Agreement on Satmex Restructuring Reached
Debt levels reduced, shareholder re-alignment, countdown to Satmex 6 launch
MEXICO CITY, Feb. 6 /PRNewswire/ -- Satelites Mexicanos, S.A. de C.V. ("Satmex" or the "Company"), Mexico's leading satellite service provider, announced today that the principal terms of a restructuring of its indebtedness, supported by the Conciliador appointed in its Concurso Mercantil proceeding, were reached among the ad-hoc committees of holders of, respectively, the Senior Secured Floating Rate Notes (the "FRNs") due 2004 and the 10 1/8 percent Senior Notes (the "HYBs") due 2004, (collectively, the "Creditors"), the Company and its shareholders. "After more than two years of trying to reconcile many highly complex issues, I am pleased that Satmex will emerge from this process with a better financial outlook and a more competitive company, able to continue delivering premier satellite services to its most important constituents, its customers," said Sergio Autrey, Chairman and CEO of Satmex. "The upcoming launch of Satmex 6 in May of this year will fortify the company even further." Richard Mastoloni, vice president and treasurer of Loral and representing Loral's interests in Satmex said, "This agreement is the culmination of the last few years of hard work that Loral has contributed to the restructuring of Satmex's business. Without the need for external financing, Satmex will now be able to launch the Space Systems/Loral-built Satmex 6 satellite, one of the region's largest and most powerful satellites that will provide high-demand C- and Ku-band coverage of the entire Western hemisphere." Thomas Heather, the Conciliador in the Concurso Mercantil proceeding of Satmex, appointed at the request of Mexico's Ministry of Communications and Transportation, said, "The challenge was to preserve the substantial value inherent in Satmex and to quickly bring all parties into agreement in order to eradicate the uncertainty that has existed thus far in the process. The country's invaluable assets, its orbital positions and its satellite coverage, will continue to receive the key communication support of Satmex. This continuity will create the confidence necessary for new investment in this area. All applicable governmental approvals necessary to implement the restructuring plan, including those of the Ministry of Communications and Transportation, are expected to be issued in due course and in a timely manner." "The ad hoc committee of the 10 1/8 percent senior noteholders is pleased that we have finally reached a fundamentally fair agreement-in-principle that creates the sound financial footing required for Satmex to succeed," said Robert L. Rauch, partner and director of research of Gramercy Advisors LLC, who heads the committee. "We would like to thank the conciliador Thomas Heather and the Mexican government for providing the leadership necessary to reach this consensual restructuring." "This has been a complicated and challenging deal," said Mitchell Harwood of Mitchell A. Harwood Partners, financial advisor to the Ad Hoc Committee of Floating Rate Noteholders. The Floating Rate Noteholders, including GoldenTree Asset Management and Murray Capital Management, are pleased that they have arrived at an agreement in principle and look forward to a speedy resolution of the deal. The Company expects that, with the support of its Creditors and shareholders, negotiations of the comprehensive terms and conditions will move forward quickly and resolution of the many outstanding issues will be achieved in a timely manner, although there is no assurance that final agreement will be reached. The restructuring agreement is subject to receipt of necessary Mexican government regulatory approvals. Specifically, the agreement provides that holders of the existing U.S.$203.4 million of FRNs will receive new first priority senior secured notes (the "First Priority Senior Secured Notes") with a face value equal to the sum of current principal and accrued interest through the effective date of the restructuring in satisfaction of the obligations due under the FRNs. The terms proposed for the First Priority Senior Secured Notes are as follows: - Five year maturity with a quarterly coupon of LIBOR + 875 basis points; - Callable at a price of 103 in year 1, 102 in year 2, 101 in year 3 and at par (plus accrued interest) thereafter; - First priority security interest in Satmex's assets; and - Cash sweep prepayments on any cash balances over U.S.$5 million. The agreement also includes the issuance of new second lien senior notes (the "Second Priority Senior Secured Notes") in the principal amount of U.S.$140,000,000 and certain shares of reorganized Satmex to the holders of the existing U.S.$320 million of HYBs in satisfaction of the obligations due under the HYBs including all accrued interest. The proposal provides for the following terms for the Second Priority Senior Secured Notes: - Seven year maturity with a quarterly coupon of 10 1/8 percent all-in, with 0 percent cash payment in year 1, 2 percent cash payment thereafter until the First Priority Senior Secured Notes are paid in full, after which time the coupon shall be paid wholly in cash; - Second lien on Satmex's assets junior in priority, operation and effect to the security interests of the First Priority Senior Secured Notes; - After the full payment of the First Priority Senior Secured Notes, cash sweep prepayment on any cash balances over U.S.$5 million; - In exchange for capitalization of the balance of their claim of U.S.$274 million in principal and unpaid interest, the holders of the HYBs will receive approximately 80 percent of the economic interest in the equity of Satmex including approximately 47 percent of the voting capital; and the shareholders agreement will include certain minority governance rights. Satmex may issue further information regarding the status of the restructuring discussions with its stakeholders.
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