ProtoStar I and ProtoStar II Satellites are for Sale under the US Bancruptcy Law

Yesterday, ProtoStar Ltd. filed two separate motions seeking approval of procedures to separately sell substantially all of the assets of two of its subsidiaries - ProtoStar I Ltd. and ProtoStar II Ltd. All three of the entities filed voluntary chapter 11 bankruptcy petitions in the United States Bankruptcy Court for the District of Delaware on July 29, 2009.

ProtoStar was formed in 2005 to "acquire, modify, launch and operate high-power geostationary (i.e., fixed with respect to a given point on Earth) communication satellites optimized for direct-to-home satellite television and broadband internet access across the Asia-Pacific region." ProtoStar operates two such satellites - the ProtoStar I Satellite (owned by ProtoStar I Ltd.) and the ProtoStar II Satellite (owned by ProtoStar II Ltd.). The ProtoStar I Satellite launched on July 7, 2008 and "provides Ku-band coverage for digital DTH services, high-definition television and broadband internet to under-served areas from Southeast Asia to the Middle East, while C-band transponders on the satellite enable ProtoStar to provide cellular backhaul, traditional last mile telecom and basic broadcasting services." The ProtoStar II Satellite launched on May 16, 2009 and became operational on June 17, 2009 following in-orbit testing. At that time, the ProtoStar II Satellite began providing services to PT Media Citra IndoStar and PT MNC Skyvision (the largest DTH satellite television service operator in Indonesia).

According to the motions, there is no stalking horse bidder for ProtoStar I's assets, but "potential acquirers have expressed an interest to purchase the assets." However, ProtoStar is seeking the authority to enter into a stalking horse agreement and provide a break-up fee and expense reimbursement in an amount of up to three percent of the cash purchase price (in aggregate). There is also no stalking horse bidder for the assets of ProtoStar II and the company is similarly seeking the ability to enter into a stalking horse agreement later. However, ProtoStar II seeks advance approval of a three percent break-up fee and a separate $500,000 expense reimbursement.

The bidding and auction procedures sought for both sets of assets include the following (differences between the two proposed sets of procedures are noted):

• Bid Deadline: 4:00 p.m. (Eastern) on September 17, 2009
• Good Faith Deposit: 10% of proposed purchase price
• Minimum Overbid (in the event a stalking horse bidder is selected): $500,000
• Credit Bidding: ProtoStar's lenders are entitled to submit a credit bid at any time before or at the auctions
• Auction: September 23, 2009

In addition, each motion attaches a proposed form of asset purchase agreement for bidders to use in submitting their bids (a bidder must include a copy of the form agreement with its bid which is marked to show any requested changes to that form).