
$31 1/8 per share based upon the last reported sale price of the Common Stock on
April 24, 1998 and after deducting the underwriting discounts and commissions
and estimated offering expenses) are estimated to be approximately $484 million,
of which Loral will use up to $175 million to fund the Globalstar Offer, and the
remainder will be used for investment in its core businesses and to pursue
emerging satellite service opportunities worldwide. Pending such use, the net
proceeds will be invested in short-term investment grade debt securities.

DIVIDEND POLICY

The Company has never declared or paid cash dividends on its Common Stock
and does not anticipate paying any cash dividends in the foreseeable future. In
addition, loan agreements and indentures restrict certain of the Company's
subsidiaries and operating affiliates from transferring cash or paying dividends
to Loral on their capital stock. As required, Loral is currently paying
dividends on its Series C Preferred Stock. See Note 7 to Loral's 1997
consolidated financial statements included in Loral's Annual Report on Form 10-K
for the year ended December 31, 1997, which is incorporated by reference in this
Prospectus.

PRICE RANGE OF COMMON STOCK

The Common Stock of Loral is quoted on the NYSE under the symbol "LOR." The
following table sets forth, for the periods indicated, the range of high and low
sale prices for the Common Stock as reported on the NYSE since the Common Stock
commenced public trading on April 15, 1996.

<TABLE>
<CAPTION>
HIGH LOW
---- ---
<S> <C> <C>
1996
Second Quarter (from April 15)............................ $18 1/2 $10 1/2
Third Quarter............................................. 16 5/8 11 1/8
Fourth Quarter............................................ 19 5/8 15 1/4

1997
First Quarter............................................. 19 1/4 14 1/8
Second Quarter............................................ 17 1/2 13
Third Quarter............................................. 21 14 1/16
Fourth Quarter............................................ 24 1/4 19

1998
First Quarter............................................. 30 1/2 19
Second Quarter (through April 24)......................... 33 5/8 28 5/16
</TABLE>

As of March 31, 1998, there were 219,214,692 shares of Common Stock
outstanding. On April 24, 1998, the last reported sale price of the Common Stock
as reported on the NYSE was $31 1/8 per share.

16
<PAGE> 22

CAPITALIZATION

The following table sets forth, as of December 31, 1997, (i) the cash and
cash equivalents and capitalization of the Company, (ii) the pro forma cash and
cash equivalents and capitalization of the Company giving effect to the
acquisition of Orion in March 1998 and (iii) the pro forma cash and cash
equivalents and capitalization of the Company as adjusted to give effect to the
net proceeds of the Offering, the Globalstar Offer and the Soros Investment,
assuming the Globalstar Offer is fully subscribed.

<TABLE>
<CAPTION>
AT DECEMBER 31, 1997
----------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT SHARE AMOUNTS)
PRO FORMA FOR PRO FORMA AS
LORAL ACTUAL ORION ACQUISITION(1) ADJUSTED
------------ -------------------- ------------
<S> <C> <C> <C>
Cash and cash equivalents....................... $ 226,547 $ 296,556 $ 605,556
========== ========== ==========
Restricted and segregated cash and cash
equivalents(2)................................ $ 356,890 $ 356,890
========== ==========
Long-term debt, including current portion....... $ 435,398 $1,331,075 $1,331,075
Shareholders' equity:
Series A convertible preferred stock, par
value $.01 per share; 150,000,000 shares
authorized, and 45,896,977 shares issued
and outstanding actual, pro forma for Orion
acquisition and pro forma as adjusted...... 459 459 459
Series B preferred stock, par value $.01 per
share; 750,000 shares authorized and
unissued actual, pro forma for Orion
acquisition and pro forma as adjusted(3)...
6% Series C convertible redeemable preferred
stock ($745,472 redemption value), par
value $.01 per share; 20,000,000 shares
authorized, 14,909,437 shares issued and
outstanding actual, pro forma for Orion
acquisition and pro forma as adjusted...... 733,762 733,762 733,762
Common stock, par value $.01 per share;
750,000,000 shares authorized, 200,950,864
shares issued actual; 218,919,478 shares
issued pro forma for Orion acquisition; and
234,919,478 shares issued pro forma as
adjusted................................... 2,010 2,189 2,349
Paid-in capital............................... 1,216,128 1,688,959 2,172,799
Retained earnings(4).......................... 22,566 22,566 57,566
Unearned compensation......................... (6,010) (6,010)
Treasury stock, at cost; 101,053 shares....... (1,680) (1,680) (1,680)
---------- ---------- ----------
Total shareholders' equity................. 1,973,245 2,440,245 2,959,245
---------- ---------- ----------
Total capitalization.................. $2,408,643 $3,771,320 $4,290,320
========== ========== ==========
</TABLE>

- ---------------
(1) Adjusted to reflect the pro forma effects of certain Orion financings which
are discussed in more detail on Note 4 to the unaudited Pro Forma Condensed
Consolidated Financial Statements for the year ended December 31, 1997,
included in Loral's Current Report on Form 8-K/A filed April 27, 1998, which
is incorporated herein by reference.
(2) Restricted and segregated cash and cash equivalents are set aside for the
next four interest payments on certain outstanding debt of Orion and to make
payments for additional Orion satellites or on such debt.
(3) Represents preferred stock underlying the Company's rights plan.

(4) Pro forma as adjusted reflects the gain of $35 million to be recorded in
connection with the Soros Investment.

17
<PAGE> 23

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

Except for the historical information contained herein, the matters
discussed in the following Management's Discussion and Analysis of Results of
Operations and Financial Condition of the Company, Globalstar, SatMex and Orion,
and elsewhere in this Prospectus, are forward-looking statements that involve
risks and uncertainties, many of which may be beyond the companies' control. The
actual results that the companies achieve may differ materially from any
forward-looking projections due to such risks and uncertainties.

Loral Space & Communications Ltd. and its subsidiaries (the "Company" or
"Loral") is one of the world's leading satellite companies, with substantial
activities in both satellite manufacturing and satellite-based communications
services. Space Systems/Loral, Inc. ("SS/L") is a leading designer and
manufacturer of space systems. Loral Skynet ("Skynet"), acquired on March 14,
1997, is a leading provider of satellite communications services in the United
States. Skynet owns and operates the Telstar satellite network and is expanding
its business internationally. On November 17, 1997, a joint venture including
Loral and another partner acquired 75% of SatMex, a satellite services provider
to Mexico and South America. Loral also manages and is the largest equity owner
of Globalstar, L.P. ("Globalstar"), a global, mobile satellite telephony system
scheduled for service initiation in early 1999. Loral is pursuing additional
satellite-based communications service opportunities, including CyberStar, a
proposed worldwide high-speed broadband data services system initially using
leased Ku-band transponder capacity on Skynet's Telstar 5 satellite. In
addition, on March 20, 1998, Loral acquired Orion Network Systems, Inc.
("Orion"), a corporate data networking and satellite services company with
operations in the United States and Europe that will be expanded to Asia/
Pacific and South America in 1998 and the first half of 1999, respectively.

Loral was formed to effectuate the distribution of Loral Corporation's
("Old Loral") space and communications businesses (the "Distribution") to
shareholders of Old Loral pursuant to a merger agreement (the "Merger") dated
January 7, 1996 between Old Loral and Lockheed Martin Corporation ("Lockheed
Martin"). Loral operates on a December 31 fiscal year-end. The space and
communications operations of Old Loral operated under a March 31 year-end.

RESULTS OF OPERATIONS

In 1997, Loral accelerated its transformation from a company with extensive
equity investments to a major satellite manufacturer and provider of satellite
services by making a number of acquisitions that significantly affected its
results of operations.

In February 1997, Loral agreed to acquire the remaining 49% of the common
stock of SS/L held by four international aerospace and communications companies
(the "Alliance Partners") for $374 million paid in cash and Loral securities
(see Note 3 to Loral's 1997 consolidated financial statements, included in
Loral's Annual Report on Form 10-K for the year ended December 31, 1997, which
is incorporated herein by reference). On March 14, 1997, Loral acquired Skynet
from AT&T for $462.1 million in cash.

The acquisition of Skynet and the remaining equity interest in SS/L have
been accounted for as purchases. Loral's consolidated financial statements for
the year ended December 31, 1997, reflect the results of operations of SS/L from
January 1, 1997, the elimination of the minority interest of the SS/L equity not
owned by Loral during the period and the results of operations of Skynet from
March 14, 1997. Prior to January 1, 1997, SS/L was accounted for using the
equity method of accounting.

In 1997, Loral increased its ownership of Globalstar by exercising existing
warrants and rights to acquire 1,312,696 Globalstar ordinary partnership
interests for $34.8 million in cash and by acquiring 2,748,372 Globalstar
ordinary partnership interests from other Globalstar partners for $97.5 million
in cash, 1,255,684 shares of Loral common stock and a deferred purchase price of
$24.8 million. At December 31, 1997, Loral had a 40.1% interest in Globalstar's
ordinary partnership interests (38% on a fully diluted basis).

In connection with the privatization by the Mexican Government of its fixed
satellite services business, Loral and Telefonica Autrey, S.A. de C.V.
("Telefonica Autrey") formed a joint venture, Firmamento Mexicano, S. de R.L. de
C.V. ("Holdings"). On November 17, 1997, Holdings acquired 75% of the
outstanding capital stock of SatMex for $646.8 million. The purchase price was
financed by a Loral equity contribution of $94.6 million, a Telefonica Autrey
equity contribution of $50.9 million and debt issued by
18
<PAGE> 24

Holdings. As part of the acquisition, Holdings issued a $125.1 million seven
year government obligation (the "Government Obligation") bearing interest at
6.03% to the Mexican Government in consideration for the assumption by SatMex of
the debt incurred by Holdings in connection with the acquisition. The debt of
SatMex and Holdings is non-recourse to Loral and Telefonica Autrey. However,
Loral and Telefonica Autrey have agreed to maintain assets in a collateral trust
in an amount equal to the value of the Government Obligation though December 30,
2000 and, thereafter, in an amount equal to 1.2 times the value of the
Government Obligation until maturity. Loral has a 65% economic interest in
Holdings and a 49% indirect economic interest in SatMex. Loral accounts for
SatMex using the equity method. The consolidated financial statements reflect
the equity in net loss of SatMex for the period November 17 to December 31,
1997.

On March 20, 1998, Loral acquired all of the outstanding stock of Orion in
exchange for Loral common stock. Loral issued 17.9 million shares of its common
stock and assumed existing Orion options and warrants to purchase 1.9 million
shares of Loral common stock representing an aggregate purchase price of $467.0
million. Loral will include Orion's results from the date of acquisition using
the purchase method of accounting. Orion is a provider of satellite-based
communications services, focused primarily on private communications network
services, Internet services and video distribution and other satellite
transmission services. Orion provides multinational corporations with private
communications networks designed to carry high speed data, fax, video
teleconferencing, voice and other specialized services.

Taxation: Loral is subject to U.S. Federal, state and local income
taxation at regular corporate rates on any income that is effectively connected
with the conduct of a U.S. trade or business. When such income is deemed removed
from the U.S. business, it is subject to an additional 30% "branch profits" tax.
Loral expects that a significant portion of its income will be from foreign
sources and will not be effectively connected with a U.S. trade or business;
some portion of this income, however, will be subject to taxation by certain
foreign countries.

The Company's U.S. subsidiaries are subject to U.S. taxes on their
worldwide income. In addition, a 30% U.S. withholding tax will be imposed on
dividends and interest paid by such subsidiaries to Loral Space & Communications
Ltd.

Comparison of Results of the Year Ended December 31, 1997
and the Nine Months Ended December 31, 1996

Revenues for the year ended December 31, 1997 totaled $1.5 billion before
elimination of intercompany sales of $200.1 million. SS/L's sales were $1.4
billion before elimination of intercompany eliminations of $199.3 million.
SS/L's commercial sales were $1.1 billion, including sales to Globalstar of
$408.1 million, and sales to the U.S. government were $90.5 million. Skynet's
sales were $69.3 million from date of acquisition to December 31, 1997. Revenue
for the nine months ended December 31, 1996, represented management fees earned
from SS/L of $5.1 million.

Earnings before interest, taxes, depreciation and amortization
("EBITDA")(1) for 1997 is as follows (in millions):

<TABLE>
<S> <C>
SS/L........................................................ $ 99.7
Skynet -- from March 14, 1997............................... 42.0
Corporate expenses and intercompany elimination............. (33.2)
------
EBITDA before CyberStar and Globalstar development costs.... 108.5
SatMex(2)................................................... 5.1
------
Adjusted EBITDA before CyberStar and Globalstar development
costs(3).................................................. $113.6
======
</TABLE>

- ---------------
(1) EBITDA should not be construed as an alternative to net income, as an
indicator of a company's operating performance, as cash flow from operations
or as a measure of a company's liquidity.

(2) Represents Loral's proportionate share of SatMex's EBITDA from November 17,
1997.

(3) Development costs for CyberStar were $33.2 million and Loral's proportionate
share of Globalstar's development costs was $33.3 million.

19
<PAGE> 25

EBITDA before development costs was $108.5 million in 1997. CyberStar
development costs were $32.2 million and depreciation and amortization was $62.7
million, resulting in operating income for 1997 of $13.6 million. The nine
months ended December 31, 1996, reflected an operating loss of $12.2 million
primarily due to corporate expenses of $17.3 million.

In connection with delayed payment in 1997 by two Asian customers for three
satellites, SS/L stopped work, reduced backlog by $291 million, which will
reduce future sales, and recorded a charge of $23 million. If the current
programs for these three satellites are not restarted, the satellites will be
sold to other customers.

Interest income of $49.1 million for the year ended December 31, 1997
represents $42.6 million of interest earned on the investment of available cash
during the year and interest on the GTL Convertible Preferred Equivalent
Obligations ("GTL Convertible Preferreds") held by Loral (See Note 6 to Loral's
1997 consolidated financial statements which are included in Loral's Annual
Report on Form 10-K for the year ended December 31, 1997, which is incorporated
herein by reference), and $6.5 million of interest earned on orbital incentive
payments. Interest income for the nine months ended December 31, 1996 of $34.7
million reflects the investment of available cash during the period and interest
on the GTL Convertible Preferreds.

Interest expense of $15.2 million, net of capitalized interest of $22.6
million, for 1997, reflects the assumption of SS/L's debt, borrowings under the
Credit Agreement (see Note 7 to Loral's 1997 consolidated financial statements
which are included in Loral's Annual Report on Form 10-K for the year ended
December 31, 1997, which is incorporated herein by reference) and interest on
Loral's outstanding Convertible Preferred Equivalent Obligations ("CPEOs") until
June 5, 1997, when the CPEOs were exchanged for Loral 6% Series C Convertible
Redeemable Preferred Stock ("Series C Preferred Stock"). Preferred dividends in
1997 of $26.3 million result from the exchange of the Company's CPEOs for Series
C Preferred Stock. Interest expense for the nine months ended December 31, 1996
of $6.0 million reflects interest on the CPEOs for one quarter.

The results of operations for 1997, reflect the gain on sale of K&F stock
of $79.6 million, net of expenses.

The Company's effective income tax rate for 1997 was 27.5%. The current
year effective rate is lower than the statutory U.S. Federal income tax rate
because, as a Bermuda company, a substantial portion of the Company's income is
foreign source income not subject to Federal taxation.

The minority interest expense in 1997 reflects the reduction of SS/L's
income attributed to the Alliance Partners.

The equity in net loss of affiliates for 1997 of $47.3 million reflects
increased development costs at Globalstar as well as an increased ownership
percentage by Loral in Globalstar. In addition, in connection with Loral's
investment in SatMex in 1997, Loral recorded its share of SatMex's losses of
$6.4 million. The equity in net loss of affiliates for the nine months ended
December 31, 1996 reflects the Company's share of Globalstar losses of $18.1
million offset by the Company's share of SS/L's income of $13.4 million. In
1997, the Company discontinued using the equity method for SS/L and fully
consolidated SS/L's results of operations.

As a result of the above, net income applicable to common stockholders for
1997 was $13.7 million, or $0.06 per diluted share, compared to $8.9 million, or
$0.04 per diluted share, for the nine months ended December 31, 1996. Diluted
weighted average shares were 243.6 million for 1997 and 229.4 million for the
nine months ended December 31, 1996.

Comparison of Results for the Nine Months Ended December 31, 1996 and 1995

For the nine months ended December 31, 1996, the consolidated financial
statements include the accounts of Loral Space & Communications Ltd. and its
subsidiaries. As such, the following discussion compares these results of
operations with the unaudited nine months ended December 31, 1995. Old Loral
operated under a March 31 year-end.

The results of operations for the periods through March 31, 1996, include
allocations and estimates of certain expenses of Loral based upon estimates of
actual services performed by Old Loral on behalf of Loral. The amount of
corporate office expenses for such periods has been estimated based primarily on
the allocation

20
<PAGE> 26

methodology prescribed by government regulations pertaining to government
contractors, which management of Loral believes is a reasonable allocation
method.

For the periods through March 31, 1996, interest was allocated to Loral
based upon Old Loral's historical weighted average debt cost applied to the
average investment in affiliates, which management of Loral believes to be a
reasonable allocation method. Interest related to Old Loral's investment in
Globalstar has been capitalized because Globalstar has not commenced its
principal operations.

The results of operations reflect net income of $8.9 million for the nine
months ended December 31, 1996 as compared with a loss of $15.3 million for the
same period in the prior year. This change is primarily attributable to interest
earned during 1996 on the investment of available cash balances as compared with
interest expense allocated from Old Loral during 1995. Total interest income,
net for the nine months ended December 31, 1996 was $28.7 million.

Management fees earned from SS/L of $5.1 million for the nine months ended
December 31, 1996 represent an increase of $1.2 million over the nine months
ended December 31, 1995. The management fees are based on SS/L sales which
increased $250 million, or 32%, to $1.0 billion.

Costs and expenses increased to $17.3 million for the nine months ended
December 31, 1996 from $2.3 million for the nine months ended December 31, 1995.
The primary reason for this increase is that 1996 expenses reflect the Company's
operation of its satellite and communications businesses on a stand-alone basis.

Equity in net loss of affiliates decreased to $4.7 million for the nine
months ended December 31, 1996 from $11.4 million for the comparable period in
the prior year. This improvement is primarily due to increased net income of
SS/L, partially offset by the loss of tax benefit for Globalstar losses
following Loral's formation in Bermuda.

The Company's effective income tax rate for the nine months ended December
31, 1996 was 17.7% compared with (35.0)% for the prior period. The current
period effective rate is lower than the statutory U.S. Federal income tax rate
because, as a Bermuda company, a substantial portion of the Company's income is
foreign source income not subject to federal taxation.

SUMMARY RESULTS OF OPERATIONS OF AFFILIATES

Globalstar

Globalstar is a development stage partnership and has not commenced
commercial service operations. The net loss applicable to ordinary partnership
interests for the year ended December 31, 1997 was $88.8 million as compared to
$56.6 million for the nine months ended December 31, 1996. The increase in the
net loss is a result of increased marketing, general and administrative expenses
of $10.7 million and an increase in development costs of $31.7 million as a
result of increased activity in the development of Globalstar's user terminals,
offset by an increase in interest income of $15.6 million as a result of higher
average cash balances available for investment. Globalstar is expending
significant funds for the construction, testing and deployment of the Globalstar
System and expects such losses to continue through commencement of revenue
generating service operations.

SatMex

For the period November 17, 1997 to December 31, 1997, SatMex had revenues,
EBITDA, operating income and a net loss of $12.5 million, $10.5 million, $4.8
million and $13.1 million, respectively (unaudited). The net loss is primarily
attributed to interest expense of $16.2 million on debt issued to finance the
acquisition, which includes a charge for $8.9 million of fees associated with a
bridge loan. SatMex expects such losses to continue through 1999 until funds
from operations reduce outstanding debt.

21
<PAGE> 27

LIQUIDITY AND CAPITAL RESOURCES

Loral intends to capitalize on its innovative capabilities, market position
and advanced technologies to offer value-added satellite-based services as part
of the evolving worldwide communications networks and, where appropriate, to
form strategic alliances with major telecommunications service providers and
equipment manufacturers to enhance and expand its satellite-based communications
service opportunities. In order to pursue such opportunities, Loral may seek
funds from strategic partners and other investors, through incurrence of debt or
the issuance of additional equity.

At December 31, 1997, Loral had $226.5 million of cash and cash
equivalents. Loral intends to utilize its existing capital base and access to
the capital markets to construct and operate additional satellites, make
additional investments in Globalstar and Globalstar service provider
opportunities and invest in additional satellite communications service
opportunities.

On November 14, 1997, the Company, through its wholly owned subsidiary
Loral SpaceCom Corporation, entered into a $850 million credit facility with a
group of banks (see Note 7 to Loral's 1997 consolidated financial statements,
included in Loral's Annual Report on Form 10-K for the year ended December 31,
1997, which is incorporated herein by reference). The facility consists of a
$500 million revolving credit facility, a $275 million term loan and a $75
million letter of credit facility. The facility replaced SS/L's existing credit
facility. The facility is secured by the stock of Loral SpaceCom Corporation and
SS/L and contains various covenants including an interest coverage ratio, debt
to capitalization ratios and restrictions on cash transfers to its parent. At
December 31, 1997, there was $435.4 million outstanding under this agreement and
other similar credit agreements with SS/L.

Skynet: Skynet currently has two high-powered satellites operating in
orbit. Loral intends to expand Skynet's business to become a worldwide satellite
service provider through the construction of additional satellites and has four
satellites under construction by SS/L. Loral anticipates that a portion of the
funds required for construction of these additional satellites will be provided
through additional borrowings or the issuance of additional equity.

Globalstar: On February 14, 1998, Globalstar launched its first four
satellites. A launch of four additional satellites was made on April 24, 1998.
Globalstar expects to begin commercial service in early 1999 following the
launch of 36 additional satellites during 1998. The remaining 12 satellites,
including eight in-orbit spares, will be launched in the first half of 1999.

As of April 27, 1998, Globalstar's budgeted expenditures for the design,
construction and deployment of the Globalstar System, including working capital,
cash interest on borrowings and operating expenses increased from approximately
$2.7 billion to approximately $2.8 billion, reflecting revised cost estimates
from Qualcomm and other increased Globalstar expenditures. In addition to
expenditures for operating costs, working capital and debt service, Globalstar
anticipates additional expenditures on system software following the
commencement of commercial service for the improvement of system functionality
and the addition of new features in response to future marketplace demands. As
of March 31, 1998, Globalstar had raised or received commitments for
approximately $2.6 billion.

In addition, Globalstar has agreed to purchase from SS/L eight additional
spare satellites at a cost estimated at $175 million. Further, in order to
accelerate the deployment of gateways around the world Globalstar has agreed to
finance approximately $80 million of the cost of up to 32 of the initial 38
gateways. Globalstar expects to recover this financing upon resale of such
gateways to its partners and service providers.

SS/L is the prime contractor for the design and construction of
Globalstar's satellites. In connection therewith, SS/L and its subcontractors
have committed $353 million of vendor financing to Globalstar, of which $121
million of such vendor financing is effectively borne by the subcontractors.

Orion: Orion currently has one satellite in orbit and two satellites under
construction. The cost of the two additional satellites under construction is
fully funded. At December 31, 1997, Orion had unrestricted cash and cash
equivalents of $70.0 million, restricted cash to be used for the satellites
under construction and

22
<PAGE> 28

interest payments of $356.9 million and debt of $747.1 million which is expected
to remain outstanding. Orion's outstanding debt is non-recourse to Loral.

On April 17, 1998, Orion made an offer to purchase its $445 million
principal amount of senior notes due 2007 and $484 million principal amount of
senior discount notes due 2007, which senior discount notes had a projected
accreted value of approximately $311,555,640 as of May 27, 1998. This offer to
purchase was made pursuant to the terms of Orion's governing indentures, which
required Orion to make an offer to noteholders to repurchase the notes within 30
days of the occurrence of a change of control. A change of control occurred on
March 20, 1998 when Orion was merged with a subsidiary of Loral.

Commitments and Contingencies: In connection with the Merger between Old
Loral and Lockheed Martin, Lockheed Martin assumed approximately $206 million of
the guarantee under the Globalstar Credit Agreement. The balance of $44 million
of the guarantee was assumed by various Globalstar partners, including
$11.7 million by SS/L. Loral has agreed to indemnify Lockheed Martin for its
liability, if any, in excess of $150 million under its guarantee of the
Globalstar Credit Agreement. Globalstar is currently financed without recourse
to Loral other than the indemnification described above.

Cash Used and Provided. Cash used in operating activities for the year
ended December 31, 1997 was $230.2 million, primarily due to an increase in
satellite contracts in process and inventories of $152.8 million, a decrease in
customer advances of $57.8 million due to the progress on commercial satellite
contracts and an increase in deposits of $107.7 million, offset by funds
generated by earnings before depreciation and amortization, taxes, gain on sale
of K&F stock, minority interest and equity in net loss of affiliates of $110.2
million. Cash used in operating activities for the nine months ended December
31, 1996, was $3.0 million, primarily due to increases in other current assets,
offset by funds generated from earnings before depreciation, taxes and equity in
net loss of affiliates of $17.5 million.

Cash used in investing activities for the year ended December 31, 1997 was
$1.0 billion primarily due to the purchase of Skynet and the SS/L equity
interests (see Note 3 to Loral's 1997 consolidated financial statements,
included in Loral's Annual Report on Form 10-K for the year ended December 31,
1997, which is incorporated herein by reference); the purchase of equity
interests in Globalstar and SatMex (see Note 6 to Loral's 1997 consolidated
financial statements, included in Loral's Annual Report on Form 10-K for the
year ended December 31, 1997, which is incorporated herein by reference);
capital expenditures of $255.3 million primarily for the construction of the
Telstar satellites by SS/L for Skynet and facility expansion and renovation at
SS/L; and other assets of $63.5 million, offset by the proceeds from the sale of
K&F stock. Cash used in investing activities for the nine months ended December
31, 1996 was $2.0 million due primarily to the purchase of $2.5 million
principal amount of GTL Convertible Preferreds in April 1996 and the purchase of
SS/L equity interests, offset by the sale of certain fixed assets.

Net cash provided by financing activities for the year ended December 31,
1997 and December 31, 1996 was $298.8 million and $1.2 billion, respectively,
primarily as a result of borrowings under credit facilities in 1997 and the net
proceeds from the Distribution and the net proceeds from the issuance of the
CPEOs in 1996.

23
<PAGE> 29

YEAR 2000 ISSUE

ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement No.
130, "Reporting Comprehensive Income" ("SFAS 130") and Statement No. 131,
"Disclosures About Segments of an Enterprise and Related Information"
("SFAS 131"), and in February 1998, issued Statement No. 132, "Employers'
Disclosures About Pensions and Other Postretirement Benefits" ("SFAS 132").
SFAS 130 establishes standards for the reporting and display of comprehensive
income and its components in a full set of general purpose financial statements.
Comprehensive income is defined as the change in equity of a business enterprise
during a period from transactions and other events and circumstances from
nonowner sources. SFAS 131 establishes annual and interim reporting standards
for an enterprise's business segments and related disclosures about its
products, services, geographic areas and major customers. SFAS 132 expands and
standardizes the disclosure requirements for pensions and other postretirement
benefits. The Company is required to adopt SFAS 130, SFAS 131 and SFAS 132 in
1998, and the Company's consolidated financial statements will reflect the
appropriate disclosures.

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<PAGE> 30

BUSINESS

Loral is one of the world's leading satellite communications companies,
with substantial interests in the design, manufacture and operation of
geosynchronous and low-earth-orbit satellite systems. Since its formation in
1996, Loral has assembled the building blocks essential to the creation of a
seamless, global networking capability for the information age.

Loral's principal businesses are: (i) providing GEO satellite services
through the activities of Skynet, Orion, SatMex and the proposed Europe*Star
joint venture, (ii) providing worldwide wireless telephony and data
communications through the Globalstar(TM) System, which is expected to commence
operations in early 1999, (iii) designing and manufacturing satellites and space
systems for a broad variety of customers through SS/L, and (iv) delivering
worldwide high-speed broadband data communications through CyberStar, which
plans to offer business and home users worldwide a variety of low-cost,
interactive multimedia communications services via high-speed digital signals,
which is expected to commence operations in the second half of 1998. Loral is
pursuing additional satellite-based communications service opportunities
throughout the world. For example, in August 1997, SS/L established a joint
venture with Mabuhay Philippines Satellite Corporation to provide
satellite-based services to the Philippines. Loral also owns approximately 12%
of CD Radio, Inc., a company that plans to provide digital audio radio service
to automobiles by satellite.

THE SKYNET GLOBAL ALLIANCE

Following its acquisition of the Skynet business from AT&T in March 1997,
Loral has rapidly established itself through a series of subsequent acquisitions
and joint venture transactions as one of the world's leading providers of GEO
satellite-based services. GEO satellites, which orbit the Earth at fixed
positions high above the Equator, are able to provide reliable, high bandwidth
services anywhere in their coverage areas and therefore serve as the backbone
for many forms of telecommunications. In the United States and other developed
countries, customers lease GEO transponder capacity primarily for distribution
of network and cable television programming and to collect live video feeds from
breaking news and sporting events, while in the developing world a substantial
portion of GEO capacity is dedicated to long-distance telephone service as well
as television services. GEO satellites are increasingly used throughout the
world for international Internet communications, high-speed data services for
businesses through VSAT networks, and for distance learning and educational
television.

Through its acquisitions of Skynet and Orion, its 49% economic interest in
SatMex, the joint venture that recently acquired the dominant provider of
Mexican FSS, and its proposed Europe*Star joint venture with a subsidiary of
Alcatel, Loral can offer its customers an integrated portfolio of satellite
capacity that provides "one stop shopping" for local, regional and global GEO
satellite services. The Skynet Global Alliance currently has seven satellites in
service providing a total of 138 C-band and 156 Ku-band 36 MHz
transponder-equivalents. The Skynet Global Alliance expects to launch in the
next 18 months five additional satellites, which, together with its existing
satellites, will provide a total of 226 C-band and 357 Ku-band 36MHz
transponder-equivalents, and will have a footprint covering almost all of the
world's population. Customers include the ABC and Fox television networks in the
United States, Telmex, Bancomer, Pemex and Cemex in Mexico and Viacom, Siemens,
Asea Brown Boveri and Telecom Denmark in Europe.

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<PAGE> 31

Skynet

Skynet's core business is support for U.S. television network programming,
and it counts the ABC and Fox television networks as major customers. As a
result, all ABC and Fox local affiliates stations have large antennas
permanently pointed at Skynet's satellites, creating a configuration known as a
"neighborhood" that is attractive to other users requiring similar distribution
channels. Other Skynet customers include third party resellers, such as sports
syndicators, who contract with major television programmers, and distance
learning providers.

Skynet currently has two high-powered GEO satellites in orbit. Telstar 4,
which was placed in service in November 1995, is equipped with 24 C-band and 24
Ku-band transponders and provides coverage over the continental United States,
Hawaii, Alaska, Puerto Rico and the U.S. Virgin Islands. The 52-transponder
Telstar 5, built by SS/L, was successfully launched in May 1997 and placed into
service on July 1, 1997. Telstar 5 provides coverage over the continental United
States, Puerto Rico, the Caribbean and into Canada and Latin America.

Skynet plans to construct, launch and operate four additional high-powered
C- and Ku-band satellites. The addition of these satellites will substantially
increase Skynet's capacity within the United States and will further extend its
coverage area of Canada and Mexico, subject to obtaining rights from regulatory
authorities in those countries.

SatMex

In December 1997, a joint venture in which Loral holds a 65% economic
interest, completed the acquisition from the Mexican government of a 75%
interest in SatMex. SatMex, which owns and operates three GEO communications
satellites, is the dominant satellite communications company currently providing
FSS in Mexico and intends to expand its services to become a leading provider of
satellite services throughout Latin America. SatMex provides satellite
transmission capacity to broadcasting customers for network and cable television
programming, direct-to-home television service and on-site transmission of live
news reports, sporting events and other video feeds. SatMex also provides
satellite transmission capacity to telecommunications service providers for
public telephone networks in Mexico and elsewhere and corporate customers for
their private business networks with data, voice and corporate video
applications. SatMex has landing rights to provide broadcasting and
telecommunications transmission capacity in 15 nations in the region, including
the United States. SatMex's broadcasting customers include Televisa, MVS
Mutivision and Television Azteca, and its telecommunications services customers
include Telmex, Bancomer, Pemex, Cemex and the Mexican subsidiaries of Ford and
Chrysler.

SatMex believes that it has one of the largest aggregate satellite
capacities dedicated primarily to the Latin American region, with 132 36MHz
transponder-equivalents currently in operation. SatMex's three satellites
(Solidaridad 1, Solidaridad 2 and Morelos II) are in geostationary orbit at
109.2(o) WL, 113.0(o) WL and 116.8(o) WL, respectively, with aggregate
footprints covering Mexico, the southern and eastern United States, Central
America, the Caribbean and most of South America. SatMex holds 20-year
concession titles to operate in these three orbital locations at C- and Ku-band
frequencies expiring October 22, 2017. The concession titles are renewable
thereafter, subject to certain conditions, for an additional 20-year term
without additional payment. In addition, SatMex operates two satellite control
centers.

SatMex has contracts for the construction and launch of SatMex 5, the
replacement for Morelos II, which is scheduled to launch in the fourth quarter
of 1998. SatMex 5 has been designed to increase SatMex's total capacity to 144
36MHz transponder-equivalents, with a substantial increase in power and an
extension of SatMex's footprint to include substantially all of the continental
United States and the Caribbean, as well as all of Latin America, other than
certain remote regions of Brazil.

Orion

On March 20, 1998, Loral acquired Orion, a rapidly growing provider of
satellite-based communications services focused primarily on three
businesses -- private communications network services, Internet services

26
<PAGE> 32

and video distribution and other satellite transmission services. Orion
currently owns and operates one GEO satellite and is constructing two additional
GEO satellites to be launched in the fourth quarter of 1998 and the second
quarter of 1999. Orion provides multinational corporations with private
communications networks designed to carry high-speed data, fax, video
teleconferencing, voice and other specialized services. The Orion network
delivers high-speed data to customers in emerging markets and remote locations
which lack the necessary infrastructure to support these services. Orion also
offers high speed Internet access and transmission services to companies outside
the United States seeking to avoid "last mile" terrestrial connections and to
bypass congested regional Internet network routes. In addition, Orion provides
satellite capacity for video distribution, satellite news gathering and other
satellite services primarily to broadcasters, news organizations and
telecommunications service providers. Orion provides its services directly to
customer premises using VSATs.

Orion commenced operations of Orion 1, a high power Ku-band satellite with
34 Ku-band transponders, in January 1995, providing coverage of 34 European
countries, much of the United States and parts of Canada, Mexico and North
Africa. Orion 2, which will be a high power satellite with 30 Ku-band
transponders, will expand Orion's European coverage and extend coverage to
portions of the Commonwealth of Independent States, Latin America and the Middle
East, is scheduled to be launched in the second quarter of 1999. Orion 3, which
will be a high power satellite with 33 Ku-band transponders and 10 C-Band
transponders, will cover broad areas of the Asia Pacific region, including
China, Japan, Korea, India, Southeast Asia, Australia, New Zealand, Eastern
Russia and Hawaii, is scheduled to be launched in the fourth quarter of 1998.

Europe*Star

In February 1998, Loral announced a strategic partnership with a subsidiary
of Alcatel to jointly build and operate Europe*Star, a multiple geostationary
satellite system to be marketed as part of the Skynet Global Alliance.
Europe*Star is expected to provide broadcast and telecommunications services to
Europe, Southeast Asia, the Middle East, South Africa and India.

GLOBALSTAR

Globalstar has begun to launch and is preparing to operate a worldwide, LEO
satellite-based digital telecommunications system. The Globalstar System has
launched eight of the 56 satellites (including eight in-orbit spares) that will
complete its full constellation and is scheduled to commence service in early
1999. Loral is the managing general partner of Globalstar, and has announced
plans to increase its fully diluted ownership therein from approximately 38% to
up to 42%. See "Recent Developments -- The Globalstar Offer."

The Globalstar System has been designed to address the substantial and
growing demand for telecommunications services worldwide, particularly in
developing countries. More than three billion people today live without
residential telephone service, many of them in rural areas where the cost of
installing wireline service is prohibitively high. Moreover, even where
telephone infrastructure is available in developing countries, outdated
equipment often leads to unreliable local service and limited international
access.

The Globalstar System's worldwide coverage is designed to enable its
service providers to extend modern telecommunications services to millions of
people who currently lack basic telephone service and to enhance wireless
telecommunications in areas underserved or not served by existing or future
cellular systems, providing a telecommunications solution in parts of the world
where the build-out of terrestrial systems cannot be economically justified. The
Globalstar System has been designed to provide services at prices comparable to
today's cellular service and substantially lower than the prices announced by
Globalstar's anticipated principal competitors. Globalstar service providers
will set their own retail pricing in their assigned service territories and will
pay Globalstar approximately $0.35 to $0.55 per minute on a wholesale basis.
Globalstar's designated service providers (including Loral, which, together with
other strategic partners, will act as Globalstar service provider in Canada,
Mexico and Brazil) have agreed to offer Globalstar service and seek to obtain
all necessary local regulatory approvals in 116 nations, accounting for
approximately 88% of the world's population. Globalstar's local service
providers have already obtained some or all of the national regulatory

27
<PAGE> 33

approvals they will need to obtain in 28 nations, including China, the United
States, Russia, Indonesia, Saudi Arabia and Ukraine.

As of April 27, 1998, each of the elements of the Globalstar
System -- space and ground segments, digital communications technology, user
terminal supply, service provider arrangements and licensing -- is on schedule
to commence commercial operations in early 1999 following the launch of 44
satellites in 1998. The remaining 12 satellites, including eight in-orbit
spares, will be launched in early 1999.

Space Segment. On April 24, 1998, Globalstar launched its second group of
four satellites. Globalstar's first four satellites were launched in February
1998. The next 12 Globalstar satellites are scheduled for launch in July 1998 on
a Ukranian Zenit launch vehicle. Production is proceeding for the remaining
satellites to meet scheduled launch dates. Mission operations preparations and
launch vehicle production and dispenser development are on schedule.

Ground Segment. Globalstar purchased the initial 38 gateways under
contracts totaling approximately $340 million. Globalstar has entered into
contracts and discussions to resell such gateways to its partners and service
providers. The first four Globalstar gateways, which are located in Australia,
France, South Korea and the United States, are completed. These gateways will
support Globalstar's data network, monitor the initial launch and orbital
placement of Globalstar's first satellites, and serve as prototypes for
production gateways that will support Globalstar service. Construction of the
remaining 34 gateways is proceeding on schedule for the initiation of commercial
service in 1999. In addition, Globalstar's satellite operations control center
facility has been completed.

Digital Communications Technology. Qualcomm's CDMA technology has now been
successfully deployed in South Korea, Hong Kong and cities in the United States
supporting terrestrial personal communications services and digital cellular
service, and its CDMA implementation for Globalstar has been successfully
demonstrated in a simulated satellite environment. This demonstration validated
Globalstar's encoding, modulation, control software, time and frequency
distribution and up/down links between satellites, gateways and handsets.

User Terminal Supply. Qualcomm and two other manufacturers, Ericsson and
Telital, are developing Globalstar's user terminals. On April 3, 1998,
Globalstar and these manufacturers entered into contracts totaling $353 million
for the initial manufacture and delivery of more than 300,000 production
handheld and fixed user terminals. Globalstar expects to recover this cost
through the resale of these terminals to vendors.

Service Providers. Globalstar and its partners have been seeking alliances
with service providers throughout the world and have entered into a number of
agreements in specific territories. Globalstar believes that these relationships
with in-country service providers will facilitate the granting of local
regulatory approvals -- particularly where the service provider and the
licensing authority are one and the same -- as well as provide local marketing
and technical expertise.

Licensing. In January 1995, the FCC granted authority for the
construction, launch and operation of the Globalstar System and assigned
spectrum for its user links. Later that year, the 1995 World Radiocommunications
Conference allocated feeder link spectrum on an international basis for mobile
satellite services systems such as Globalstar, and in November 1996 the FCC
authorized Globalstar's feeder links.

SPACE SYSTEMS/LORAL

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<PAGE> 34

As one of the premier providers of satellites and other space systems, SS/L
competes principally on the basis of technical excellence, a long record of
reliable performance, competitive pricing and on-orbit delivery packages. The
Company believes that SS/L's advanced manufacturing and testing facilities and
long-term customer relationships have enabled SS/L to compete effectively in the
commercial space systems marketplace.

SS/L has a history of technical innovation that includes the first
three-axis stabilized satellites, bipropellant propulsion systems for commercial
satellites that permit significant increases in the satellites' payload and
extend the satellites' on-orbit lifetime, rechargeable nickel-hydrogen batteries
with a life span of 10 years or more, the use of advanced composites to
significantly enhance satellite performance at lighter weights and the first
communications satellite with more than ten kilowatts of power. SS/L also
created the first multi-mission geostationary satellite and was the first U.S.
company to exchange space technology with Russia's space industry, obtaining
exclusive rights outside the former Eastern bloc to an electric propulsion
subsystem that is five times as efficient as bipropellant propulsion systems.
Since 1990, SS/L has shortened delivery schedules significantly, increased
spacecraft reliability and increased spacecraft power.

SS/L's capabilities in spacecraft bus technologies are extensive, including
its efforts in composite structural design, which, with certain exceptions,
allows structural components to be manufactured of lightweight/high-strength
composite materials. SS/L was also the first to employ heat pipes in its bus to
control heat transfer in commercial satellites, thereby providing a more benign
temperature environment and increased reliability. Nickel hydrogen batteries,
when combined with SS/L's patented thermal management system, provide one of the
most efficient space batteries ever produced. A new technology currently being
developed by SS/L could result in the doubling of such efficiency within the
next three years. A new telemetry and command system employing serial interfaces
was introduced in 1997.

Active research and development projects are underway for both
communications and payload equipment and supporting bus elements. Highlights of
the payload program include the development of active microwave components,
which are among the lightest and most compact in the industry, and high power
handling state-of-the-art multiplexers and antennas that can be customized for
various customer requirements within a year of satellite delivery. Investments
in state-of-the-art computer-aided design and modeling tools have enabled SS/L
to eliminate expensive and time-consuming prototyping of most equipment, thereby
further reducing production time.

In March and June 1997, Loral acquired the remaining 49% of the common
stock of SS/L held by the Alliance Partners for $374 million paid in cash and
Loral securities. SS/L and three of the Alliance Partners have agreed generally
to operate as a team on satellite programs worldwide, to coordinate research and
development activities and to share technological resources. SS/L believes that
this strategic alliance has enhanced its technological and manufacturing
capabilities and marketing resources and affords it access to international
government and commercial customers more effectively than its U.S.-based
competitors. For example, through the alliance, SS/L has been able to supply
satellite payloads in support of Aerospatiale's prime contract under the
Eutelsat, Thaicom and Sirius programs.

CYBERSTAR

Loral is the managing general partner and principal equity owner of
CyberStar, a worldwide high-speed broadband data communications system that is
expected to commence commercial operations in the second half of 1998. CyberStar
will leverage satellites, terrestrial networks and a sophisticated network
operations center to deliver information securely and reliably at speeds of up
to 27 Mbps to multiple locations simultaneously, using an Internet protocol
multicasting technique. CyberStar plans to offer business and home users
worldwide a variety of low-cost, interactive multimedia communications services
via high speed digital signals. Initially, CyberStar intends to offer service in
the United States using leased Ku-band transponder capacity on Skynet's Telstar
5 satellite, and plans in the future to migrate its service to a worldwide
system of three GEO satellites. CyberStar's satellite-based services will
include high speed Internet access, data broadcasting, broadband
interconnection, intranet muticasting, real-time streaming and other data
services.

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<PAGE> 35

CyberStar service will be delivered to consumers, businesses and private
networks worldwide through a network of local and regional service providers.

AUTHORIZED ORBITAL LOCATIONS

The following table presents a brief description of the orbital locations
that the Company and its affiliates are authorized to use. All satellite systems
are subject to international frequency coordination requirements and must obtain
appropriate authority to provide service in a given territory.

FIXED SATELLITE SERVICES

<TABLE>
<CAPTION>
SATELLITE LOCATION FREQUENCY COVERAGE IN SERVICE
--------------- --------- --------------------- --------------------------------- ----------
<S> <C> <C> <C> <C> <C>
Skynet Telstar 303(1) 120(o) W.L. C-band North America X
Telstar 4 89(o) W.L. C-band, Ku-band North America X
Telstar 5(2) 97(o) W.L. C-band, Ku-band North America X
Telstar 6 93(o) W.L. C-band, Ku-band North America
Telstar 7 129(o) W.L. C-band, Ku-band North America, including Alaska
Telstar 8 77(o) W.L. C-band, Ku-band North America
Telstar 9 69(o) W.L. C-band, Ku-band North America
Orion Orion 1 37.5(o) W.L. Ku-band Europe, SE Canada, U.S. East of X
the Rockies and parts of Mexico
Orion 2(3) 12(o) W.L. Ku-band Eastern U.S., SE Canada, Europe,
CIS, Middle East, North Africa
and Latin America, S. Africa
Orion 3 139(o) E.L. C-band, Ku-band China, Japan, Korea, India,
Hawaii, Southeast Asia,
Australia, New Zealand, Eastern
Russia and Oceana
Orion A 47(o) W.L. Ku/Ka-band Americas, Europe and Africa
Orion B(3) 135(o) W.L. Ku-band North America, Hawaii, Puerto
Rico, U.S. Virgin Islands
Orion C 144(o) E.L. C-band and Ku-band China, Japan, Korea, India,
Hawaii, Southeast Asia,
Australia, New Zealand, Eastern
Russia and Oceana
SatMex Solidaridad 1 109.2(o) W.L. C-band, Ku-band Mexico and portions of Latin X
America
Solidaridad 2 113.0(o) W.L. C-band, Ku-band Mexico and portions of Latin X
America
Morelos II 116.8(o) W.L. C-band, Ku-band Mexico X
SatMex 5(4) 116.8(o) W.L. C-band, Ku-band Americas
</TABLE>

MOBILE SATELLITE SERVICES

<TABLE>
<CAPTION>
SATELLITE LOCATION FREQUENCY COVERAGE IN SERVICE
------------- ------------------ --------------------- -------------------------- ----------
<S> <C> <C> <C> <C> <C>
Globalstar Globalstar 56 satellites, LEO 1610 - 1621.35MHz, Global (Eight
2483.5 - 2500 - MHz, satellites
feeder links in launched)
C-band
</TABLE>

30
<PAGE> 36

BROADBAND DATA

<TABLE>
<CAPTION>
SATELLITE LOCATION FREQUENCY/TRANSPONDERS COVERAGE IN SERVICE
------------- --------- ---------------------- --------------------------------- ----------
<S> <C> <C> <C> <C> <C>
CyberStar CyberStar 115 degrees W.L. Ka-band (spot beams) North America
CyberStar 93 degrees W.L. Ka-band (spot beams) North and South America(5)
CyberStar 105.5 degrees E.L. Ka-band (spot beams) Asia-Pacific
Orion Orion Ka 89 degrees W.L. Ka-band Americas
Orion Ka 81 degrees W.L. Ka-band Americas
Orion Ka 78 degrees E.L. Ka-band Russia, India, China, Europe,
Africa, CIS, Australia, Asia
Orion Ka 126.5 degrees E.L. Ka-band Asia, Russia, Australia, Oceana
</TABLE>

DIRECT-TO-HOME

<TABLE>
<CAPTION>
SATELLITE LOCATION FREQUENCY COVERAGE IN SERVICE
------------- ------------------ --------------------- -------------------------- ----------
<S> <C> <C> <C> <C> <C>
R/L DBS R/L DBS 61.5 degrees W.L. 11-Odd numbered Eastern US
DBS channels 1-21
R/L DBS 166 degrees W.L. 11-Odd numbered Western US
DBS channels 1-21
</TABLE>

- ---------------
(1) Currently operating in inclined orbit beyond its designed life. Subject to
FCC approval, can be expected to continue to generate modest revenues for
approximately one year.

(2) This satellite is licensed pursuant to a grant of special temporary
authority that expires May 18, 1998. Prior to that date, Loral anticipates
that the FCC will grant a permanent authorization or extend the temporary
authority.

(3) These satellites are conditionally licensed by the FCC, subject to an
appropriate showing of Loral's financial capability to construct, launch and
operate the satellites.

(4) SatMex 5 is under construction and is scheduled for launch in the fourth
quarter of 1998 to replace Morelos II.

(5) The FCC license does not describe a particular coverage area.

In addition to the orbital slots listed in the table above, Loral has
applications pending at 77 degrees W.L. for use of the Extended C/Ku-band
frequencies, at 81 degrees W.L. for use of Ku/Extended Ku-band frequencies and
at 135 degrees W.L., 115 degrees W.L., 95 degrees W.L. and 58 degrees W.L. for
use of the V-band frequency. Loral also has International Telecommunication
Union filings at 3.5 degrees E.L., 11 degrees E.L., 30 degrees E.L., 80 degrees
E.L., 105.5 degrees E.L. and 135 degrees E.L. for use of the V-band frequency.

Orion has applications pending at 126(o)E.L. for use of the Ku/Extended
Ku/C and Extended C-band frequencies and at 139(o)E.L., 15(o)W.L. and 67(o)W.L.
for use of the Ka-band frequency. Globalstar also has applications pending for
an 80 satellite LEO system using the V-band frequency and for a second
generation Globalstar system comprised of 64 LEO satellites and four GEO
satellites (at 80(o)W.L., 10(o)E.L., 100(o)E.L. and 170(o)E.L.) using the 2 GHz
frequency.

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<PAGE> 37

DESCRIPTION OF CAPITAL STOCK

The authorized capital of Loral consists of (i) 750 million common shares,
par value $.01 per share (the "Common Stock"), (ii) 150 million shares of
Series A Convertible Preferred Stock, par value $.01 per share (the "Series A
Preferred Stock"), (iii) 750,000 shares of Series B Preferred Stock, par value
$.01 per share (the "Series B Preferred Stock"), to be issued upon exercise, if
any, of the rights (the "Rights") issued pursuant to the Company's Rights Plan
and attached to each certificate representing outstanding shares of Common
Stock, and (iv) 20,000,000 shares of 6% Series C Convertible Redeemable
Preferred Stock, par value $.01 per share (the "Series C Preferred Stock").

COMMON STOCK

The holders of Common Stock are entitled to voting rights. Under Bermuda
law, questions brought before a general meeting of shareholders are decided by a
majority vote of shareholders present at the meeting (or by such majority as The
Companies Act 1981 of Bermuda or the bye-laws of the company prescribe). Loral's
Bye-Laws provide that, with certain exceptions, any questions proposed for the
consideration of the shareholders will be decided by a simple majority of votes
cast by shareholders entitled to vote at the meeting, with each shareholder
present, or person holding proxies for any shareholder, entitled to one vote for
each share held.

The holders of Common Stock are entitled to receive ratably the dividends,
if any, that may be declared from time to time by the Board of Directors out of
funds legally available for such dividends. The holders of Common Stock are
entitled, under certain circumstances, to share ratably with holders of the
Series A Preferred Stock in all assets remaining after payment of liabilities
and after provision has been made for the payment of the $.01 liquidation
preference on the Series A Preferred Stock and the liquidation preference on any
other series of preferred stock of Loral. Holders of Common Stock have no
preemptive rights and no right to convert their Common Stock into any other
securities. There are no redemption or sinking fund provisions applicable to the
Common Stock. All the outstanding shares of Common Stock are validly issued,
fully paid and nonassessable.

PREFERRED STOCK

Series A Preferred Stock. The Series A Preferred Stock votes together with
the Common Stock as a single class on all matters submitted to shareholders,
except that it may not vote with respect to the election of directors of Loral.
The Series A Preferred Stock is entitled to a liquidation preference of $.01 per
share and otherwise participates pro rata with the Common Stock in dividends and
distributions, subject under certain circumstances to priority rights over the
Common Stock and pro rata distribution rights with the most senior preferred
stock of Loral then outstanding in a liquidating distribution. The Series A
Preferred Stock is subject to certain antidilution adjustments, including
adjustments for stock splits and reclassifications. The Series A Preferred Stock
will be convertible into Common Stock at the option of the holder upon receipt
of certain antitrust clearance or upon a sale to a third party unaffiliated with
Lockheed Martin.

Series B Preferred Stock. The Series B Preferred Stock will, if issued, be
junior to any other series of Preferred Stock which may be authorized by Loral's
shareholders. Holders of the Rights will be entitled, subject to the occurrence
of certain events, to purchase from Loral, one one-thousandth of a share of
Series B Preferred Stock at a purchase price of $75, but before such purchase
will have no voting, conversion, redemption or preemptive rights, nor will they
have any right to receive dividends.

6% Series C Preferred Stock. The Series C Preferred Stock, with respect to
dividend rights and rights upon liquidation, winding up and dissolution, ranks
pari passu with Loral's Series A Preferred Stock and senior to or pari passu
with all other existing and future series of preferred stock of Loral and senior
to the Common Stock. The Series C Preferred Stock accrues dividends at the rate
of 6% per annum, is entitled to a liquidation preference of $50 per share, is
subject to mandatory redemption on November 1, 2006 and is convertible into
shares of Common Stock at a conversion price of $20.00 per share, subject to
adjustments under certain circumstances. Except for certain amendments to the
Series C Schedule of the Bye-Laws under which the Series C Preferred Stock was
issued and except as required by law, the holders of the Series C Preferred
Stock
32
<PAGE> 38

have no voting rights unless the Company has deferred dividend payments for an
aggregate of six quarterly dividend payments, in which case the holders of the
Series C Preferred Stock have contractual rights to have the Company nominate
two directors of their choosing.

RIGHTS OF SHAREHOLDERS UNDER BERMUDA LAW

The Company is incorporated under the laws of the Islands of Bermuda.
Principles of law relating to such matters as the validity of corporate
procedures, the fiduciary duties of the Company's management, directors and
controlling shareholders, and the rights of its shareholders, are governed by
Bermuda law and the Company's Memorandum of Association and Bye-Laws. Such
principles of law may differ from those that would apply if the Company were
incorporated in a jurisdiction in the United States. In addition, there is
uncertainty as to whether the courts of Bermuda would enforce (i) judgments of
United States courts obtained against the Company or its officers and directors
resident in foreign countries predicated upon the civil liability provisions of
the securities laws of the United States or (ii) in original actions brought in
Bermuda, liabilities against the Company or such persons predicated upon the
securities laws of the United States or any state.

CERTAIN ANTITAKEOVER PROVISIONS

The Company's classified Board of Directors, voting provisions with respect
to certain business combinations and rights plan may have the effect of making
more difficult or discouraging an acquisition of the Company deemed undesirable
by the Board.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar for Loral's Common Stock is The Bank of
New York.

33
<PAGE> 39

TAXATION

This summary does not consider all the tax issues that might be relevant to
an investor or that depend on the investor's particular circumstances. It is
based on current laws and their official interpretations, all of which may be
changed, possibly with retroactive effect.

Prospective investors should consult their own advisors about the tax
consequences of an investment in the Company under the laws of the jurisdictions
in which they are subject to tax.

The discussion of United States tax considerations is based on opinion of
Willkie Farr & Gallagher, U.S. counsel to the Company, and the discussion of
Bermuda tax considerations is based on the opinion of Appleby, Spurling & Kempe,
Bermuda counsel to the Company.

UNITED STATES TAX CONSIDERATIONS

Taxation of the Company. The Company expects that a significant portion of
its worldwide income will not be subject to tax by the United States. The U.S.
Internal Revenue Service may disagree, however, and/or may promulgate
regulations that would recharacterize a substantial portion of the Company's
income as from U.S. sources and as effectively connected with a U.S. trade or
business so as to subject that income to regular U.S. Federal income and a 30%
branch profits tax. Any portion of the Company's income from sources outside the
United States, realized through Globalstar or otherwise, may be subject to
taxation by foreign countries and the extent to which these countries may
require the Company or Globalstar to pay tax or to make payments in lieu of tax
cannot be determined in advance.

The worldwide income of any of the Company's U.S. subsidiaries (such as
Skynet, Orion and SS/L) will be subject to regular U.S. Federal income taxation.
In addition, a 30% U.S. withholding tax will be imposed on dividends and
interest paid by such corporations to the Company.

Taxation of Non-U.S. Stockholders of the Company. A non-U.S. resident
alien individual, a non-U.S. corporation, a non-U.S. trust or a non-U.S. estate
will not be subject to U.S. Federal income taxation of dividends paid with
respect to Common Stock unless those payments are effectively connected with the
conduct by the stockholder of a trade or business within the United States.

In addition, such a non-U.S. stockholder will not be subject to U.S.
Federal income tax on gains realized by such stockholder on a sale or exchange
of Common Stock unless the sale of such Common Stock is attributable to an
office or fixed place of business maintained by the stockholder in the United
States or the stockholder is an individual who is present in the United States
for 183 days or more during the year of sale and who has a tax home in the
United States.

Taxation of United States Stockholders of the Company. A U.S. stockholder
that holds the Common Stock as a capital asset generally will recognize capital
gain or loss on a sale or other disposition of Common Stock (other than in
certain limited circumstances on a redemption by the Company).

Because the Company is incorporated in Bermuda, its dividend payments will
not be eligible for the dividends received deduction.

U.S. stockholders (who are not tax exempt) would be subject to a special,
adverse tax regime if the Company were (or were to become) a "passive foreign
investment company" (a "PFIC") for U.S. Federal income tax purposes. The Company
is not and, does not expect to become, a PFIC. U.S. Stockholders are urged,
however, to consult their own advisors regarding the adverse U.S. Federal income
tax consequences of owning stock of a PFIC and of making certain elections
designed to lessen those adverse consequences.

BERMUDA TAX CONSIDERATIONS

There is no Bermuda income tax, corporations or profits tax, withholding
tax, capital gains tax, capital transfer tax, or estate or stamp duty or
inheritance tax payable by the Company or by a stockholder (other than a
stockholder ordinarily resident in Bermuda) in respect of an investment in the
Common Stock.

34
<PAGE> 40

UNDERWRITING

Under the terms of and subject to the conditions contained in an
underwriting agreement (the "U.S. Underwriting Agreement"), among the Company
and each of the underwriters named below (the "U.S. Underwriters"), for whom
Lehman Brothers Inc. is acting as representative (the "Representative"), each of
the several U.S. Underwriters has agreed to purchase from the Company, and the
Company has agreed to sell to each U.S. Underwriter, the aggregate number of
shares of Common Stock set forth opposite the name of such U.S. Underwriter
below:

<TABLE>
<CAPTION>
U.S. UNDERWRITERS
-----------------
<S> <C>
Lehman Brothers Inc. .......................................
Bear, Stearns & Co. Inc. ...................................
Donaldson, Lufkin & Jenrette Securities Corporation.........
BancAmerica Robertson Stephens..............................
C.E. Unterberg, Towbin .....................................
CIBC Oppenheimer Corp.......................................
NationsBanc Montgomery Securities LLC.......................
----------
Total.............................................
==========
</TABLE>

Under the terms of and subject to the conditions contained in an
underwriting agreement (the "International Underwriting Agreement"), among the
Company and each of the international managers named below (the "International
Managers"), for whom Lehman Brothers International (Europe) is acting as Lead
Manager (the "Lead Manager"), each of the several International Managers has
agreed to purchase from the Company, and the Company has agreed to sell to each
International Manager, the aggregate number of shares of Common Stock set forth
opposite the name of such International Manager below:

<TABLE>
<CAPTION>
INTERNATIONAL MANAGERS
----------------------
<S> <C>
Lehman Brothers International (Europe)......................
Bear, Stearns International Limited.........................
Donaldson, Lufkin & Jenrette International..................
BA Robertson Stephens International Limited.................
C.E. Unterberg, Towbin......................................
CIBC Wood Gundy Oppenheimer plc.............................
NationsBanc Montgomery Securities LLC.......................
----------
Total.............................................
==========
</TABLE>

The U.S. Underwriting Agreement and the International Underwriting
Agreement (collectively, the "Underwriting Agreements") provide that the
obligations of the U.S. Underwriters and the International Managers,
respectively, to purchase shares of Common Stock are subject to the approval of
certain legal matters by counsel and to certain other conditions and that if any
of the shares of Common Stock are purchased by the U.S. Underwriters pursuant to
the U.S. Underwriting Agreement or by the International Managers pursuant to the
International Underwriting Agreement, all the shares of Common Stock agreed to
be purchased by either the U.S. Underwriters or the International Managers, as
the case may be, pursuant to their respective Underwriting Agreements, must be
so purchased. The offering price and underwriting discounts and commissions for
the U.S. Offering and the International Offering are identical. The closing of
each of the U.S. Offering and the International Offering is conditioned upon the
closing of the other.

The Company has been advised by the Representatives and the Lead Managers
that the U.S. Underwriters and the International Managers propose to offer
shares of Common Stock directly to the public initially at the public offering
price set forth on the cover page of this Prospectus and to certain selected
dealers (who may include the U.S. Underwriters and International Managers) at
such public offering price less a selling concession not to exceed $ per
share. The selected dealers may reallow a concession not to

35
<PAGE> 41

exceed $ per share. After the initial offering of the Common Stock, the
offering price, the concession to selected dealers and the reallowance to other
dealers may be changed by the U.S. Underwriters and the International Managers.

The U.S. Underwriters and the International Managers have entered into an
Agreement Among U.S. Underwriters and International Managers (the "Agreement
Among") pursuant to which each U.S. Underwriter has agreed that, as part of the
distribution of the shares of Common Stock offered in the U.S. Offering, (a) it
is not purchasing any of such shares for the account of anyone other than a U.S.
or Canadian person (as defined below) and (b) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the U.S. Offering outside the
United States or Canada or to anyone other than a U.S. or Canadian Person. In
addition, pursuant to the Agreement Among, each International Manager has agreed
that, as part of the distribution of the shares of Common Stock offered in the
International Offering, (a) it is not purchasing any of such shares for the
account of any U.S. or Canadian Person and (b) it has not offered or sold, and
will not offer, sell, resell or deliver, directly or indirectly, any of such
shares or distribute any prospectus relating to the International Offering
within the United States or Canada or to any U.S. or Canadian Person. The
foregoing limitations do not apply to stabilization transactions or to certain
other transactions specified in the Underwriting Agreements and the Agreement
Among, including: (i) certain purchases and sales between the U.S. Underwriters
and the International Managers; (ii) certain offers, sales, resales, deliveries
or distributions to or through investment advisors or other persons exercising
investment discretion; (iii) purchases, offers or sales by a U.S. Underwriter
that is also acting as an International Manager or by an International Manager
that is also acting as a U.S. Underwriter; and (iv) other transactions
specifically approved by the U.S. Underwriters and International Managers. As
used herein, "U.S. or Canadian Person" means any resident or citizen of the
United States or Canada, any corporation, pension, profit sharing or other trust
or other entity organized under or governed by the laws of the United States or
Canada or any political subdivision thereof (other than the foreign branch of
any United States or Canadian Person), any estate or trust the income of which
is subject to United States or Canadian federal income taxation regardless of
the source of its income, and any United States or Canadian branch of a person
other than a United States or Canadian Person. The term "United States" means
the United States of America (including, the states thereof and the District of
Columbia) and its territories, its possessions and other areas subject to its
jurisdiction. The term "Canada" means the provinces of Canada, its territories,
its possessions and other areas subject to its jurisdiction.

Pursuant to the Agreement Among, sales may be made among the U.S.
Underwriters and the International Managers of such number of shares of Common
Stock as may be mutually agreed. The price of any shares so sold shall be the
public offering price as then in effect for Common Stock being sold by the U.S.
Underwriters and the International Managers, less an amount not greater than the
selling concession unless otherwise determined by mutual agreement. To the
extent that there are sales pursuant to the Agreement Among, the number of
shares initially available for sale by the U.S. Underwriters and the
International Managers may be more or less than the amount specified on the
cover page of this Prospectus.

Each International Manager has represented and agreed that: (i) it is not
carrying on investment business in the United Kingdom in contravention of
Section 3 of the Financial Services Act 1986; (ii) it has not offered or sold
and, prior to the date six months after the latest closing date for the issue of
the shares of Common Stock, will not offer or sell any shares of Common Stock to
persons in the United Kingdom by means of any document except to persons whose
ordinary business is to buy or sell securities or debentures, whether as
principal or agent, or otherwise in circumstances that do not constitute an
offer to the public in the United Kingdom within the meaning of the Public
Offers of Securities Regulation 1995; (iii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the shares of Common Stock in, from or
otherwise involving the United Kingdom; and (iv) it has only issued or passed
on, and will only issue or pass on, to any person in the United Kingdom, any
document received by it in connection with the issue of the Common Stock if that
person is of a kind described in Article 11(3) of the Financial Services Act
1986 (Investment Advertisements) (Exemptions) Order 1996 or is a person to whom
the document may otherwise lawfully be issued or passed on and that it will

36
<PAGE> 42

procure that any purchaser from it of shares of Common Stock undertakes to
comply with the provisions of this paragraph.

Purchasers of the shares of Common Stock offered pursuant to the Common
Stock Offering may be required to pay stamp taxes and other charges in
accordance with the laws and practices of the country of purchase in addition to
the offering price set forth on the cover page hereof.

Except for the Common Stock to be sold in the Offering, the Company has
agreed not to offer, sell, contract to sell or otherwise issue any shares of
Common Stock or other capital stock or securities convertible into or
exchangeable for, or any rights to acquire, Common Stock or other capital stock,
with certain exceptions, prior to the expiration of 90 days from the date of
this Prospectus without the prior written consent of Lehman Brothers on behalf
of the Representatives and the Lead Managers.

The Company has granted to the U.S. Underwriters and the International
Managers options to purchase up to an additional 1,920,000 and 480,000 shares of
Common Stock, respectively, at the initial public offering price to the public,
less the underwriting discounts and commissions shown on the cover page of this
Prospectus, solely to cover over-allotments, if any. The options may be
exercised at any time up to 30 days after the date of this Prospectus. To the
extent that the U.S. Underwriters and the International Managers exercise such
options, each of the U.S. Underwriters and the International Managers, as the
case may be, will be committed (subject to certain conditions) to purchase a
number of additional shares proportionate to such U.S. Underwriter's or
International Manager's initial commitment as indicated in the preceding tables.

The Company has agreed to indemnify the U.S. Underwriters and the
International Managers against certain liabilities, including liabilities under
the Securities Act, and to contribute to payments that the U.S. Underwriters and
the International Managers may be required to make in respect thereof.

Until the distribution of the shares of Common Stock offered hereby is
completed, rules of the Commission may limit the ability of the Underwriters and
certain selling group members to bid for and purchase the Common Stock. As an
exception to these rules, the Representatives and the Lead Managers are
permitted to engage in certain transactions that stabilize the price of the
Common Stock. Such transactions may consist of bids or purchases for the purpose
of pegging, fixing or maintaining the price of the Common Stock.

If the Underwriters create a short position in the Common Stock in
connection with the Common Stock Offering (i.e., if they sell more shares of
Common Stock than are set forth on the cover page of this Prospectus), the
Representatives and the Lead Managers may reduce that short position by
purchasing the Common Stock in the open market after the distribution has been
completed. The Representatives and the Lead Managers may also elect to reduce
any short position by exercising all or part of the over-allotment options
described herein.

The Representatives and the Lead Managers also may impose a penalty bid on
certain Underwriters and selling group members. This means that if the
Representatives or the Lead Managers purchase Common Stock in the open market to
reduce the Underwriters' short position or to stabilize the price of the Common
Stock, they may reclaim the amount of the selling concession from the
Underwriters and selling group members who sold those shares of Common Stock as
part of the Offering.

In general, purchases of a security for the purposes of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the applicable offering.

Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the transactions
described above may have on the price of the Common Stock. In addition, neither
the Company nor any of the Underwriters makes any representation that the
Representatives or the Lead Managers will engage in such transactions or that
such transactions, once commenced, will not be discontinued without notice.

37
<PAGE> 43

Application will be made to have the Common Stock issued in the Offering
approved for listing on the NYSE.

Each of the Underwriters except CIBC Oppenheimer Corp. has from time to
time provided certain investment banking services to the Company and its
affiliates for which they have received customary fees. In addition, Lehman
Brothers Inc., Bear, Stearns & Co. Inc., Donaldson, Lufkin & Jenrette Securities
Corporation and C.E. Unterberg, Towbin have acted as underwriters in connection
with public and private offerings of stock and debt of the company and certain
of its affiliates. A. Robert Towbin, who is a member of GTL's Board of Directors
and a member of the General Partners' Committee of Globalstar, is a managing
director of C.E. Unterberg, Towbin.

LEGAL OPINIONS

The validity of the Common Stock offered hereby will be passed upon for
Loral by Appleby, Spurling & Kempe, Hamilton, Bermuda. Certain other matters
will be passed upon for Loral by Willkie Farr & Gallagher, New York, New York,
and for the Underwriters by Cravath, Swaine & Moore, New York, New York. Mr.
Robert B. Hodes is of counsel to the law firm of Willkie Farr & Gallagher, a
Director of the Company and a member of the Executive and Audit Committees of
the Company, and owns 20,000 shares of Common Stock.

EXPERTS

The consolidated financial statements of Loral, SS/L and Loral's affiliate
Globalstar, and the financial statement schedule of Loral incorporated in this
Prospectus by reference from Loral's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997 have been audited by Deloitte & Touche LLP,
independent auditors, as stated in their reports, which are incorporated herein
by reference, and have been so incorporated in reliance upon the reports of such
firm given upon their authority as experts in auditing and accounting.

The consolidated financial statements of SatMex incorporated in this
Prospectus by reference from Loral's Current Report on Form 8-K filed on January
13, 1998 have been audited by Price Waterhouse LLP, independent auditors, as
stated in their reports, which are incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm given upon their
authority as experts in auditing and accounting.

The consolidated financial statements of Orion Network Systems, Inc.
included in its Annual Report on Form 10-K for the year ended December 31, 1997
and incorporated by reference in the Form 8-K of Loral Space & Communications
Ltd. dated March 20, 1998, as amended by Form 8-K/A dated April 27, 1998, which
Forms 8-K and 8-K/A are incorporated herein by reference, have been audited by
Ernst & Young LLP, independent auditors, as set forth in their report thereon
included in such Form 10-K and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by reference in
reliance upon such report given upon the authority of such firm as experts in
accounting and auditing.

38
<PAGE> 44

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed by Loral with the Commission
pursuant to the Exchange Act and are hereby incorporated by reference into this
Prospectus:

(a) Loral's Annual Report on Form 10-K for the year ended December 31,
1997;

(b) Loral's Proxy Statement relating to the 1998 Annual Meeting of
Stockholders;

(d) Loral's Current Report on Form 8-K/A, filed on March 4, 1998;

(e) Loral's Current Report on Form 8-K, filed on April 6, 1998; and

(f) Loral's Current Report on Form 8-K/A, filed on April 27, 1998.

All documents filed by Loral pursuant to Section 13(a), 13(c), 14 or 15(d)
of the Exchange Act after the date of this Prospectus and prior to the
termination of the offering of the Common Stock offered hereby shall be deemed
to be incorporated by reference in this Prospectus and to be a part hereof from
the date of filing such documents (provided, however, that the information
referred to in item 402(a)(8) of Regulation S-K of the Commission shall not be
deemed specifically incorporated by reference herein).

Any statement contained herein or in a document incorporated or deemed to
be incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
(or in the applicable Prospectus Supplement) or in any other subsequently filed
document which also is or is deemed to be incorporated by reference herein
modifies or supersedes such statement. Any such statement as modified or
superseded shall not be deemed, except as so modified or superseded, to
constitute a part of this Prospectus.

Loral will provide without charge to each person, including any beneficial
owner, to whom a copy of this Prospectus has been delivered, upon the written or
oral request of any such person, a copy of any or all of the documents
incorporated by reference in this Prospectus (other than exhibits and schedules
thereto, unless such exhibits or schedules are specifically incorporated by
reference into the information that this Prospectus incorporates). Written or
oral requests for copies of these documents should be directed to Loral Space &
Communications Ltd., 600 Third Avenue, New York, New York 10016, Attention:
Secretary (Telephone (212) 697-1105).

39
<PAGE> 45

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE REPLIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY OR ANY OF THE U.S. UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO
SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION
WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES,
CREATE AN IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY
TIME SUBSEQUENT TO THE DATE HEREOF.

---------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Available Information................. ii
Forward-Looking Statements............ ii
Prospectus Summary.................... 1
Risk Factors.......................... 9
Use of Proceeds....................... 16
Dividend Policy....................... 16
Price Range of Common Stock........... 16
Capitalization........................ 17
Management's Discussion and Analysis
of Results of Operations and
Financial Condition................. 18
Business.............................. 25
Description of Capital Stock.......... 32
Taxation.............................. 34
Underwriting.......................... 35
Legal Opinions........................ 38
Experts............................... 38
Incorporation of Certain Documents by
Reference........................... 39
</TABLE>

======================================================
======================================================
[LOGO]
16,000,000 SHARES
COMMON STOCK
---------------------------
PROSPECTUS
, 1998
---------------------------
LEHMAN BROTHERS

BEAR, STEARNS & CO. INC.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

BANCAMERICA ROBERTSON STEPHENS
C.E. UNTERBERG, TOWBIN
CIBC OPPENHEIMER
NATIONSBANC
MONTGOMERY SECURITIES LLC

======================================================
<PAGE> 46

======================================================

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY
OR ANY OF THE U.S. UNDERWRITERS. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF
ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY, TO ANY PERSON IN ANY JURISDICTION WHERE SUCH AN
OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS
NOT ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO THE DATE HEREOF.

---------------------------

TABLE OF CONTENTS

BEAR, STEARNS INTERNATIONAL LIMITED

DONALDSON, LUFKIN & JENRETTE
INTERNATIONAL

BANCAMERICA ROBERTSON STEPHENS
C.E. UNTERBERG, TOWBIN
CIBC OPPENHEIMER
NATIONSBANC
MONTGOMERY SECURITIES LLC

======================================================
<PAGE> 47

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the fees and expenses payable by the
Registrant in connection with this offering, other than underwriting discounts
and commissions. All the amounts shown are estimates, except the SEC
registration fee:

<TABLE>
<S> <C>
SEC registration fee........................................ $ 177,902
NASD fee.................................................... 30,500
NYSE listing fee............................................ *
Printing fees............................................... *
Legal fees and expenses..................................... 150,000
Accounting fees and expenses................................ *
Miscellaneous fees and expenses............................. *
---------
Total............................................. $ *
=========
</TABLE>

- ---------------
*To be provided by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Bermuda law permits a company to indemnify its directors and officers,
except for any act of fraud or dishonesty. The Registrant has provided in its
Bye-Laws that its directors and officers will be indemnified and held harmless
against any expenses, judgments, fines, settlements and other amounts incurred
by reason of any act or omission in the discharge of their duty, other than in
the case of fraud or dishonesty.

Bermuda law and the Bye-Laws of the Registrant also permit the Registrant
to purchase insurance for the benefit of its directors and officers against any
liability incurred by them for the failure to exercise the requisite care,
diligence and skill in the exercise of their powers and the discharge of their
duties, or indemnifying them in respect of any loss arising or liability
incurred by them by reason of negligence, default, breach of duty or breach of
trust.

The Registrant intends to enter into indemnification agreements with its
officers and directors. To the extent permitted by law, the indemnification
agreements may require the Registrant, among other things, to indemnify such
officers and directors against certain liabilities that may arise by reason of
their status or service as directors (other than liabilities arising from
willful misconduct of a culpable nature) and to advance their expenses incurred
as a result of any proceedings against them as to which they could be
indemnified.

The Registrant maintains a directors' and officers' liability insurance
policy.

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S>
1* -- Underwriting Agreement
4.1** -- Memorandum of Association
4.2** -- Second Amended and Restated Bye-Laws
5* -- Opinion of Appleby, Spurling & Kempe
8.1* -- Opinion of Appleby, Spurling & Kempe
8.2* -- Opinion of Willkie Farr & Gallagher
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Ernst & Young LLP
23.3 -- Consent of Price Waterhouse
23.4* -- Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5)
24 -- Powers of Attorney
</TABLE>

II-1
<PAGE> 48

- ---------------

* To be filed by amendment.

** Incorporated by reference to Loral's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (File No. 1-14180).

ITEM 17. UNDERTAKINGS

(a) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers, and controlling persons of
the registrant pursuant to the provisions described under item 15 above, or
otherwise, the registrant has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as
expressed in the Act and is, therefore, unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer, or controlling
person of the registrant in the successful defense of any action, suit or
proceeding), is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.

II-2
<PAGE> 49

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT MEETS ALL OF THE
REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS REGISTRATION
STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY
AUTHORIZED, IN THE CITY OF NEW YORK, STATE OF NEW YORK, ON APRIL 27, 1998.

LORAL SPACE & COMMUNICATIONS LTD.

BY: *

------------------------------------
BERNARD L. SCHWARTZ
CHAIRMAN OF THE BOARD AND
CHIEF EXECUTIVE OFFICER

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>

* Chairman of the Board and Chief
- ------------------------------------------------ Executive Officer (Principal
Bernard L. Schwartz Executive Officer) April 27, 1998

Director
- ------------------------------------------------
Howard Gittis

* Director
- ------------------------------------------------
Robert B. Hodes April 27, 1998

* Director
- ------------------------------------------------
Gershon Kekst April 27, 1998

* Director
- ------------------------------------------------
Charles Lazarus April 27, 1998

* Director
- ------------------------------------------------
Malvin A. Ruderman April 27, 1998

* Director
- ------------------------------------------------
E. Donald Shapiro April 27, 1998

* Director
- ------------------------------------------------
Arthur L. Simon April 27, 1998

* Director
- ------------------------------------------------
Daniel Yankelovich April 27, 1998
</TABLE>

II-3
<PAGE> 50

<TABLE>
<CAPTION>
NAME TITLE DATE
---- ----- ----
<C> <S> <C>
* First Senior Vice President and
- ------------------------------------------------ Chief Financial Officer
Michael P. DeBlasio (Principal Financial Officer) April 27, 1998

* Vice President and Controller
- ------------------------------------------------ (Principal Accounting Officer)
Harvey B. Rein April 27, 1998

* By: /s/ ERIC J. ZAHLER
------------------------------------------
Attorney-In-Fact
</TABLE>

II-4
<PAGE> 51

EXHIBIT INDEX

ITEM 16. EXHIBITS.

<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION OF EXHIBITS
------- -----------------------
<C> <S> <C>
1* -- Underwriting Agreement
4.1** -- Memorandum of Association
4.2** -- Second Amended and Restated Bye-Laws
5* -- Opinion of Appleby, Spurling & Kempe
8.1* -- Opinion of Appleby, Spurling & Kempe
8.2* -- Opinion of Willkie Farr & Gallagher
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consent of Ernst & Young LLP
23.3 -- Consent of Price Waterhouse
23.4* -- Consent of Appleby, Spurling & Kempe (included in their
opinion filed as Exhibit 5)
24 -- Powers of Attorney
</TABLE>

- ---------------

* To be filed by amendment.

** Incorporated by reference to Loral's Annual Report on Form 10-K for the
fiscal year ended December 31, 1996 (File No. 1-14180).

<PAGE> 1

EXHIBIT 23.1

CONSENT OF DELOITTE & TOUCHE LLP

We consent to the incorporation by reference in this Registration Statement
of Loral Space & Communications Ltd. (a Bermuda company) on Form S-3 of our
reports with respect to the consolidated financial statements of Loral Space &
Communications Ltd., Space Systems/Loral, Inc. and Globalstar L.P. and the
financial statement schedule of Loral Space & Communications Ltd. appearing in
or incorporated by reference in the Annual Report on Form 10-K of Loral Space &
Communications Ltd. for the year ended December 31, 1997 and to the reference to
us under the heading "Experts" in the Prospectus, which is part of this
Registration Statement.

DELOITTE & TOUCHE LLP
New York, New York
April 27, 1998

<PAGE> 1

EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333-xxxxx) and related Prospectus of Loral
Space & Communications Ltd. for the registration of 18,400,000 shares of its
common stock and to the incorporation by reference therein of our report dated
February 20, 1998, with respect to the consolidated financial statements of
Orion Network Systems, Inc. included in its Annual Report on Form 10-K for the
year ended December 31, 1997, incorporated by reference in the Form 8-K of Loral
Space & Communications Ltd. dated March 20, 1998, as amended by Form 8-K/A dated
April 27, 1998, which Forms 8-K and 8-K/A are incorporated herein by reference.

/s/ Ernst & Young LLP

Washington D.C.
April 27, 1998

<PAGE> 1

EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the incorporation by reference in the Prospectus
constituting part of the Registration Statement on Form S-3 dated April 27, 1998
of Loral Space & Communications Ltd. of our report on the financial statements
of the fixed satellite service business of Telecomunicaciones de Mexico (the
"Predecessor Company" of Satelites Mexicanos, S.A. de C.V.) dated December 15,
1997, except for Note 9 which is as of January 5, 1998, and our report on the
balance sheet of Satelites Mexicanos, S.A. de C.V. dated December 15, 1997,
except for Note 9 which is as of January 5, 1998, which appear in the Current
Report on Form 8-K of Loral Space & Communications Ltd. dated January 13, 1998.

Price Waterhouse

Mexico City
April 27, 1998

<PAGE> 1

EXHIBIT 24

POWER OF ATTORNEY

EACH OF THE UNDERSIGNED OFFICERS AND DIRECTORS OF LORAL SPACE &
COMMUNICATIONS LTD. HEREBY SEVERALLY CONSTITUTES AND APPOINTS BERNARD L.
SCHWARTZ, GREGORY J. CLARK, MICHAEL P. DEBLASIO, ERIC J. ZAHLER, NICHOLAS C.
MOREN AND HARVEY B. REIN, AND EACH OF THEM AS THE ATTORNEYS-IN-FACT FOR THE
UNDERSIGNED, IN ANY AND ALL CAPACITIES, WITH FULL POWER OF SUBSTITUTION, TO SIGN
ANY AND ALL PRE-OR POST-EFFECTIVE AMENDMENTS TO THIS REGISTRATION STATEMENT, ANY
SUBSEQUENT REGISTRATION STATEMENT FOR THE SAME OFFERING WHICH MAY BE FILED
PURSUANT TO RULE 462(B) UNDER THE SECURITIES ACT OF 1933 AND ANY AND ALL PRE-OR
POST-EFFECTIVE AMENDMENTS THERETO, AND TO FILE THE SAME WITH EXHIBITS THERETO
AND OTHER DOCUMENTS IN CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE
COMMISSION, GRANTING UNTO SAID ATTORNEYS-IN-FACT, AND EACH OF THEM, FULL POWER
AND AUTHORITY TO DO AND PERFORM EACH AND EVERY ACT AND THING REQUISITE AND
NECESSARY TO BE DONE IN AND ABOUT THE PREMISES, AS FULLY TO ALL INTENTS AND
PURPOSES AS HE MIGHT OR COULD DO IN PERSON, HEREBY RATIFYING AND CONFIRMING ALL
THAT EACH SAID ATTORNEY-IN-FACT, OR EITHER OF THEM, MAY LAWFULLY DO OR CAUSE TO
BE DONE BY VIRTUE HEREOF.

<TABLE>
<CAPTION>
SIGNATURES TITLE DATE
---------- ----- ----
<C> <S> <C>
/s/ BERNARD L. SCHWARTZ Chairman of the Board, Chief
------------------------------------------------ Executive Officer (Principal
Bernard L. Schwartz Executive Officer) April 27, 1998

Director
------------------------------------------------
Howard Gittis April 27, 1998

/s/ ROBERT B. HODES Director
------------------------------------------------
Robert B. Hodes April 27, 1998

/s/ GERSHON KEKST Director
------------------------------------------------
Gershon Kekst April 27, 1998

/s/ CHARLES LAZARUS Director
------------------------------------------------
Charles Lazarus April 27, 1998

/s/ MALVIN A. RUDERMAN Director
------------------------------------------------
Malvin A. Ruderman April 27, 1998

/s/ E. DONALD SHAPIRO Director
------------------------------------------------
E. Donald Shapiro April 27, 1998

/s/ ARTHUR L. SIMON Director
------------------------------------------------
Arthur L. Simon April 27, 1998

/s/ DANIEL YANKELOVICH Director
------------------------------------------------
Daniel Yankelovich April 27, 1998

/s/ MICHAEL P. DEBLASIO First Senior Vice President and
------------------------------------------------ Chief Financial Officer (Principal
Michael P. DeBlasio Financial Officer) April 27, 1998

/s/ HARVEY B. REIN Vice President and Controller
------------------------------------------------ (Principal Accounting Officer)
Harvey B. Rein April 27, 1998
</TABLE>