Satmex, stakeholders discussing $374 million stock sale allocation

By Caroline Salls

Pittsburgh, March 3 - Satelites Mexicanos, SA de CV (Satmex) is in ongoing discussions with the stakeholders regarding the allocation of cash to be available for distribution if Satmex is sold to EchoStar Satellite Services, LLC and MVS Comunicaciones under a transaction announced on Feb. 26, according to a company news release.

Under the stock purchase agreement, Satmex would be acquired for $267 million in cash, plus up to a maximum of $107 million in cash on Satmex's balance sheet at closing, resulting in potential total cash of up to $374 million available for distribution to Satmex's stakeholders.

According to the release, a portion of the total cash is expected to be applied to the repurchase or redemption of Satmex's outstanding first-priority senior secured notes and second-priority senior secured notes and to be distributed to Satmex's equity holders.

In addition, a portion of the total cash is expected to be used to pay an estimated $30 million in fees, expenses and other payments incurred in connection with the transaction.

The company said an informal group representing more than 50% of the second-priority notes has indicated that it does not support the proposed EchoStar transaction.

Satmex said the portion of the total cash amount to be applied to repurchase or redeem the senior secured notes or available for distribution to Satmex's equity holders is expected to be negotiated between the noteholders and the equity holders.

The company said the total cash amount will not be enough to repurchase or redeem all of the outstanding senior secured notes at face value, no matter how much is allocated to equity holders.

There were $424.25 million principal amount of the senior secured notes outstanding as of Feb. 26, compared to a maximum potential amount of cash available of $374 million.

If, upon completion of a minimum tender period for offers by Satmex to purchase the senior secured notes, the estimated total cash is not sufficient to purchase or redeem all of the notes at the offered discount from par and to pay the negotiated amount of proceeds to the equity holders, then neither the tender offers nor the sale of the Satmex shares will be completed.

Satmex is a Juarez, Mexico-based satellite coverage provider.

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