Beleaguered Mexican satellite operator Satmex announced at the end of January that the primary xenon ion propulsion system (XIPS) on its satellite Satmex 5 has experienced an unexpected shutdown.
In an SEC filing, Satmex stated: “The company is working…
Beleaguered Mexican satellite operator Satmex announced at the end of January that the primary xenon ion propulsion system (XIPS) on its satellite Satmex 5 has experienced an unexpected shutdown.
In an SEC filing, Satmex stated: “The company is working with the manufacturer of the satellite to identify the cause of the primary XIPS failure, but does not expect to be able to restart the system. The secondary XIPS on Satmex 5 had previously failed and is no longer available. The satellite is operating on its backup bi-propellant propulsion system.”
Satmex estimates that this back-up fuel will give the satellite, which is located at 116.8W, approximately 2.7 years of remaining life, as compared with the 3.97 years of design life it had remaining.
Satmex 5 is not insured for a loss due to XIPS failure. This is because the XIPS technology, which is part of the Boeing 601HP platform, has experienced similar malfunctions on other satellites. In the early part of the last decade, PanAmSat suffered a spate of XIPS shutdowns on its satellites with Galaxy VIII-I, Galaxy IVR and PAS-6B.
While this malfunction does not lead to a significant shortening of the satellite’s life, it does exacerbate the capacity crisis that Satmex is currently facing. The satellite operator has three satellites in orbit, Solidaridad 2, Satmex 5 and Satmex 6. The first of those, Solidaridad 2, was launched back in 1994 and since 2008 has been in an inclined orbit. With its shortened life, Satmex 5 is now due to remain fully operation until, at best, 2013. However, the Space Systems/Loral-built Satmex 6 was launched in 2006 and is expected to be operational until at least 2020.
Since its emergence from Mexican bankruptcy protection in early 2006, Satmex has been seeking new financing to fund a new satellite, well aware that its existing fleet had little longevity. In his first investor call in January 2009, Satmex CEO Patricio Northland emphasized the need to secure additional capacity, commenting: “We believe that the most important driver for growth is to rapidly enter into a financial arrangement to build our Satmex 7 satellite, which will replace the Solidaridad 2 satellite.”
In its SEC filing on the Satmex 5 anomaly, the company reiterated its desire to secure fresh funding: “The company is working on plans to obtain financing for the construction and launch of a new or replacement satellite, and to transition customers to the new or replacement satellite seamlessly. It is also continuing to review its strategic alternatives and restructuring options, and it remains engaged in communications with its major equity and creditor constituents.”
For some time, Satmex has been widely seen as an inevitable acquisition target. While its satellites are not hugely valuable, its orbital slots cover a lucrative and growing market. The constant stumbling block to any deal has been the Mexican government, which owns a 20% stake. Back in June 2007 a sales process was postponed as the two final bidders, a consortium of Eutelsat, Miguel Aleman (a former shareholder of Mexican broadcaster Televisa) and Clemente Serna Group, and an all-Mexican consortium led by the former president of TV Azteca, the late Moises Saba Masri, failed to meet the minimum US$500m bid price that the government had set. SES has also shown an interest in Satmex.
