NEW YORK (Bloomberg) — Loral Space & Communications Inc., the satellite company that emerged from bankruptcy in 2005, was ordered to convert a $300 million investment by MHR Fund Management LLC to non-voting common stock from preferred shares.

The Delaware Chancery Court ruled that MHR's investment didn't meet "the entire fairness standard" under Delaware law and ordered the preferred shares be converted into 9.51 million common shares, New York-based Loral said yesterday in a statement.

As a result, MHR will hold 56 percent of Loral's total equity and about 36 percent of the voting power, the same level of voting power it had prior to the October 2006 financing.

Loral was sued by investors in March 2007 after it agreed to sell New York-based MHR $300 million worth of convertible perpetual preferred stock. The deal was aimed at helping Loral pursue opportunities in satellite services and manufacturing markets, chief executive officer Michael Targoff said at the time.