Satelites Mexicanos fails to make $16.2 million interest payment

By Carlise Newman

Chicago, Aug. 5 - Satelites Mexicanos SA de CV did not make the $16.2 million interest payment due Aug. 1 on its 10 1/8% senior notes due 2004, and now has a 30-day grace period to avoid an event of default.

Satmex's decision was made in order to conserve cash and to complete payments necessary to insure and launch its new Satmex 6 satellite as scheduled for later this year.

Satmex said it intends to approach fixed-rate noteholders regarding a debt restructuring plan.

As part of the proposed restructuring, Satmex has filed a registration statement with the Securities and Exchange Commission covering an exchange offer for its $320 million 10 1/8% notes due 2004 as part of a package of financing to help it survive the telecommunications industry downturn and complete the launch of its Satmex 6 satellite.

The proposed exchange to extend the maturity of the notes is required as a condition to new bank financing that the company has obtained. The financing is in the form of a proposed $150 million loan from ING Capital LLC guaranteed by the Export-Import Bank of the United States, and a proposed $74 million loan from Socíeté Générale, with 95% of that amount backed by an insurance policy from Compagnie Française d'Assurance pour le Commerce Extérieur. These loans are conditional on the exchange offer being completed.

In addition, the Mexico-based satellite company plans a new bond offering in which it will issue $80 million of new senior secured floating-rate notes in a private placement. The term of the new floating rate notes will be five years. Proceeds of about $70 million will be used to prepay a portion of the company's existing floating-rate notes.

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