Loral says MHR's $300M investment ruled unfair

A Delaware court ruled that MHR Fund Management LLC's $300 million investment in Loral Space & Communications Inc. did not meet the fairness standard under that state's law, Loral said Monday.

The Delaware Chancery Court held that MHR's preferred shares be converted into 9.5 million nonvoting common shares, Loral said. As a result, MHR will own 56 percent of Loral's total equity and 35.5 percent of its voting power, the same voting power it had prior to the investment, Loral said.

Last year, Highland Capital Management LP filed a class action lawsuit against Loral, alleging the company breached its fiduciary duties during a private transaction with MHR.

Loral also said the court dismissed an action brought by noteholders of Loral Skynet, and determined an early redemption of Loral Skynet's 14 percent senior secured cash/PIK notes due 2015 was proper.

The court said the parties could collaborate to implement the decision and present it to the court within 15 days.

Shares of Loral rose 33 cents, or 2.1 percent, to $15.76 in afternoon trading.

(This version CORRECTS lede to read investment did NOT meet fairness standard.)