Alcatel Suing Loral

Alcatel Space has filed suit against Loral Space & Communications to avoid being excluded from any future sale of Loral or its satellite manufacturing division, Space Systems/Loral. Alcatel filed its complaint with a New York court on March 16. Under a 1997 agreement, Alcatel holds 3.4% of Loral shares, has seats on Space Systems/Loral’s board of directors and has veto power over certain decisions relating to the company. The agreement also gives Alcatel right of first refusal on any sale of Loral or Space Systems/Loral. According to the lawsuit, Loral has been negotiating a transaction with “at least one party” involving the consolidation or restructuring of Space Systems/Loral.

Alcatel claims Loral has violated agreement terms and tried to nullify it unilaterally without the required one-year notice. Loral said it submitted the notice on February 22 giving a year's notice of its intention to withdraw from a construction partnership. Alcatel accuses Loral and its Space Systems/Loral unit of breaking its agreements and the legal action is, in Alcatel’s words, to "protect our rights". Alcatel Space has taken action against Loral to oppose its “unilateral violation and illegal termination” of the construction partnership agreement between the two companies. Alcatel said the action aims to enforce Alcatel Space rights relating to the management and strategy of Loral's Space Systems/Loral unit. Loral says, “We think Alcatel’s case is without merit and we intend to defend against it vigorously.”

Alcatel denies that other ventures with Loral are affected by the legal action, including the participation of both companies in the Skybridge consortium and the EuropeStar joint venture. Alcatel Spacecom hold 51% of EuropeStar, with Loral Space and Communications holding 49%. EuropeStar currently operates two satellites, EuropeStar B and EuropeStar 1, with a third satellite, EuropeStar 2, on order and scheduled for launch in 2002.

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