A bankruptcy court in New York approved the sale of DBSD North America to DISH Network, in a $1.4 billion deal.
On Tuesday Judge Robert E. Gerber of the New York State Bankruptcy Court in Manhattan signed off on the bid from DISH, which was raised from a $1.1 billion offer in February. DBSD said it was considering a rival bid.
In court filings, DBSD said that both the rival bid and the DISH offer were much improved and that the company decided on the latter.
DBSD has been in bankruptcy proceedings since May of 2009. The bankruptcy plan has had to go through several iterations. Originally it called for creditors to take 95% of the equity of a reorganized DBSD in exchange for their notes, while DISH would have retained the $40 million in loans under new terms. But that plan was appealed and the Second Circuit Appeals Court overturned it.
Since then the plan has wended its way through the courts. The current plan calls for an $87.5 million loan to the company, and DBSD said it is negotiating an additional $10 million. DISH owns $40 million of DBSD's debt.
During the bankruptcy proceedings, one objection to came from Sprint, which says DBSD owes $100 million for costs related to clearing spectrum for DBSD's use in its satellite communications system. The current plan offers Sprint $40 million that it could accept now to settle the claim.
In February, bond holders, represented by Solus Alternative Asset Management and Harbinger Capital Partners, two hedge funds, filed a term sheet with the court. In the filings, Solus' offer said it was willing to put in $90 million to repay creditors. DBSD's other debts would also be paid in full. An additional $123.9 million will go to repaying the creditors of TerreStar, another satellite communications company in bankruptcy proceedings. Much of TerreStar's debt is held by EchoStar, a sister company to DISH. The offer letter seemed to contemplate combining the two companies, though it added that combining the two companies isn't a necessary condition for a deal.
That was the only alternative offer DBSD got, and after DISH said it was willing to offer more the company went to the court with the DISH plan.
DBSD is developing a satellite constellation coupled with a terrestrial network that would provide voice and data services.
To contact the reporter responsible for this story call (646) 461 6917 or email email@example.com.