Satmex pre-packaged plan of reorganization takes effect on May 26

By Caroline Salls

Pittsburgh, May 31 - Satélites Mexicanos, SA de CV (Satmex) emerged from Chapter 11 bankruptcy when its pre-packaged plan of reorganization took effect on May 26, according to a company news release.

As previously reported, the plan was confirmed on May 11 by the U.S. Bankruptcy Court for the District of Delaware.

In accordance with the terms of the plan, Satmex's former first-priority senior secured notes due 2011 were repaid in full from the net proceeds of $325 million in principal amount of new 9½% senior secured notes due 2017, which were issued at par on May 5 by Satmex Escrow, SA de CV.

Satmex Escrow merged into Satmex in connection with the emergence from bankruptcy.

The remaining net proceeds from the notes offering and the proceeds of a completed $96.25 million rights offering of equity securities to holders of Satmex's second-priority senior secured notes due 2013 were used to purchase 100% of the former equity in Satmex and will be used to fund the completion of the Satmex's Satmex 8 satellite.

The company said the Satmex 8 satellite is scheduled to be launched in 2012 to replace its Satmex 5 satellite and to position Satmex to seek future growth opportunities.

"We are pleased to have so quickly completed this financial restructuring and have our plan confirmed by the court only 35 days after our filing, particularly in light of its significant complexity," chief executive officer Patricio E. Northland said in the release.

"We now have the funding to finish the construction and launch of our Satmex 8 satellite as well as the financial flexibility to move forward with Satmex 7 at the appropriate time.

Plan terms

Under the pre-packaged plan:

• The recapitalization will be financed with the proceeds of an offering of up to $325 million principal amount of new senior secured debt financing and the proceeds of a $96.25 million rights offering of equity securities in the indirect parent of reorganized Satmex to eligible holders of second-priority senior secured notes;

• The noteholders will also have the right to invest in their share of an up to $40 million follow-on issuance of equity securities, which may be called by the reorganized company to fund the construction and launch of Satmex 7;

• Holders of Satmex's first-priority senior secured notes due 2011 will be paid out in cash at par plus accrued interest;

• In lieu of equity interests in the indirect parent, primary rights to invest in additional parent interests and the follow-on rights, second-priority noteholders can elect to receive a cash payment of $0.38 for every dollar of notes, which will be funded by supporting noteholders;

• Other creditors, including trade creditors, are expected to be paid in full; and

• Existing Satmex stockholders would receive their share of $6.25 million under a Holdsat Mexico purchase agreement if specified conditions are met.

New directors

"We are also fortunate to welcome new members to our board of directors, one of whom is Jim Frownfelter, who has over 25 years of experience in the technology and communications industry, including senior positions at Intelsat and PanAmSat," Northland said in the release.

Centerbridge Partners, LP managing director Jared Hendricks said in the release, "The equity sponsors look forward to being part of Satmex's continued investment and growth in providing fixed satellite, broadband satellite and programming distribution services."

Monarch Alternative Capital LP managing principal Josiah Rotenberg said he will be joining Satmex's board.

"Monarch is excited to continue its four-year-long investment in Satmex," Rotenberg said in the release.

"We view this transaction as transformational, positioning Satmex for continued operational performance and the successful completion and launches of Satmex 8 and Satmex 7."

Lazard and its Mexican alliance partner Alfaro, Davila y Rios, S.C. served as financial advisers to Satmex. Greenberg Traurig served as U.S. counsel and Rubio Villegas & Asociados served as Satmex's Mexican counsel.

Satmex is a Juarez, Mexico-based satellite coverage provider that filed for bankruptcy on April 6. The Chapter 11 case number is 11-11035.

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