Satmex Readies New Bond

Mexico’s Satmex is preparing to sell $325m in new 2017 NC3 bonds to replace exit financing it received in February to support a bankruptcy reorganization plan that was accepted by courts last week. According to investors, the satellite operator plans to use proceeds to pay off creditors and to help launch a new satellite. It will meet investors in London and Miami this week, with less defined plans to visit the rest of the US next week, investors say. Under the reorganization plan, accepted by more than 66% of holders of the company’s 2013 bonds in March, Satmex plans to pay holders of its first-priority 2011 bonds at par plus accrued interest. Holders of Satmex’s second-priority 2013 bonds would receive their pro rata share of a pool of equity interests in the indirect parent of reorganized Satmex and participate in a priority rights offering of up to $96.25m, but only to the extent that existing holders exercised their primary rights. Alternatively, 2013 holders may elect to receive a cash payment of 38 cents per dollar. Proceeds of the exit financing and rights offering will also be used to fund completion of Satmex 8, a satellite scheduled to be launched in 2012 to replace the Satmex 5 satellite. When assigning a B3 rating to the new bonds, Moody’s notes a small $129m annual revenue size and high operating risk arising from the construction and launch of Satmex 8. The risk is somewhat mitigated by an insurance policy that pays bondholders if Satmex 8 fails to launch, the agency says. Following the new bond sale, Moody’s says Satmex’s capital structure would be composed of $316m in shareholders’ equity and $325m in debt, providing a “comfortable” debt maturity profile and an “adequate” liquidity profile. Lazard has been advising Satmex. Bondholders rejected a takeover bid for the company worth up to $375m last year from EchoStar and MVS Comunicaciones. It is Satmex’s second time requesting bankruptcy protection, following a petition in 2006 from which it exited