Judge Says Creditors Can Vote On DBSD Sale To Dish
May 23 2011 - 10:44AM
Dow Jones News
A judge on Monday said DBSD North America Inc. creditors can
vote on the company's $1.4 billion sale to Charles Ergen's Dish
Network Corp. (DISH), as DBSD moves closer to ending its two-year
stay in bankruptcy.
Judge Robert E. Gerber of U.S. Bankruptcy Court in Manhattan
approved DBSD's disclosure statement, or plain language reading of
the company's bankruptcy exit plan on which creditors must vote.
Gerber in March had called the plan "very, very favorable to the
creditor community."
When asked by Gerber if he expected any creditor objections to
the deal down the road, Kirkland & Ellis LLP's Ryan Bennett, a
lawyer for DBSD said, "We don't, your honor."
The plan pays in full DBSD's creditors, including bondholders
owed $740 million. The main voters on the deal are equity holders
led by DBSD's owner ICO Global Communications Inc. (ICOG), a group
that stands to recover $280 million. ICO, which owns 99.8% of
DBSD's equity, would also get an additional $10 million on top of
that from Dish.
DBSD hopes to have its bankruptcy plan confirmed by the court on
June 30.
The company in March auctioned off its assets, with Dish's $1.4
billion offer coming out superior to others. In February, Dish had
offered $1.1 billion.
In the disclosure statement, DBSD outlines its one remaining
large dispute with Sprint Nextel Corp. (S), which still claims it
is owed more than $104 million for a satellite license
agreement.
That matter was sent to mediation by Gerber earlier this year.
The Dish agreement proposed a $40 million settlement that Sprint
could have taken immediately, but didn't. If it prevails, Sprint
will get 100 cents on the dollar of whatever it recovers in that
litigation.
DBSD filed for bankruptcy in May 2009 and had an earlier
restructuring plan approved by Gerber.
That plan called for bondholders to swap their $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 in
late 2010, a court overturned it. Dish had called the plan
unfeasible, and Sprint objected to the way the plan ranked it lower
than other creditors.
DBSD, based in 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 Ergen, who has
also tried to use his other publicly traded company, EchoStar Corp.
(SATS), to bring TerreStar Networks Inc. out of bankruptcy. Ergen
stepped down as Dish's chief executive last week but remains the
company's chairman.
Dish recently bought Blockbuster Inc. (BLOAQ) in another
high-profile New York bankruptcy court auction.
(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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