Satmex faces fiscal crash landing

Gonzalez says bankruptcy is not cancer

MEXICO CITY — Heavily indebted Mexican satellite service provider Satmex may be on the verge of bankruptcy, even as it moves to enter the highly competitive U.S. feevee market.

This spring, the 6-year-old satellite company launched Satmex Maximo, a programming service of six free and feevee channels from Mexico, as well as single channels from the Dominican Republic, Ecuador and Uruguay.

Satmex Maximo, which is to be distributed by Castalia Communications and transmitted by Crawford Communications, both out of Georgia, targets the growing U.S. Hispanic market.

For now, however, it is unclear how the company will pay off $524 million in debt. Credit-rater Standard & Poor’s lowered its local and foreign currency credit ratings for Satmex from CCC to D following a missed Aug. 1 interest payment on $320 million in debt. Although Satmex has a 30-day grace period to make the payment, S&P said it does not expect that to happen.

Last month, Loral Space, which owns 49% of Satmex, filed for Chapter 11 protection. Under questioning from the press, Satmex’s director, Lauro Gonzalez, did not discount the possibility of following suit.

“It’s not cancer, it’s a treatment that allows remediation of the problem,” Gonzalez said of the bankruptcy, adding that he did not “foresee a suspension of service.”

Satmex owns and operates a satellite system providing TV, telephone and telecom services in 39 countries.