Satmex Clashes With Creditors on Bankruptcy Court
June 30 (Bloomberg) -- Satelites Mexicanos SA, a Mexican company that
defaulted on more than $520 million of bonds issued in the U.S., is
fighting U.S. creditors over whether the company's restructuring should
be supervised by a U.S. or Mexican court.
Satmex, a satellite company half owned by Loral Space & Communications
Ltd., filed for protection against creditors in a Mexican court
yesterday -- a month after U.S. creditors filed a petition for
involuntary bankruptcy reorganization in a New York court.
A restructuring in Mexico could benefit the Mexican government at the
expense of bondholders, said James Harper, head of research at BCP
Securities LLC. In a Mexican court, the government may manage to include
in the restructuring plan $188 million of debt owed by Satmex
controlling shareholders, Harper said. Under U.S. bankruptcy law, such
debt cannot be considered a liability of the company.
``There's going to be a real fight,'' Harper said in a telephone
interview from Greenwich, Connecticut. ``Mexican bankruptcy
reorganization procedures are an unproven and untested process. Nobody
knows how long it could take and how vulnerable it could be to corruption.''
This unprecedented contest over jurisdiction in case involving Mexico
underscores the Mexican government's multiple roles regarding Satmex.
The government is a shareholder with a 24 percent stake in Satmex; it's
a creditor of Satmex's majority shareholders; and, the government, as
communications regulator, has authority over Satmex.
Clash on Jurisdiction
The group of U.S. bondholders that filed an involuntary bankruptcy
petition in a New York court said the government put pressure on Satmex
to file for protection in Mexico, a decision they said they disapproved
of. These creditors, who are owed more than $379 million, agreed on June
13 to extend a deadline for Satmex to respond to their petition to July
7 from June 15.
The New York bankruptcy court could not assume control of the case
before considering Satmex's answer. The judge could either transfer to
Mexico or assert jurisdiction over it, setting up a battle over the forum.
``Satmex may have filed a voluntary bankruptcy petition in Mexico not
because it is in the best interest of the company and its customers but
rather due to pressure from the Mexican government,'' they said in an
emailed statement.
The bondholders added a plan in their U.S. bankruptcy petition to repay
creditors and lend the company $55 million to launch a satellite Satmex
needs to become profitable.
The Transportation Ministry had no comment, a spokesman in Mexico City said.
Government
The government lent money to Mexican businessman Sergio Autrey, chief
executive of Satmex, and Loral to help them pay for a controlling stake
in Satmex they purchased in 1997 in a privatization. They missed a $188
million payment on the loan that was due on Dec. 29.
The government rejected a debt restructuring agreement between Satmex
and bondholders last year because it failed to address the money Autrey
and Loral owe to the government, said Rodolfo Salgado, a Transportation
Ministry official overseeing Satmex, in an interview Dec. 27.
Satmex Chief Executive Autrey said in a statement that bankruptcy
organization supervised by a Mexican court ``is the best procedure to
achieve an agreement on the terms of a restructuring.'' Autrey had said
in a June 15 statement he wouldn't file for bankruptcy protection in
Mexico ``in the next few days.''
A bankruptcy in Mexico would give Satmex more protection because the
company wouldn't be liable for back interest payments. Under U.S.
bankruptcy law, the company is liable for such interest payments.
The case is In re: Satelites Mexicanos SA, No. 05-13862, U.S. Bankruptcy
Court, Southern District of New York.
--
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