Satmex: bankruptcy remains remote option

The prospect of bankruptcy for Mexican satellite operator Satmex is "remote," despite creditors threatening to demand early repayment of debts if an agreement is not reached by December 6, Satmex operations vice president Arturo Gonzalez told BNamericas on Thursday. If no agreement is reached by the deadline, creditors said they would accelerate payment of US$320mn in debts, which could force Satmex into bankruptcy proceedings. "[Bankruptcy] is still a very remote option. Negotiations are continuing today, tomorrow and Friday. We hope to reach an agreement," Gonzalez said. "We don't want to declare bankruptcy." Satmex missed a US$16.2mn interest payment on August 1 this year, and has subsequently been negotiating with an ad hoc committee of noteholders that hold more than 70% of the outstanding principal amount. Meanwhile, the launch of the company's newest satellite Satmex 6 hinges on a successful agreement with the creditors. The launch is currently scheduled between December 15, 2003 and January 15 of next year, Satmex said in a recent statement, although it may be moved to later in the first half of 2004. As well as talks with creditors, the launch also depends on payment of the launch insurance premium and Ariane Space's ability to iron out technical problems with the launch vehicle. The cost of the satellite, ground equipment, services and insurance coverage purchased from suppliers in the US is estimated at US$184mn, and the project has already qualified for an Ex-Im Bank guarantee of US$150mn. Satmex also expects the launch of Satmex 6 and related services will cost around US$85m, and is seeking financing of up to US$76mn from French export insurer Coface. A consortium of Principia and Loral controls 75% of Satmex, while the government has the other 25%.