BCE Sells Telesat

MONTREAL -- BCE Inc. (TSX/NYSE:BCE) today announced the sale of its satellite services subsidiary Telesat Canada for $3.42 billion to a new acquisition company formed by Canada's Public Sector Pension Investment Board (PSP Investments) and Loral Space & Communications Inc.

Consistent with BCE's stated strategy of concentrating on Bell, its core communications business, the company had previously announced its intention to surface the value Telesat represents for its shareholders through an IPO or strategic sale.

Net of Telesat's debt, BCE will realize total proceeds of $3.25 billion from the all cash transaction, which represents a significant premium to comparable public market valuations. Because of existing capital losses, the transaction will be completed on a tax-free basis. The sale is subject to regulatory approval both in Canada and the United States, and is expected to close in mid-2007. Other customary conditions must also be satisfied.

PSP Investments, the pension fund manager for Canada's federal public service, the Canadian Forces, the Royal Canadian Mounted Police, and other Canadian investors will hold majority voting control in the new company, thereby ensuring strong Canadian control of Telesat. Seventy per cent of board members of the new Telesat and eighty per cent of the board of the operating company will be resident Canadians.

On closing, Loral - a recognized leader in satellite manufacturing and satellite services - will contribute its Loral Skynet business, which involves complementary satellite services assets in Europe, Asia, the Middle East and Latin America to the new company. Combined with Telesat's existing services, in North and South America, the new Telesat will be a truly global operator of scale, headquartered in Ottawa.

"At the outset of this process, we set three goals," said BCE Chief Executive Officer Michael Sabia. "First, we were determined to surface the value of the asset. Second, we wanted to make certain any transaction fully protected the future of ExpressVu. And finally, we wanted to position Telesat as a truly global player in a rapidly consolidating industry."

"This transaction meets each of those objectives," Sabia added. "The new company will be the fourth largest satellite services operator in the world. Global in scale, but Canadian based and Canadian controlled."

In a separate release:

NEW YORK and MONTREAL -- Loral Space & Communications Inc. (Nasdaq: LORL) today announced that it and its Canadian partner, the Public Sector Pension Investment Board (PSP Investments), have entered into a definitive agreement with BCE Inc. (NYSE: BCE; TSX) pursuant to which a joint venture company formed by PSP Investments and Loral will acquire 100 percent of the stock of Telesat Canada from BCE for approximately US $2.8 billion (CAD 3.25 billion), plus the assumption of US $148 million (CAD 172 million) of debt.

In connection with this transaction, Loral will transfer the fixed satellite services and network services assets of Loral Skynet to a new Canadian company, to be known as Telesat, based in Ottawa formed by Loral and PSP Investments. This new company will be one of the world's largest operators of telecommunications satellites, with a combined fleet of eleven satellites and four additional satellites to be launched over the next three years. The new company will have combined trailing 12 months revenue for the period ended September 30, 2006 of approximately US $568 million (CAD 658 million) and US $4.9 billion (CAD 5.6 billion) of backlog, generating combined trailing 12 months Adjusted EBITDA for the period ended September 30, 2006 of approximately US $295 million (CAD 341 million).

The new company will feature a management team to be drawn from both Telesat and Loral Skynet and Daniel Goldberg will continue to serve as chief executive officer. Loral and PSP Investments will hold a 64 percent and 36 percent economic interest, respectively, in the new company. Consistent with Canadian law, Loral's total voting equity will be 33.3 percent, with PSP Investments and other Canadian investors having 66.7 percent.

Michael B. Targoff, chief executive officer of Loral, said, "This transaction converts Loral's ownership of its current FSS business into a 64 percent economic interest in a premier global provider of satellite services with a large, high-quality backlog, international scope and access to high growth markets. Loral looks forward to an exciting partnership with PSP Investments and wants to thank MHR Fund Management LLC, Loral's largest shareholder, for its substantial assistance in bringing about this transaction."

BCE Inc. (Bell Canada) (NYSE/Toronto: BCE)

Loral Space & Communications Ltd.