By Joseph Checkler
Of DOW JONES DAILY BANKRUPTCY REVIEW
DBSD North America Inc. has tweaked its sale agreement with Dish
Network Corp. (DISH)--including the removal of a crucial "no-shop"
provision that creditors had objected to--ahead of a hearing on the
$1.1 billion sale offer next week.
Although it does satisfy the concerns of some DBSD creditors,
the revised deal still has key objectors who will have their say in
court next week. An ad hoc group of DBSD's bondholders still is
objecting to the deal, which was filed Friday with the U.S.
Bankruptcy Court in Manhattan. The group favors an amended version
of a previously overturned exit plan that it says treats creditors
more fairly.
Under the Dish buyout plan, Dish would get 100% of reorganized
DBSD's equity, pay DBSD's senior notes in full, and provide what
DBSD calls enhanced recovery for its unsecured creditors.
According to court papers filed before the most recent iteration
of the sale deal, Sprint Nextel Corp. (S) is still objecting.
Sprint objected to the now-removed no-shop provision, but it also
balked at how its claim of more than $100 million is being treated.
According to the amended deal, DBSD offered to pay $40 million for
that claim if Sprint votes for the deal. A Sprint lawyer didn't
immediately respond to a request for comment.
In court papers filed Friday, DBSD's official committee of
unsecured creditors said it tentatively supports the plan, touting
the removal of the "no-shop" provision and some conditions placed
on the deal. The amended plan would give 100% cash recovery to
unsecured creditors with claims worth less than $50,000, and 75%
recovery to unsecured creditors worth more than $50,000. A
provision that said unsecured creditors must vote to participate in
the tender offer to get their recovery was removed.
DBSD, a unit of ICO Global Communications Holdings Ltd. (ICOG),
filed for bankruptcy in 2009 and had its plan confirmed by Judge
Robert E. Gerber. That plan would have called for bondholders to
swap $740 million in debt for a 95% stake in the reorganized
company. Dish, the sole holder of $40 million in first-lien loans,
would have had its debt continued with the new company under
amended terms.
But both Dish and Sprint objected to the confirmation, and they
got their wish in late 2010 when a court overturned it. Dish had
called the plan unfeasible, and Sprint objected to the way the plan
placed it lower on the totem pole than other creditors.
DBSD, Reston, Va., is developing a system that combines both
satellite and terrestrial communications capabilities for wireless
voice, data and Internet services.
Dish is controlled by satellite-television mogul Charles Ergen,
who also is seeking to use his other publicly traded company,
EchoStar Corp. (SATS), to bring TerreStar Networks Inc. out of
bankruptcy.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection.)
-By Joseph Checkler, Dow Jones Newswires; 212-416-2152;
joseph.checkler@dowjones.com