Satmex makes prepackaged voluntary Chapter 11 filing

By Caroline Salls

Pittsburgh, Aug. 14 - Satelites Mexicanos SA de CV made a voluntary Chapter 11 filing Friday in the U.S. Bankruptcy Court for the Southern District of New York and filed its plan of reorganization and related disclosure statement.

Satmex said in the disclosure statement that its mercantil concurso restructuring plan was approved by the Mexican court on July 14 and the concurso proceeding became final on July 31.

On Friday, the company asked the bankruptcy court to close its Section 304 bankruptcy proceeding in connection with its voluntary Chapter 11 filing.

The bondholders and noteholders who filed an involuntary Chapter 11 case against Satmex agreed to convert that case to Section 304 in connection with the Mexican proceeding.

According to court documents, the company has $905.95 million in assets and $743.47 million in debt.

Bank of New York, as indenture trustee for the company's 10 1/8% unsecured senior notes, was the only creditor listed with a claim of $1 million or more. The indenture trustee has a $413.77 million notes claim.

According to the disclosure statement, the plan is based on a restructuring agreement and related support agreements reached on March 31 with holders of the company's equity and more than 67% of the holders of its unsecured bonds and senior secured notes.

Specifically, the supporting noteholders and bondholders have agreed to forbear from enforcing their rights with respect to defaults under the senior secured notes and bonds.

In addition, before the Chapter 11 case was filed, the supporting parties agreed to vote for the plan, not to make specified transfers of Satmex securities until the plan is confirmed and not to object to the confirmation order.

Under the plan:

• Holders of senior secured note claims will receive first-priority senior secured notes, and holders of bond claims will receive second-priority senior secured notes and interests in one or more special purpose entity that will own beneficial interests in the equity trust corresponding to the company's new series B and series N common stock, collectively representing 43% of the voting rights and 78% of the financial rights in the reorganized company;

• Holders of existing preferred stock interests will receive one share of new series B common stock and ownership of beneficial interests in the equity trust, collectively representing 2% of the voting rights and 2% of the financial rights in the reorganized company;

• Holders of existing common stock interests will receive ownership of beneficial interests in the equity trust corresponding to new series A and series N common stock, collectively representing 20% of the financial rights and 55% if the voting rights in the reorganized company; and

• Holders of general unsecured claims will be treated according to the terms of the particular agreement that governs the claim.

New notes terms

The company will issue $234.4 million in five-year first-priority senior secured notes.

If the effective date is anything other than Sept. 30, the principal amount of notes will be adjusted upward for each day after that or downward for each day before that.

Interest will be one-month or three-month Libor plus 875 basis points.

The company will also issue $140 million of seven-year second-priority senior secured notes.

Interest will be 10.125%, to be paid in kind at 10.125% for year one and 8.125% for years two through five, and will be paid in cash at 10.125% for years six and seven.

Satmex is a Mexico-based satellite operator. Its Chapter 11 case number is 06-11868.

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