[Satellite News 07-30-09] The post-bankruptcy sale of ProtoStar’s satellites is sure to draw interest from multiple parties, according to industry officials and analysts.
    ProtoStar and its five affiliates filed for Chapter 11 bankruptcy protection July 29 with the U.S. Bankruptcy Court of Deleware, listing assets and liabilities between $100 million to $500 million and naming Philippine Long Distance Telephone Co. (PLDT) as its largest unsecured creditor. ProtoStar has two satellites, ProtoStar 1 and 2.
    Patrick French, a satellite analyst at NSR, told Satellite News that a bidding war for these assets is not out of the question. "I tend to lean towards dissolving of the company and selling of the assets because of the coordination issue that would hang over the company if someone bought it for pennies on the dollar and tried to continue operations. I have no doubt that some of the other satellite operators are very closely eyeing the ProtoStar 1 and 2 satellites and one could even see a bidding war (to a certain extent) breakout to get healthy satellites ‘on the cheap’. Whatever happens, it will probably be the company that has the best orbital slot for the satellites (including priority and rights to frequency) that will win at the end of the day," he said.
    ProtoStar had created some friction within the satellite communication sector with its failure to coordinate satellite frequencies so they do not interfere with the operations of other spacecraft. While ProtoStar-1 primiarly is designed to provide direct-to-home services in the Asia-Pacific region, there were concerns that its C-band capacity could interfere with the operations of spacecraft located near ProtoStar’s orbital slot at 98.5 degrees East, with the main threat to AsiaSat satellites operating nearby.
    AsiaSat CEO Peter Jackson said ProtoStar’s descent into Chapter 11 is "not good" for the satellite industry. "It shows that you can launch satellites that are not coordinated, and they can interfere with existing satellites."
    But Jackson also has not ruled out efforts to acquire ProtoStar’s satellites in a court auction as a result of the bankruptcy filing, Jackson told Satellite News. "We may have orbital slots that could work with these satellites. We haven’t looked at it that seriously, but we will. I presume there will be some kind of auction now. We could well participate in that," he said.
    While AsiaSat could participate in any auction, Jackson believes it is a complex decision for any operator looking to acquire these assets. "One of the problems is when you design a satellite, you design the coverage and the power for exactly the countries you want to cover and the markets you want to sell into, but you do it from a specific orbital slot. If you then move the satellite away from the slot, you have to change the way satellite looks at the Earth and often you will get some degradation in services. You will find that the power or coverage is not as good as it would have been in the slot was designed for. Really, you have to find a buyer now that has got a slot that it suits, and I assume is relatively close," he said. "If there is a really good slot for the satellite, I am sure ProtoStar’s people would have found it already. So you have to look for an existing operator with a slot where that satellite fits in. That is quite difficult. We said that perhaps they should sell the satellite before they launched it, but they chose not to."
    French believes a quick resolution to this situation is needed. "The quicker this is resolved the better. Indian [direct-to-home] operators need the capacity there, and Indovision needs some certainty of what is going to happen to its S-band payload on ProtoStar 2. They will likely be very much involved in whatever end deal is reached, especially for this satellite," said French.
    Jackson believes the ProtoStar’s problems could have an impact on investors looking to invest in satellite businesses in Asia. "I think the way the industry has changed is that you must not assume anyone cannot raise money when there is no business case. I think you have to be careful in terms of orbital slots. For investors, the prime lesson, must be, ‘Don’t believe everything you are told and get an independent assessment of the satellite and the slot where it is going.’ Anyone who had completed their due diligence would have found that you could not coordinate these satellites at the orbital slots they had proposed. A due diligence process would have covered it. If you haven’t got anywhere to put a satellite, don’t build it and certainly don’t launch it," he said.