Satmex has reached a restructuring agreement with a majority of its second lien lenders that will see the Mexican satellite operator file a pre-packaged plan of reorganisation in the United States bankruptcy court.
The key component of the plan involves…
Satmex has reached a restructuring agreement with a majority of its second lien lenders that will see the Mexican satellite operator file a pre-packaged plan of reorganisation in the United States bankruptcy court.
The key component of the plan involves Satmex carrying out a recapitalization worth up to US$460m. Proceeds from the debt and equity financing will then be used to repay the first priority bond holders, other creditors and existing Satmex shareholders as well as to fund the construction and launch of the Satmex 8 satellite.
On completion, the company will ostensibly be majority owned by its second lien senior secured noteholders. However, in order to comply with Mexican foreign investment laws, certain Mexican partners will control the company via a Mexican holding company, Holdsat Mexico.
Under the terms of the transaction, Satmex plans to issue US$325m of new senior secured debt and raise up to US$96.25m through a rights issue to the second lien bond holders. These lenders will then also have the right to invest in their pro rata share of a follow-on stock issuance of up to US$40m, the proceeds of which would be used to fund the purchase of Satmex 7, a satellite that is intended to replace the Solidaridad 2 spacecraft.
Those noteholders that do not wish to participate in the recapitalisation will receive a cash payment of 38 cents every dollar of notes held. There are approximately US$175m of the second lien notes, which are due 2013, outstanding.
Certain members of the ad hoc committee of second lien creditors who support the plan have agreed to pay the other noteholders as well as exercise all of the rights granted to them under the equity issue. These creditors predominantly comprise US based hedge funds Centerbridge Partners, Monarch Alternative Capital, New Generation Advisors and Outrider Management, as well as Moneda Asset Management from Chile.
Satmex stated that the holders of the outstanding US$238.2m of first priority senior secured notes, due 2011, are to be paid in cash at par plus accrued interest. The other creditors, including trade creditors, would also be paid in full.
As for the company’s existing shareholders, including the Mexican Government which owns a 20% stake and has agreed to the restructuring plan, Satmex plans to pay a total of US$6.25m in cash.
Commenting on the restructuring, Satmex chief executive Patricio Northland said: “We are pleased by the confidence in Satmex shown by the investment commitment of the Supporting Holders (the majority of second lien noteholders). As a result of these initiatives our debt and interest expense will be reduced and our liquidity and equity capital will be greatly enhanced. This will provide support for ongoing service to our customers in the near term and will facilitate a number of important operating initiatives, including the completion of construction and the launch of our Satmex 8 satellite, and the entry into a construction and launch agreement for our Satmex 7 satellite.
“We intend to move forward as expeditiously as possible to complete the recapitalization, and we anticipate that the process will have no day-to-day impact on our suppliers, customers or employees.”
The transaction, which still requires certain regulatory approvals, is expected to be completed by May.
Lazard and its Mexican alliance partner, Alfaro, Davila y Rios are serving as financial advisers to Satmex, with Greenberg Traurig the company’s US counsel and Santamarina y Steta and Rubio Villegas & Asociados its Mexican counsels.
Jefferies & Co is advising certain holders of the Second Priority Senior Secured Notes, with Ropes & Gray US counsel and Cervantes Sainz Mexican counsel to the lender group. NM Rothschild & Sons provided a fairness opinion to the technical committee of the Mexican Communication and Transportation Secretariat (SCT).
