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Satellite operator Orbital Imaging Corp., unable to favorably restructure about $225 million in notes, has followed through on its plan to file a Chapter 11 petition. The Dulles, Va., company had hoped to file the prepackaged bankruptcy plan last month, the one-year anniversary of its default on its senior unsecured notes. Orbital Imaging, also known as Orbimage, warned in September, following the failed launch of its OrbView-4 imaging satellite, that it would file a voluntary bankruptcy petition and distribute the launch insurance proceeds to bondholders. An unplanned mid-flight maneuver caused the rocket to deliver Orb-view-4 and a NASA ozone-measuring satellite too low to sustain orbit. The satellites and a payload of human ashes sent up by Celestis Inc. fell into the Indian Ocean. Orbimage received $13 million from its insurers; bondholders provided Orbimage with $50 million in additional coverage, about $34 million of which will go directly back to them. Institutional investors such as Merrill Lynch & Co. and J.P. Morgan Chase & Co. hold most of Orbimage that Orbital Sciences Corp. does not own. Under Orbimage’s proposed reorganization plan, which it has yet to file, the company’s unsecured notes would be exchanged for notes secured by Orbimage’s assets. Orbital Sciences will add $1.2 million, defer $8.6 million in payments that were due to the company for construction and launch of the satellites and provide $3.6 million debtor-in-possession working capital. Orbimage will also raise $6 million in new notes. The filing, in the U.S. Bankruptcy Court for the Eastern District of Virginia, did not detail assets and liabilities. Geoffrey Manne of law firm Latham & Watkins represents Orbimage. Cash on hand would carry Orbimage through the launch of its Orbview-3 satellite, expected later this year, said Armand Mancini, chief financial officer. Orbimage said Monday its plan had the support of the stockholders and an informal committee representing more than 50 percent of the holders of the 115/8 percent notes. Over the past year, Orbital Sciences has divested noncore satellite operations, including a $70 million sale of satellite navigation operation Magellan Corp. to Paris-based Thales Group. Orbital also sold its stake in Navigation Solutions, a Plano, Texas, auto navigation joint venture with Hertz Corp. and its share of the electronics engineering company. Copyright (c)2002 TDD, LLC. All rights reserved.

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