DBSD Seeking Extension Of Bankruptcy Loan While Sale Plays Out
14 Marzo 2011 - 7:10PM
Dow Jones News
DBSD North America Inc. is seeking court approval to increase
both the amount and term of its bankruptcy loan, fearful that it
will run out of money by the end of March if its sale to Dish
Network Corp. (DISH) or another bidder isn't finalized soon.
In a Friday court filing, DBSD said if the court doesn't approve
a sale agreement to Dish or a competing entity at a Tuesday
hearing, "the Debtors would almost certainly run out of liquidity
by the end of this month."
DBSD said it is still negotiating with Dish over the particulars
of an amended loan, in which the satellite company is seeking an
additional $10 million and an extension to April 30 for it to
mature. If the Dish deal is closed, Dish would provide a new $87.5
million revolving term loan that would pay off the existing
facility.
Judge Robert E. Gerber of U.S. Bankruptcy Court in Manhattan on
Tuesday is scheduled to hear arguments on both the $1.1 billion
sale of DBSD to Dish Network, as well as a competing plan by Phil
Falcone's Harbinger Capital Partners hedge-fund firm and fellow
investment company Solus Alternative Asset Management. DBSD said it
has also received other preliminary offers. Harbinger and Solus
have said they may try to merge DBSD with another satellite company
in bankruptcy, TerreStar Networks Inc.
DBSD said in its court filing that if it doesn't get the
extension, the company "would be forced to consider competing bids
for their estates with the ever-present fear of running out of cash
in mind, adversely affecting their ability to negotiate and
evaluate alternate proposals."
Earlier this month, Gerber held off ruling on the sale of DBSD
to Dish to give all parties involved and creditors time to digest
the Harbinger/Solus offer.
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 out of bankruptcy.
DBSD, a unit of ICO Global Communications Holdings Ltd. (ICOG),
filed for bankruptcy in 2009 and had its plan confirmed by Gerber.
That plan 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 Nextel Corp. (S) 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 ranked it lower than other creditors.
Sprint is still a key to the case, as it claims DBSD owes it $104
million. The DBSD/Dish deal contemplates a payment to Sprint of $40
million to satisfy those claims.
(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
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