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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported):
September 9, 1998
LORAL SPACE & COMMUNICATIONS LTD.
(Exact name of registrant as specified in its charter)
Islands of Bermuda 1-14180 13-3867424
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification
incorporation) Number)
c/o Loral SpaceCom Corporation
600 Third Avenue, New York, New York 10016
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 697-1105
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Item 5. Other Events.
Globalstar, L.P. ("Globalstar") announced today that a Zenit 2 rocket
malfunction has resulted in the loss of 12 Globalstar satellites shortly after
lift-off from the Baikonur Cosmodrome in Kazakhstan. These 12 satellites were
fully insured. In light of the failure, Globalstar is implementing back-up
launch plans previously put in place, and currently plans to launch its next 32
satellites in eight groups of four satellites each aboard Starsem Soyuz and
Boeing Delta II rockets, with the intention of commencing service with a
constellation of at least 32-satellites in third quarter of 1999. Globalstar
intends to consider all available launch alternatives, including the Zenit, for
the launch of the satellites necessary to complete its full constellation of 48
satellites, plus four in-orbit spares. The Boeing Delta II successfully launched
the first eight Globalstar satellites in two groups of four in February and
April 1998.
Globalstar has 14 completed satellites at the launch base in Baikonur,
16 more in final integration and test and another 14 under construction. These
satellites would, barring any future failures, be sufficient for Globalstar's
planned 48-satellite constellation, with four in-orbit spares. Globalstar's
preliminary estimate of the incremental cost of the shift in its launch strategy
to the Soyuz and Delta vehicles after receipt of insurance proceeds is
approximately $85 million, assuming that one Zenit will be used for the launch
of the last 12 satellites in the constellation. Globalstar would incur
additional expenses if it elects to build additional in-orbit or ground spares,
and would incur substantial additional launch costs if it decides not to use the
Zenit for any future launches. In addition, the revised launch schedule will
result in additional interest and operational costs prior to the systems'
in-service date of approximately $100 million. These additional costs plus the
delay in receipt of planned service revenues will require Globalstar to seek
additional financing.
According to early press reports, a Russian Space Agency spokesman
attributed the failure to "a malfunction command on the [rocket] guidance
system 272 seconds after launch," after which "the motors on the Zenit rocket
cut out and it fell to Earth." While the Russian Space Agency has established a
special commission to investigate the cause of the Zenit failure, there can be
no assurance that the results of that investigation will be made available in
timely fashion to Globalstar, or that Globalstar and its insurers will deem the
Zenit vehicle appropriate for future launches. Moreover, Globalstar's plan to
commence service in 1999 remains subject to a number
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of additional risks, including the risk of future launch failures, political
uncertainty affecting launches in the former Soviet Union, availability of firm
launch dates and prices, and other risks disclosed in more detail in
Globalstar's 1997 Annual Report on Form 10-K.
This report contains forward-looking statements, including statements
regarding schedules for future satellite launches and commencement of commercial
service of the Globalstar system. These forward-looking statements are based on
a number of assumptions including very preliminary assessments of the effect of
the Zenit 2 launch failure yesterday and actual results may be materially
different from those expressed or implied by such statements. For a description
of factors which may cause results for Globalstar to differ materially from
those expressed or implied by such forward-looking statements, please consult
the Securities and Exchange Act filings of Globalstar Telecommunications
Limited.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
LORAL SPACE & COMMUNICATIONS LTD.
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(Registrant)
Date: September 10, 1998 By: /s/ Eric J. Zahler
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Eric J. Zahler
Senior Vice President,
General Counsel and Secretary
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