SC 13D/A

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

SCHEDULE 13D

Under the Securities Exchange Act of 1934
(Amendment No. 3 )*

LORAL SPACE & COMMUNICATIONS INC.

(Name of Issuer)

Common Stock, par value $0.01 per share

(Title of Class of Securities)

543881106

(CUSIP Number)

J. Kevin Ciavarra
Highland Capital Management, L.P.
Two Galleria Tower
13455 Noel Road, Suite 800
Dallas, Texas 75240
(972) 628-4100

(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)

March 12, 2007

(Date of Event which Requires Filing of this Statement)

If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of §§240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the following box. þ

Note: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See §240.13d-7 for other parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person’s initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed to be “filed” for the purpose of Section 18 of the Securities Exchange Act of 1934 (“Act”) or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes).

Persons who respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

CUSIP No. 543881106  13 D Page 2  of  13 

1	NAMES OF REPORTING PERSONS: Highland Multi-Strategy Onshore Master SubFund, L.L.C., a Delaware limited liability company
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
	20-5237162
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a)   þ
	(b)   o
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS):
	WC
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION:
	Delaware
		7	SOLE VOTING POWER:
NUMBER OF			0
SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			100,150
EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER:
			100,150
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
	100,150
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
	0.5%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
	OO

CUSIP No. 543881106  13 D Page 3  of  13 

1	NAMES OF REPORTING PERSONS: Highland Multi-Strategy Master Fund L.P., a Bermuda limited partnership
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a)   þ
	(b)   o
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS):
	AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION:
	Bermuda
		7	SOLE VOTING POWER:
NUMBER OF			0
SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			100,150
EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER:
			100,150
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
	100,150
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
	0.5%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
	PN

CUSIP No. 543881106  13 D Page 4  of  13 

1	NAMES OF REPORTING PERSONS: Highland Multi-Strategy Fund GP, L.P., a Delaware limited partnership
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a)   þ
	(b)   o
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS):
	AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION:
	Delaware
		7	SOLE VOTING POWER:
NUMBER OF			0
SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			100,150
EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER:
			100,150
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
	100,150
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
	0.5%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
	PN

CUSIP No. 543881106  13 D Page 5  of  13 

1	NAMES OF REPORTING PERSONS: Highland Multi-Strategy Fund GP, L.L.C., a Delaware limited liability company
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a)   þ
	(b)   o
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS):
	AF
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION:
	Delaware
		7	SOLE VOTING POWER:
NUMBER OF			0
SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			100,150
EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER:
			100,150
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
	100,150
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
	0.5%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
	OO

CUSIP No. 543881106  13 D Page 6  of  13 

1	NAMES OF REPORTING PERSONS: Highland Capital Management, L.P., a Delaware limited partnership
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
	75-2716725
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a)   þ
	(b)   o
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS):
	AF/BK
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION:
	Delaware
		7	SOLE VOTING POWER:
NUMBER OF			0
SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			1,159,676
EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER:
			1,159,676
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
	1,159,676
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
	5.8%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
	IA/PN

CUSIP No. 543881106  13 D Page 7  of  13 

1	NAMES OF REPORTING PERSONS: Strand Advisors, Inc., a Delaware corporation
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
	95-4440863
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a)   þ
	(b)   o
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS):
	AF/BK
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION:
	Delaware
		7	SOLE VOTING POWER:
NUMBER OF			0
SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			1,159,676
EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER:
			1,159,676
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
	1,159,676
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
	5.8%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
	CO

CUSIP No. 543881106  13 D Page 8  of  13 

1	NAMES OF REPORTING PERSONS: James Dondero
	I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY):
2	CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (SEE INSTRUCTIONS):
	(a)   þ
	(b)   o
3	SEC USE ONLY:
4	SOURCE OF FUNDS (SEE INSTRUCTIONS):
	AF/BK
5	CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e):
	o
6	CITIZENSHIP OR PLACE OF ORGANIZATION:
	United States
		7	SOLE VOTING POWER:
NUMBER OF			0
SHARES		8	SHARED VOTING POWER:
BENEFICIALLY
OWNED BY			1,159,676
EACH		9	SOLE DISPOSITIVE POWER:
REPORTING
PERSON			0
WITH		10	SHARED DISPOSITIVE POWER:
			1,159,676
11	AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON:
	1,159,676
12	CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES (SEE INSTRUCTIONS):
	o
13	PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11):
	5.8%
14	TYPE OF REPORTING PERSON (SEE INSTRUCTIONS):
	IN

* SEE INSTRUCTIONS BEFORE FILLING OUT!

CUSIP No. 543881106  13 D Page 9  of  13 

     This Amendment No. 3 to Schedule 13D amends and supplements the Schedule 13D filed with the Securities and Exchange Commission (the “Commission”) on October 24, 2006, as amended by Amendment No. 1 to Schedule 13D filed with the Commission on October 25, 2006 and Amendment No. 2 to Schedule 13D filed with the Commission on November 17, 2006 (as amended, the “Schedule 13D”). Capitalized terms used herein which are not defined herein have the meanings given to such terms in the Schedule 13D. Except as otherwise provided herein, all Items of the Schedule 13D remain unchanged.

Item 4. Purpose of the Transaction.

     Item 4 is hereby supplemented as follows:

     Although the Issuer’s Special Committee indicated that Highland Capital would receive a response to Highland Capital’s Proposal to the Issuer’s Special Committee dated October 23, 2006 and that such Proposal was being taken under consideration, Highland Capital never received any communications regarding the Proposal beyond the Special Committee acknowledging receipt of the Proposal on October 24, 2006.

     On October 27, 2006, the Issuer issued a press release announcing that “in response to certain shareholders’ recent expressions of interest in participating in its financing plans, it has requested that MHR Fund Management LLC consider proposing an alternative to the recently announced $300 million equity financing transaction that would include the participation of all interested shareholders” and that “MHR has indicated to Loral that it is pleased with the interest shown by shareholders and that its response will be forthcoming.”

     On February 26, 2007, the Issuer filed a Current Report on Form 8-K to announce an update with respect to its agreement to sell $300 million of convertible perpetual preferred stock to affiliates (the “MHR Purchasers”) of MHR Fund Management LLC (“MHR”), Loral’s largest shareholder. In the press release filed with the February 26, 2007 Form 8-K, the Issuer announced “[f]ollowing shareholder expressions of interest and concerns after the agreement was announced on October 17, 2006, the Company and MHR considered adjustments and other alternatives to the agreed upon transaction that would have included a component for broader shareholder participation, while simultaneously seeking the regulatory approvals required under the agreement.” According to the Issuer, among the approvals needed to complete the sale of the preferred stock was that “NASDAQ confirm that shareholder approval is not required under the NASDAQ Marketplace Rules.” The Issuer further indicated that it and MHR were advised on February 26, 2007 “by NASDAQ that the transaction will not require shareholder approval, provided certain terms are amended to comply with NASDAQ rules.” According to the press release “NASDAQ has also indicated that adjustments or alternatives other than to effect compliance with its rules would effectively require the parties to agree to rescind and renegotiate the transaction, which is not an available alternative.” The press release further stated that “[a]ccordingly, the Company and MHR are preparing modifications to the terms of the transaction that will satisfy NASDAQ requirements.”

     On February 27, 2007, the Issuer filed a Current Report on Form 8-K disclosing that it had completed the sale to the MHR Purchasers of $300,000,098 of two newly created series of convertible perpetual preferred stock of the Company pursuant to an Amended and Restated Securities Purchase Agreement with MHR, which was originally executed on October 17, 2006, and which was amended and restated on February 27, 2007. Pursuant to the Purchase Agreement, the MHR Purchasers purchased for approximately $41 million 136,526 shares of Series A-1 Cumulative 7.50% Convertible Perpetual Preferred Stock and for approximately $259 million 858,486 shares of Series B-1 Cumulative 7.50% Convertible Perpetual Preferred Stock for an aggregate purchase price of $300,000,098.

     In response to the foregoing actions, on March 12, 2007, Highland Crusader Offshore Partners, L.P. delivered to the Issuer a demand letter pursuant to Section 220 of the Delaware General Corporation Law, to inspect certain books, records and documents of the Issuer. A copy of the letter is attached hereto as Exhibit 99.8.

CUSIP No. 543881106 13D Page 10 of 13 Pages

Item 5. Interest in Securities of the Issuer.

     Item 5 is hereby amended and restated in its entirety as follows:

     Each of the Reporting Persons and Crusader, Crusader Fund GP, Crusader Fund GP LLC, Credit Strategies, General Partner and GP Holdings declares that the filing of this statement shall not be construed as an admission that such person is, for the purposes of Sections 13(d) or 13(g) of the Securities Exchange Act of 1934, as amended, the beneficial owner of any securities covered by this statement.

     (a) As of March 14, 2007, each of the Reporting Persons may be deemed to beneficially own an aggregate of 1,159,676 shares of Common Stock, representing approximately 5.8% of the Common Stock outstanding as of March 14, 2007 (based upon 20,000,000 shares of Common Stock outstanding on October 31, 2006 as disclosed in Issuer’s Quarterly Report on Form 10-Q for the period ended September 30, 2006).

     Each of Crusader, Crusader Fund GP, Crusader Fund GP LLC, Credit Strategies, General Partner and GP Holdings and each director and executive officer of Strand and Multi-Strategy SubFund (other than Mr. Dondero) beneficially owns zero shares of Common Stock.

     (b)

	Sole		Shared		Sole		Shared
	Voting		Voting		Dispositive		Dispositive
	Power		Power		Power		Power
Highland Crusader Offshore Partners, L.P. (1)		0		0		0		0
Highland Crusader Fund GP, L.P. (1)		0		0		0		0
Highland Crusader Fund GP, LLC (1)		0		0		0		0
Highland Multi-Strategy Onshore Master SubFund, L.L.C.		0		100,150		0		100,150
Highland Multi-Strategy Master Fund, L.P. (2)		0		100,150		0		100,150
Highland Multi-Strategy Fund GP, L.P. (2)		0		100,150		0		100,150
Highland Multi-Strategy Fund GP, L.L.C. (2)		0		100,150		0		100,150
Highland Credit Strategies Master Fund, L.P. (3)		0		0		0		0
Highland General Partner LP (3)		0		0		0		0
Highland GP Holdings LLC (3)		0		0		0		0
Highland Capital Management, L.P. (2)(4)		0		1,159,676		0		1,159,676
Strand Advisors, Inc. (2)(4)		0		1,159,676		0		1,159,676
James Dondero (2)(4)		0		1,159,676		0		1,159,676

(1)	Crusader holds 1,006,942 shares of Common Stock. Crusader Fund GP is the general partner of Crusader and Crusader Fund GP LLC is the general partner of Crusader Fund GP. However, pursuant to a management agreement between Highland Capital and Crusader, Highland Capital has all voting and dispositive powers with respect to securities held by Crusader.
(2)	Master Fund is the managing member of Multi-Strategy SubFund, Multi-Strategy GP is the general partner of Master Fund, Multi-Strategy GP LLC is the general partner of Multi-Strategy GP, Highland Capital is the sole member of Multi-Strategy GP LLC, Strand is the general partner of Highland Capital and Mr. Dondero is the President and a Director of Strand.

CUSIP No. 543881106 13D Page 11 of 13 Pages

(3)

Credit Strategies holds 52,584 shares of Common Stock. General Partner is the general partner of Credit Strategies and GP Holdings is the general partner of General Partner. However, pursuant to a management agreement between Highland Capital and Credit Strategies, Highland Capital has all voting and dispositive powers with respect to securities held by Credit Strategies.

(4)

As a result of the relationships described herein, Highland Capital, Strand and Mr. Dondero may be deemed to be the indirect beneficial owners of the shares of Common Stock beneficially owned by Crusader, Multi-Strategy SubFund and Credit Strategies. Highland Capital, Strand and Mr. Dondero expressly disclaim beneficial ownership of the securities reported herein, except to the extent of their pecuniary interest therein.

     (c) Except as otherwise described herein, and other than the receipt of stock dividends from the Issuer pursuant to Common Stock ownership, no transactions in the Common Stock were effected during the past sixty days or since the most recent filing on Schedule 13D, whichever is less, by the Reporting Persons or, to the knowledge of the Reporting Persons, any of Crusader, Crusader Fund GP, Crusader Fund GP LLC, Credit Strategies, General Partner and GP Holdings, or the persons controlling the Reporting Persons.

     (d) Except as otherwise described in this Schedule, to the knowledge of the Reporting Persons, only the Reporting Persons have the right to receive or the power to direct the receipt of dividends from, or proceeds from the sale of, the shares of Common Stock covered by this statement.

     (e) Inapplicable.

Item 7. Material to be Filed as Exhibits.

     Item 7 is hereby amended and supplemented as follows:

     Exhibit 99.8 Letter of Highland Crusader Offshore Partners, L.P. to Loral Space & Communications Inc., dated March 12, 2007.

CUSIP No. 543881106 13D Page 12 of 13 Pages

SIGNATURE

     After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct.

Date: March 14, 2007

HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P.
By:	Highland Crusader Fund GP, L.P.,
	its general partner
By:	Highland Crusader Fund GP, LLC,
	its general partner
By:	Highland Capital Management, L.P.,
	its sole member
By:	Strand Advisors, Inc., its general partner

By:	/s/ James Dondero
	James Dondero, President

HIGHLAND MULTI-STRATEGY ONSHORE MASTER SUBFUND, L.L.C.
By:	Highland Multi-Strategy Master Fund L.P.,
	its managing member
By:	Highland Multi-Strategy Fund GP, L.P.,
	its general partner
By:	Highland Multi-Strategy Fund GP, L.L.C.,
	its general partner
By:	Highland Capital Management, L.P.,
	its sole member
By:	Strand Advisors, Inc., its general partner

By:	/s/ James Dondero
	James Dondero, President

HIGHLAND MULTI-STRATEGY MASTER FUND, L.P.
By:	Highland Multi-Strategy Fund GP, L.P.,
	its general partner
By:	Highland Multi-Strategy Fund GP, L.L.C.,
	its general partner
By:	Highland Capital Management, L.P.,
	its sole member
By:	Strand Advisors, Inc., its general partner

By:	/s/ James Dondero
	James Dondero, President

HIGHLAND MULTI-STRATEGY FUND GP, L.P.
By:	Highland Multi-Strategy Fund GP, L.L.C.,
	its general partner
By:	Highland Capital Management, L.P.,
	its sole member
By:	Strand Advisors, Inc., its general partner

By:	/s/ James Dondero
	James Dondero, President

HIGHLAND MULTI-STRATEGY FUND GP, L.L.C.
By:	Highland Capital Management, L.P.,
	its sole member
By:	Strand Advisors, Inc., its general partner

By:	/s/ James Dondero
	James Dondero, President

CUSIP No. 543881106 13D Page 13 of 13 Pages

HIGHLAND CAPITAL MANAGEMENT, L.P.
By:	/s/ James Dondero
	James Dondero, President

STRAND ADVISORS, INC.
By:	/s/ James Dondero
	James Dondero, President

/s/ James Dondero

James Dondero

EX-99.8

Exhibit 99.8

HIGHLAND CRUSADER OFFSHORE PARTNERS, L.P.
c/o Highland Capital Management, L.P.
Two Galleria Tower
13455 Noel Road, Suite 800
Dallas, Texas 75240

March 12, 2007

By Hand Delivery and Telecopy	By Federal Express and Telecopy
Loral Space & Communications, Inc.	Loral Space & Communications, Inc.
c/o CT Corporation System	600 Third Avenue
1209 Orange Street	New York, NY 10016
Wilmington, DE 19801

ATTN: Michael B. Targoff

          Re: Demand to Inspect Books and Records

Dear Mr. Targoff:

          Highland Crusader Offshore Partners, L.P. (“Stockholder”), is the beneficial owner of 981,879 shares of Common Stock of Loral Space & Communications, Inc., a Delaware corporation (the “Company” or “Loral”), representing approximately 5% of the Company’s currently issued and outstanding common stock. Attached hereto as Exhibit “A” is documentary evidence of Stockholder’s ownership and such documentary evidence is a true and correct copy of what it purports to be.

          This demand seeks to inspect books and records of the Company pursuant to Section 220(b) of the Delaware General Corporation Law (the “DGCL”). Stockholder’s purposes for seeking the inspection are as follows:

          (i) to investigate possible mismanagement, breaches of fiduciary duty, corporate waste, and improper influence and conduct with respect to the negotiation, execution, and approval of a Securities Purchase Agreement announced by Loral on October 17, 2006 (the “Original SPA”), which granted Loral’s controlling stockholder, MHR Fund Management LLC (“MHR”), the exclusive right to purchase from Loral shares of two newly created series of convertible preferred stock (the “Preferred Stock”) for $300,000,098;

          (ii) to investigate possible mismanagement, breaches of fiduciary duty, corporate waste, and improper influence and conduct with respect to the purported reconsideration of the Original SPA and the negotiation, execution and approval of a revised Securities Purchase Agreement announced by Loral on February 26, 2007 (the “Revised SPA”), together with the issuance of the shares of Preferred Stock to MHR (collectively, and together with the Original SPA, the “Transaction”);

Loral Space & Communications, Inc.
March 12, 2007
Page 2

          (iii) to utilize the information obtained through the inspection of the Company’s books and records to evaluate possible litigation or other corrective measures with respect to certain or all of these matters;

          (iv) to communicate with other stockholders regarding matters relating to their interests as stockholders, so that stockholders may effectively address any mismanagement or improper conduct, including, without limitation, through litigation or by considering changes to the composition of the Loral board of directors (the “Board”); and

          (v) to value Stockholder’s shares in Loral as of the date of the Original SPA, the Revised SPA, and the issuance of the Preferred Stock.

          Each of these purposes is a proper purpose under Delaware law that is reasonably related to Stockholder’s interest as a stockholder of the Company.

          With respect to its purpose of investigating potential wrongdoing, Stockholder summarizes its credible bases to suspect wrongdoing as follows:

• The Transaction appears on its face to be a sweetheart deal for MHR.

o The Transaction does not appear to have been the result of competitive bidding.

o The conversion price under the Original SPA was set at only 12% above the ten-current market price and below the intrinsic value of Loral established by the bankruptcy court only 18 months before.

o The conversion price under the Original SPA appears to have been “spring-loaded,” in that shortly after the announcement of the Original SPA, Loral announced a series of positive and material business developments that caused its stock price to increase from approximately $27 per share to more than $51 per share. Had the Original SPA not been entered into, the share price presumably would have risen even higher.

o After the announcement of the Original SPA, the Board was presented with an alternative proposal which on its face stated that it would be more favorable to Loral; however, it appears that the Board did not pursue or meaningfully consider the alternative proposal.

o After the announcement of the Original SPA, after receipt of at least one additional superior financing proposal, and after the Transaction encountered regulatory difficulties as originally structured, Loral did not negotiate better terms for the Transaction. In particular, the conversion price was not altered such that at the time the Preferred Stock was issued, the market price of Loral’s common stock was over $50.00 per share, significantly exceeding the conversion price of $30.15 per share.

• The terms of the Transaction are unfair and oppressive to Loral and its non-participating stockholders.

Loral Space & Communications, Inc.
March 12, 2007
Page 3

o The Transaction provides for the issuance of shares to MHR representing approximately 50% of Loral’s current equity. As a result of the Transaction, MHR has the opportunity to increase its equity stake from approximately 35.9% to approximately 56% of Loral’s outstanding stock.

o The Transaction gives MHR significant class voting rights that provide MHR with stockholder level veto power over numerous types of transactions, including operational decisions.

o The Transaction guarantees MHR a dividend return of 7.5% per annum, paid in PIK shares over the next 5.5 years, giving MHR additional equity in the Company.

o The Transaction provides for an unjustifiably outsized return to MHR in the event of a change in control.

o MHR receives a $6.75 million “placement fee” in connection with the Transaction.

o Loral had no need to accept an insider transaction carrying such unfair and onerous terms. The Company has ample cash currently available, no identified need for the $300 million capital infusion obtained through the Transaction, and no identified exigency that would force Loral to agree to such a deal. Indeed, as of September 30, 2006, Loral had $321 million in cash and short-term investments that Loral has said will be used primarily for funding its current satellite build (Telstar 11N), working capital associated with the revenue growth at SS/L, and facility upgrades and capacity increases at SS/L.

o On November 13, 2006, Loral filed with the SEC a universal shelf registration statement on Form S-3 covering the offer and sale by Loral of up to $500 million of securities which may include debt securities, common stock, preferred stock, warrants and subscription rights. Loral had no need to pursue a preferential insider transaction at the same time it planned to pursue lower cost and readily available debt and equity capital through the highly liquid public markets.

• The Transaction entrenches current directors by (i) providing that MHR will cause certain shares received in the Transaction and any common shares into which they convert to be voted as the Board recommends in the election and removal of directors, and (ii) causing a change in the composition of the Board to be treated as a change of control under the Transaction documents, thereby triggering punitive financial consequences for Loral and disproportionate financial rewards for MHR.

• The Transaction was with Loral’s controlling stockholder. Loral has disclosed publicly that MHR is its controlling stockholder. Loral also has disclosed publicly that in addition to its status as Loral’s controlling stockholder, MHR exercises significant influence over Loral’s operating subsidiary, Loral Skynet.

Loral Space & Communications, Inc.
March 12, 2007
Page 4

• Loral’s Board does not have a majority of directors that are independent and disinterested with respect to transactions involving MHR. Three of Loral’s eight directors are affiliated with MHR, including the non-executive vice chairman of the Board. In light of the influence and control over Loral exercised by MHR, Loral’s CEO is beholden to MHR and is not disinterested or independent with respect to matters affecting MHR. Yet another director, Dean Olmstead, is described as a “consultant” to Loral, without any disclosure of the nature of his consultancy or the size of the payments.

           Pursuant to Section 220(b) of the DGCL, Stockholder hereby demands, under oath, that it and its attorneys, representatives and agents be given, during regular business hours, the opportunity to inspect the following books and records and to make copies or extracts therefrom:

1.	Selected Books and Records relating to the origins, timing, reasons for, and negotiation of the Transaction.
2.	Selected Books and Records concerning the independence and/or disinterestedness of the members of the Board and Loral’s named executive officers in connection with the Transaction.
3.	The resolution establishing the Special Committee of the Board that considered the Transaction (the “Special Committee”) and Selected Books and Records relating to the formation of the Special Committee, the selection of its members, and the selection of its advisors.
4.	Minutes of any meeting of the Board or the Special Committee, any notes, recordings, or memorializations of any such meetings, and any actual or proposed actions by unanimous written consent which either (i) relate to the Transaction or (ii) otherwise occurred during the period from August 1, 2006 through March 1, 2007.
5.	Books and records considered or relied on by the Special Committee of the Board in approving the Transaction.
6.	The information and projections provided by Loral to North Point Advisors, LLC in connection with its fairness opinion on the Transaction.
7.	The fairness opinion prepared by North Point and any presentations, valuations or analyses prepared by North Point and presented to the Special Committee in connection with rendering its fairness opinion.
8.	Selected Books and Records reflecting any past or prospective engagements by North Point for Loral or MHR or otherwise concerning the independence and disinterestedness of North Point, including but not limited to North Point’s compensation in connection with the Transaction.
9.	Selected Books and Records reflecting the amounts paid to Deutsche Bank Securities, Inc., Stroock & Stroock & Lavan LLP, and Richards, Layton & Finger, P.A. in connection with the Transaction, the reasons for Loral agreeing to make and making the payments, and books and records reflecting any past engagements by Deutsche Bank

Loral Space & Communications, Inc.
March 12, 2007
Page 5

	Securities, Inc., Stroock & Stroock & Lavan LLP, and Richards, Layton & Finger, P.A. for Loral.
10.	Selected Books and Records reflecting the knowledge of the Board, the Special Committee, MHR, or any Loral named executive officer of any of the following subsequently announced events or Loral’s plans with respect to those events at the time the Original SPA was proposed, negotiated, and approved:

a.	Loral’s successful delivery of the WildBlue-1 satellite to the Arianespace spaceport in Kourou, French Guiana, as announced on November 9, 2006.
b.	The positive financial results for its third quarter, as announced on November 13, 2006, including

i.	That revenue for the third quarter of 2006 rose 42 percent to $227 million, compared to revenue of $160 million last year, and that for the first nine months of 2006, revenue was $592 million, an increase of 38 percent over the $429 million reported in the same period in 2005.
ii.	That adjusted EBITDA for the third quarter of 2006 was $36.1 million, compared to $9.9 million last year, and that for the first nine months of 2006, Adjusted EBITDA was $63.8 million versus $25.4 million in the same period in 2005.
iii.	That the Company’s consolidated backlog at the end of the third quarter of 2006 totaled approximately $1.359 billion.

c.	The positive views of Loral’s business as expressed by Mr. Targoff on November 13, 2006: “Our overall business execution has been excellent. Space Systems/Loral’s vigorous pursuit of opportunities in the commercial satellite manufacturing industry has resulted in the capture of five satellite awards this year. In addition, four satellites have been delivered to customers thus far and another is scheduled for delivery in December. We believe that both short- and long-term opportunities for SS/L continue to evidence the recovery of the satellite manufacturing industry. On the fixed satellite services side, the transponders in Loral Skynet’s fleet are operating at 74 percent capacity and we foresee continued steady results from our core transponder leasing business.”
d.	Loral’s plan to acquire 100 percent of the stock of Telesat Canada through a joint venture, as announced on December 18, 2006.
e.	The award of a contract to manufacture Nimiq 5 for Telesat Canada, as announced by Loral on January 4, 2007.
f.	The award of a contract to deliver a high-power satellite to ProtoStar Ltd., as announced by Loral on January 5, 2007.

Loral Space & Communications, Inc.
March 12, 2007
Page 6

g.	The award of a contract to manufacture Intelsat 14 for Intelsat Corporation, as announced by Loral on January 19, 2007.
h.	The award of a contract to manufacture a new direct broadcast satellite (DBS) for EchoStar Orbital Corporation II, a subsidiary of EchoStar Communications Corporation, as announced by Loral on January 24, 2007.
i.	A verdict of $51 million against Rainbow DBS Holdings, Inc., a subsidiary of Cablevision Systems Corporation, as announced by Loral on January 24, 2007.
j.	The award of any additional contracts to manufacture satellites or the successful achievement of milestones between October 17, 2006 and February 26, 2007.

          In requesting documents, the Stockholder is inherently hampered by the fact that the Stockholder does not and cannot know what specific documents exist or how they are maintained. Nevertheless, in an effort to limit the burden on the Company, the Stockholder is primarily requesting only Selected Books and Records. For purposes of the foregoing requests, the term “Selected Books and Records” means books and records supplied to, prepared, reviewed, or possessed by a Loral director or named executive officer (each, a “Custodian”).

          Stockholder will bear the reasonable costs incurred by the Company in connection with the production of the information demanded.

          Stockholder hereby designates and authorizes Abrams & Laster LLP, and any persons designated by Abrams & Laster LLP, acting singly or in any combination, to conduct the inspection and copying herein requested. Please advise Kevin G. Abrams at (302) 778-1000 as to the time and place when the requested information will be made available in accordance with this demand. Pursuant to Section 220 of the DGCL, you are required to respond to this demand within five (5) business days.

          If the Company contends that this request is incomplete or is otherwise deficient in any respect, please notify Stockholder immediately in writing care of Highland Capital Management, L.P., Attention: General Counsel, Two Galleria Tower, 13455 Noel Road, Suite 800, Dallas, Texas 75240, Facsimile: (972) 628-4147, with a copy to Kevin G. Abrams, Abrams & Laster, LLP, Facsimile: (302) 778-1001, setting forth the facts that the Company contends support its position and specifying any additional information believed to be required. In the absence of such prompt notice, Stockholder will assume that the Company agrees that this request complies in all respects with the requirements of the DGCL and that the Company will immediately produce all of the requested books and records. Stockholder reserves the right to withdraw or modify this request.

          Please acknowledge receipt of this letter and the enclosures by signing and dating the enclosed copy of this letter in the space provided below and returning the same to the undersigned in the enclosed envelope.

[Signature page follows]

Very truly yours,
HIGHLAND CRUSADER OFFSHORE
PARTNERS, L.P.
By:	Highland Crusader Fund GP, L.P., its
	general partner
By:	Highland Crusader Fund GP, LLC, its
	general partner
By:	/s/ Niles Chura
	Niles Chura, Secretary

Receipt Acknowledged.

Loral Space & Communications, Inc.

By:

Name:

Title:

Date:

Exhibit “A”

STATE OF VIRGINIA



COUNTY OF FAIRFAX §
§
§
§
§

          Niles Chura, having been first duly sworn, deposes and says that he is Secretary of Highland Crusader Fund GP, LLC, the general partner of Highland Crusader Fund GP, L.P., which is the general partner of Highland Crusader Offshore Partners, L.P., that he is authorized to execute the foregoing demand for inspection pursuant to Section 220 of the Delaware General Corporation Law and to make the demand designations, authorizations and representations contained therein, and that the facts and statements contained in the foregoing demand for inspection are true and correct.

       /s/ Niles Chura  

Niles Chura 

SWORN TO AND SUBSCRIBED before me
this 12th day of March, 2007.

/s/ Mac Luis Via-Daens

Notary Public