Profile: Sergio Autrey
Chief Executive Officer, Satelites Mexicanos, S.A. de C.V.
S atellite-fleet operator Satmex has come through a financial crisis that lasted more than two years with a big new satellite now safely in orbit, a financial reorganization nearing approval by its debtors and the Mexican government, and plans for a fresh attack on the hot North American market for Ku-band satellite capacity.
During this period, Sergio Autrey, the main owner of Satmex shareholder Principia, was obliged to step in to replace the Satmex chief executive officer and to try to calm nervous U.S. debtors who feared the Mexican government would permit Satmex to wither and die.
The Satmex situation was complicated by the fact that its holding company, Servicios, had a separate debt obligation to the Mexican government, and the government insisted on treating a resolution of the Satmex issues as part of a package that included the Servicios debt.
The one asset that all parties agreed would help Satmex return to financial health — the large Satmex 6 satellite — was allowed to sit for nearly two years at its French Guiana launch site, as Sat mex searched for the needed cash to pay for the launch and insurance.
“I think they should name one of the satellite-storage facilities here after Satmex 6 — we’ve been in pretty much all of them,” Autrey said after the May 27 launch of the satellite aboard an Ariane 5 ECA rocket.
During this period, the Latin American satellite transponder-lease market has remained depressed, with overcapacity a constant concern. The Venezuelan government’s announced intention of building its own large telecommunications spacecraft has not helped matters.
But Autrey says new pockets of video demand are showing up in the region, reducing downward pressure on transponder prices, and h e says there are doubts about whether Venezuela will proceed with its plans. Autrey discussed Satmex’s prospects with Space News staff writer Peter B. de Selding.
What is the status of the Satmex financial restructuring?
We presented our restructuring agreement to the judge handling the proceedings in Mexico, and to the Mexican government. Several different government agencies need to approve it. This will be followed by a review under U.S. Chapter 11 bankruptcy law. We expect to be moving out of this starting in June and to present the final agreement to the U.S. court after that. The proceedings should be completed by September.
What will the ownership and voting-rights structure be once you are out of bankruptcy?
Our bondholders will have a 78-percent economic ownership. The Mexican government and Servicios, the Satmex holding company, will have a combined 20 percent. The remaining 2 percent will be held by [Mexican holding company] Principia and Loral Space and Communications. In terms of voting rights, Servicios and the Mexican government will retain a majority, as required by law.
Satmex will be placed into an equity trust and then sold. When will this happen and who are the likely buyers?
As far as the timing, this has yet to be decided. The question is: What is the best timing for a sale of the company? Is it once Satmex 6 is operational? Is it after a year in orbit to assess its commercial value? Should you wait a year to generate more revenues? This is a matter of interpretation, and the equity trust will need to make an independent evaluation.
The Satmex financial crisis raised questions about whether the Mexican government still believed in the company sufficiently to help it through its difficulties. What is your view?
I think the Mexican government demonstrated its support for Satmex, and that support will remain.
What were Satmex’s revenues in 2005?
About $71 million — not much different from 2004. So we’re holding our own and in fact we are increasing prices for Ku-band on our fleet because of demand particularly in North America.
Satmex 6 carries a lot of capacity. Are you on plan for marketing it?
Yes we are. The fact is that our current two satellites do not have that much capacity available, so we haven’t had much we are able to sell. Satmex 5 is 85-90 percent full, and our Solidaridad 2 satellite is more for regional coverage.
That is why Satmex 6 is so important to us. With this one satellite we are adding 60 transponders — 36 in C-band, 24 in Ku-band — and we will once again be a force in the market.
Your shareholder and manufacturer, Loral, has rights to two C-band and two Ku-band transponders for the life of Satmex 6. Are you jointly marketing the satellite with Loral in North America?
No, we are retaining separate marketing teams for North America.
Did the Chapter 11 bankruptcy of Loral aggravate your financial difficulties?
I don’t really think it did. Of course, when you have a shareholder in Chapter 11 you have one less source of financing available to you, but the two companies’ difficulties were separate, so we can’t say we suffered because of the Loral situation.
Solidaridad 2 is scheduled to be retired in 2010. What is your current thinking about a Satmex 7 order?
Our target is to be able to send out bid requests for Satmex 7 this year. This will be feasible once we have completed the bankruptcy-related proceedings in Mexico and in the United States. Having Satmex 7 ready for a launch in late 2009 is feasible.
