Noteholders File Involuntary Chapter 11 Petition Against Satelites
Mexicanos (Satmex)
Action Taken to Facilitate Debt Restructuring, Provide New Financing, and
Ensure Company's Continued Viability
http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/05-26-2005/0003692106&EDATE=
NEW YORK, May 26 /PRNewswire/ -- A group of secured and unsecured
noteholders, represented by Wilmer Cutler Pickering Hale and Dorr LLP and
Akin Gump Strauss Hauer & Feld LLP, respectively, holding in excess of
US$379 million of outstanding notes of Satelites Mexicanos, S.A. de C.V.
("Satmex" or the "Company"), the leading Mexican satellite operator in the
Americas, today filed an involuntary Chapter 11 petition against Satmex in
the U.S. Bankruptcy Court for the Southern District of New York.
The noteholders have reached an agreement on a comprehensive debt
restructuring that is supported by creditors holding more than two-thirds
in amount of the Company's liabilities, and have requested that the court
waive the customary exclusivity period given to the Company in order to
implement the agreed-upon restructuring plan as quickly as possible. The
noteholders believe that implementing the terms of their debt restructuring
through a formal Chapter 11 plan of reorganization would substantially
improve the Company's capital structure and allow it to better serve the
needs of its customers in Mexico, the United States, and throughout Latin
America.
Satmex currently has a principal amount of approximately US$523.4 million
of debt in default. Under the restructuring agreement, the petitioning
secured and unsecured noteholders have agreed, subject to certain
conditions, to provide up to US$55 million in debtor-in-possession (DIP)
financing to Satmex, an amount that would be sufficient to fund the launch
of Satmex 6, the Company's new satellite. Satmex 6 has been stored at the
Arianespace launch facility in French Guiana for the last 18 months because
Satmex has not had sufficient capital to fund its launch. The Company has
two other satellites in orbit.
The noteholders' restructuring agreement contemplates that allowed claims
of trade creditors would be paid in full, permitting the Company to
continue to operate without interruption. The agreement also provides that
current shareholders -- including Loral Space & Communications Ltd., itself
in a Chapter 11 proceeding; Principia, S.A. de C.V., led by Sergio Autrey,
the Company's acting chief executive officer; and the Mexican government --
will maintain majority control of the reorganized company as of the
Effective Date of the Chapter 11 plan. The Company is not a party to the
restructuring agreement.
"This action by the petitioning holders of the Senior Secured Floating Rate
Notes due 2004 and of the 10 1/8% Senior Notes due 2004 was taken in order
to preserve the value of the Company's assets and to provide a
comprehensive and timely solution to its financial difficulties, which have
been on-going since prior to the Company's first major debt payment default
in August 2003," said Mitchell A. Harwood, Managing Director of Evercore
Partners, financial advisor to the petitioning holders of Senior Secured
Floating Rate Notes.
"The noteholders have concluded that the extended period of uncertainty is
beginning to take its toll on the Company's customer base," said Harwood.
"The noteholders believe that the Chapter 11 restructuring will provide
current and potential customers with comfort that the Company's
telecommunications services will continue uninterrupted," said Harwood.
"A traditional out-of-court restructuring process to resolve the Company's
balance sheet and funding issues has been on-going for almost two years,
and the creditors do not see that process resolving matters in the near
term," said Skip Victor, Senior Managing Director of Chanin Capital
Partners, financial advisor to the petitioning holders of the 10 1/8%
Senior Notes.
"We therefore believe that a restructuring under Chapter 11 of the U.S.
Bankruptcy Code is now the best alternative to follow, because it will
achieve a fair and equitable restructuring of the Company's debt and will
provide for the critical new funding needed to launch Satmex 6 in a
relatively short time frame," said Victor.
"In order for the Company to remain competitive and provide customers with
important services, it is important to resolve the Company's balance sheet
and funding issues promptly, and the noteholders' action is being taken to
achieve that result," said Victor.
Satmex, headquartered in Mexico, derives over 50% of its revenues from
United States business, and all of the Company's over US$500 million in
debt was issued in the United States and is governed by New York law. The
Company's largest shareholder, Loral Space & Communications Ltd., is a
United States public company also undergoing a Chapter 11 reorganization in
the U.S. Bankruptcy Court for the Southern District of New York. Under
U.S. bankruptcy law, Satmex has 20 days to respond to the involuntary
petition, during which time the Company is entitled to operate its business
in the ordinary course.
In the event that the Company or another party contests the involuntary
petition, it will be up to the Bankruptcy Court to determine whether the
Chapter 11 reorganization will proceed.
================================
George Antunes, Political Science Dept
University of Houston; Houston, TX 77204
Voice: 713-743-3923 Fax: 713-743-3927
antunes at uh dot edu
Reply with a "Thank you" if you liked this post.
_______________________________________________
MEDIANEWS mailing list
[email protected]
To unsubscribe send an email to:
[EMAIL PROTECTED]
