EchoStar to Acquire Mexican Satellite Operator SATMEXFriday, February 26th, 2010
ENGLEWOOD, Colo., U.S.A., and MEXICO CITY, Mexico — EchoStar Satellite Services, L.L.C., a subsidiary of EchoStar Corporation (NASDAQ: SATS), and Satélites Mexicanos, S.A. de C.V. (Satmex) announced today an agreement pursuant to which EchoStar will acquire an ownership interest in Satmex. Satmex is Mexico’s leading satellite operator and delivers video, audio and data services to the Americas. MVS Comunicaciones, one of the largest media and telecommunications companies in Mexico and EchoStar’s partner in the fast growing Mexican direct-to-home TV service Dish Mexico, will also participate in the ownership of Satmex through a joint venture with EchoStar. Together, EchoStar and MVS Comunicaciones will acquire all of the outstanding stock of Satmex.
Satmex will be acquired for approximately $267 million in cash, plus up to $107 million in cash on Satmex’s balance sheet at closing, resulting in total cash of up to $374 million available for distribution to Satmex’s stakeholders. The transaction is expected to close early in the third quarter 2010.
Established in the mid 1980s as part of a government operation before becoming a commercial organization, Satmex owns and operates three satellites and two satellite uplink facilities, and has approximately 200 employees, which are all included as part of the transaction.
“We are pleased to make this announcement with EchoStar, a major provider of satellite services in the United States with a significant and growing presence in Mexico,” said Satmex CEO Patricio Northland. “Our companies have common goals in delivering satellite communications services across the Americas, and EchoStar has the dedication and expertise for continued growth.”
“The Satmex acquisition provides us with a footprint over Mexico and South America and presents us the opportunity to serve a growing global demand for satellite services,” said Dean Olmstead, president of EchoStar Satellite Services L.L.C. “We look forward to leveraging our satellite operations and uplink expertise in North America to expand our fixed satellite services throughout the Americas, including the delivery of satellite Internet to rural communities.”
In connection with the sale, Satmex intends to offer to purchase all of its outstanding Senior Secured Notes for cash upon the closing of the sale of the Satmex shares. The offer to purchase the Senior Secured Notes and the sale of the shares are subject to the receipt of certain consents from the holders of the Senior Secured Notes, including consents to modify or eliminate most of the covenants in the indentures under which the Senior Secured Notes have been issued, and various corporate approvals. The consummation of the sale of the Satmex shares is conditioned upon successful completion of the offer to purchase the Senior Secured Notes.
The transaction is also contingent upon other closing conditions, including actions with respect to the construction of a replacement satellite for Satmex 5, verification of the operational capabilities of Satmex’s in-orbit satellites, approvals under applicable U.S. export laws, and completion of regulatory review and receipt of regulatory approvals.
There can be no assurance that the transaction will receive the requisite corporate approvals or approvals from the Satmex bondholders, some of which have indicated that they are opposed to the transaction. EchoStar may terminate the agreement under certain circumstances, including the failure to obtain the requisite approval by the Satmex bondholders.
EchoStar’s financial advisors are Deutsche Bank Securities and Peter J. Solomon Company. The financial advisor for Satmex is Perella Weinberg Partners LP.