Satmex hopes debt plan flies with court

Former majority owners' shares will be whittled down

Mexican satellite firm Satmex on Tuesday presented a debt restructuring plan to a New York court, which will have 60 days to rule on the deal.

A yearlong bankruptcy process in Mexico formally ended Monday, with a Mexican court approving a deal that gives U.S. holders of Satmex debt 78% of the firm and the Mexican government 20%.

Former majority owners Mexican Sergio Autrey and Loral Communications will see their shares whittled down to 0.33% and 1.66%, respectively.

Satmex had defaulted on more than $700 million in debt, including $520 million in U.S.-held bonds. Autrey had defaulted on $188 million owed to the Mexican government, which already owns 24% of Satmex.

Satmex was crippled when a satellite failed in 2000 and the company beaten down by rivals, losing major clients such as TV Azteca. By the end of 2005, it was bleeding more than $70 million a year.

But the company recently launched a new satellite and, if the debt deal is approved, it will be free of nearly half of its previous debt.

The Mexican government, which will have a 55% voting stake to get around limits on foreign ownership, and the U.S. bondholders are putting together a new board that will take over the company and look to sell it.

Parties kicking the tires include PamAmSat and Mexican mogul Clemente Serna, who is partnered with SES Americom in Mexican satellite firm Quetzsat.

Deal, put together by Thomas Heather, a partner at White & Case’s Mexico City office, will be reviewed by U.S. Bankruptcy Court Judge Robert Drain.