NEW YORK – August 27, 2002 – Loral Space & Communications (NYSE: LOR) has
commenced an exchange offer for all of its outstanding preferred stock as
part of its ongoing strategy to reduce debt and increase its financial
flexibility, it was announced today by Bernard L. Schwartz, chairman and
chief executive officer.

The company said it continues to generate substantial positive cash flow
from operations and has decided to take this step to enhance its balance
sheet by further reducing its fixed obligations. Loral has successfully
implemented previous exchanges for its preferred stock.

Loral said that it is offering to exchange $1.92 in cash and four shares of
Loral common stock for each share of its Series C and Series D preferred
stock. The offer represents a total of $3.96 for each share of Series C and
D preferred stock, based on today’s closing price of $.51 for Loral common
stock.

As of June 30, 2002, there were 8,084,174 outstanding shares of the Series C
preferred stock and 3,391,688 outstanding shares of the Series D preferred
stock. If all of the preferred shares participate, Loral will exchange $22
million in cash and 45.9 million common shares for preferred stock that has
a liquidation preference of $574 million.

The offer is contingent on participation of a minimum of 50 percent, in the
aggregate, of all outstanding shares of the two series of preferred stock.

The offer extends to all outstanding shares of the Series C and D Preferred
issues, and remains open until 12:00 a.m. midnight, New York City time,
September 25, 2002, unless extended.

In connection with this financial strategy, Loral’s Board of Directors has
approved a plan to suspend indefinitely the future payment of dividends on
its two series of preferred stock. Accordingly, Loral will defer the
payment of quarterly dividends due on its Series C preferred stock on
November 1, 2002, and its Series D preferred stock on November 15, 2002.
Dividends on the two series will continue to accrue.

Documents describing the exchange offer in greater detail are being mailed
to holders of Series C and Series D Preferred Stock. Series C and D
shareholders who wish to participate in the exchange offer should contact
the company’s information agent, Morrow & Co., Inc., at (800) 607-0088.
Exchanges will be effected by The Bank of New York, the exchange agent for
the offer.

Loral Space & Communications is a high technology company that concentrates
primarily on satellite manufacturing and satellite-based services. For more
information, visit Loral’s web site at www.loral.com.

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This announcement is neither an offer to purchase nor a solicitation of an
offer to sell shares of Series C Convertible Redeemable Preferred Shares due
2006 or Series D Convertible Redeemable Preferred Shares due 2007 of Loral
Space & Communications Ltd. Loral intends to file an offer to exchange and a
letter of transmittal with the United States Securities and Exchange
Commission (“SEC”) relating to its offer to exchange outstanding Series C
Preferred Shares and Series D Preferred Shares for cash and shares of Loral
common stock. Before any decision is made with respect to the offer, all
holders of Series C Preferred Shares and Series D Preferred Shares are
strongly advised to read the offer to exchange and letter of transmittal
when these documents become available. These and other documents filed with
the SEC will contain important information relating to the offer. These
documents will be available at no charge on the SEC’s website at
http://www.sec.gov. Copies of the offer to exchange and certain related
documents may be obtained from Loral for free by contacting the information
agent for the offer, Morrow & Co., Inc.

This document contains forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. In addition, Loral Space &
Communications Ltd. or its representatives have made or may make
forward-looking statements, orally or in writing. Such forward-looking
statements may be included in, but are not limited to, various filings made
by the company with the Securities and Exchange Commission, press releases
or oral statements made with the approval of an authorized executive officer
of the company. Actual results could differ materially from those projected
or suggested in any forward-looking statements as a result of a wide variety
of factors and conditions, which have been described in the section of the
company’s annual report on Form 10-K for the fiscal year ended December 31,
2001, entitled “Certain Factors That May Affect Future Results,” and the
company’s other filings with the Securities and Exchange Commission. The
reader is specifically referred to these documents regarding the factors and
conditions that may affect future results.