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Satmex Creditors Will Pursue Chapter 11 Despite Concurso Mercantil Filing
New York NY (SPX) Jul 03, 2005 United States based creditors holding more than two-thirds in amount of the outstanding debt of Satelites Mexicanos ("Satmex" or the "Company") expressed their disappointment with the Company's decision to file a voluntary concurso mercantil in Mexico last Wednesday night. The Creditors said that they intend to pursue their joint plan to restructure the Company's U.S.-issued debt obligations through a U.S. Chapter 11 proceeding, which they commenced on May 25, 2005 by filing an involuntary petition for bankruptcy in the Southern District of New York. 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, Satmex consented to jurisdiction in New York in connection with the bond debt. The ad hoc committees of holders of, respectively, the Senior Secured Floating Rate Notes due 2004 and the 10-1/8% Senior Notes due 2004, which are represented, respectively, by Wilmer Cutler Pickering Hale and Dorr and Akin Gump Strauss Hauer & Feld, 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 mercantil filing but reaffirmed their commitment to ensuring an ongoing Satmex and a rapid deployment of Satmex 6. "The creditors are committed to ensuring the viability of Satmex and believe that the best chance to achieve a timely and successful restructuring is under a court-supervised Chapter 11 reorganization in the U.S.," said Mitchell A. Harwood, Managing Director of Evercore Partners, financial advisor to the ad hoc committee of holders of the Senior Secured Floating Rate Notes. "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 advisor to the ad hoc committee of holders of the 10-1/8% Senior Notes. "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" said Victor. 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 due to pressure from the Mexican Government. The Creditors' belief is due to Mexican press reports suggesting that officials of Mexico's Ministry of Transportation and Communications ("SCT") have pressured the Company into a concurso mercantil filing to allow the Mexican Government to extract value from Satmex for a debt (the so-called "menoscabo") that is owed to the Mexican Government not by Satmex but rather by Satmex's parent company, Servicios Corporativos. Those press reports suggest that SCT officials want the Satmex restructuring to proceed in Mexico where they believe the menoscabo and the Mexican Government's position as minority shareholder will be treated more favorably than in a U.S. court. The Creditors stressed that their U.S. Chapter 11 restructuring plan would not compromise the menoscabo debt owed by Servicios Corporativos. On the contrary, the Creditors fully support the payment in full of the Mexican Government's menoscabo debt ahead of any distributions to Satmex shareholders. Given that the menoscabo debt would not be compromised under the proposed Chapter 11 restructuring plan, the Creditors are surprised that the Mexican Government, a shareholder in the Company, would not consider and respond to the Creditors' proposal, which has the support and approval of more than two- thirds of Satmex's creditors and which would quickly provide the Company with badly-needed new financing.
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