Satmex U.S. creditors unhappy with Mexico filing

By Caroline Salls

Pittsburgh, June 30 - Satelite Mexicanos SA de CV's U.S.-based creditors, who hold more than two-thirds of the company's outstanding debt, expressed their disappointment with the company's decision to file a voluntary concurso mercantil in Mexico late Wednesday.

The creditors said in a news release that they intend to move forward with their joint plan to restructure the company's U.S.-issued debt obligations through a U.S. Chapter 11 proceeding, which they began on May 25 by filing an involuntary petition in the U.S. Bankruptcy Court for the Southern District of New York.

According to the release, the creditors believe that the United States is the proper venue for a court supervised restructuring because the only debt to be compromised as part of the restructuring is the bond debt issued by Satmex in the United States, almost all of which is held by U.S.-based creditors.

Moreover, the release said Satmex consented to jurisdiction in New York in connection with the bonds.

The ad hoc committees of holders of Satmex's senior secured floating-rate notes due 2004 and the 10 1/8% senior notes due 2004 have proposed a restructuring plan that would put Satmex back on solid financial footing within 90 days while providing up to $55 million of financing to launch the Satmex 6 satellite, currently in storage in French Guiana.

The creditors expressed their disapproval of Satmex's concurso mercantile filing but reaffirmed their commitment to ensuring an ongoing Satmex and a rapid deployment of Satmex 6, according to the release.

"While the creditors are hopeful that a consensual restructuring can be reached and remain willing to work with the company and its shareholders to achieve that goal, they are concerned that their requests to meet with the Mexican government to discuss the terms of a consensual restructuring have to date been rejected," said Skip Victor, senior managing director of Chanin Capital Partners, financial adviser to the ad hoc committee of holders of the 10 1/8% senior notes, in the release.

"The creditors believe the restructuring plan submitted in connection with the involuntary Chapter 11 filing represents the quickest way to inject new capital into Satmex, reduce the company's debt levels and preserve value for all stakeholders."

According to the release, the creditors believe that Satmex may have filed a voluntary concurso mercantil not because it is in the best interest of the company and its customers but rather because of pressure from the Mexican government.

This assertion stems from Mexican news reports suggesting that officials of Mexico's Ministry of Transportation and Communications have pressured the company into a concurso mercantil filing to allow the Mexican government to extract value from Satmex for a debt that is owed to the Mexican government not by Satmex, but rather by Satmex's parent company, Servicios Corporativos.

Those press reports suggest that Servicios Corporativos officials want the Satmex restructuring to proceed in Mexico where they believe the Mexican government's position as minority shareholder will be treated more favorably than in a U.S. court, the release said.

The creditors stressed in the release that their U.S. Chapter 11 restructuring plan would not compromise the debt owed by Servicios Corporativos.

On the contrary, the creditors fully support the payment in full of the Mexican government's debt ahead of any distributions to Satmex shareholders.

Satmex, a Mexico-based satellite operator, had the involuntary petition filed against it on May 25. Its Chapter 11 case number is 05-13862.

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