Court set to approve DBSD's $1.4 billion sale to Dish
By Nick Brown
NEW YORK | Thu Jun 30, 2011 1:08pm EDT
(Reuters) - A U.S. bankruptcy judge is prepared to approve a plan to bring DBSD North America out of bankruptcy by selling the telecommunications company to Dish Network Corp (DISH.O) for about $1.4 billion.
Judge Robert Gerber green-lighted the sale at a hearing in U.S. Bankruptcy Court in Manhattan on Thursday, but said he would wait to enter an official order to give Dish an opportunity to respond to a change in the plan's language.
If approved, the deal would represent the third major acquisition for Dish this year. The company on Monday won an auction to buy TerreStar Networks Inc TSTRT.UL, another bankrupt telecommunications company, for $1.375 billion. In April, it completed a deal to buy bankrupt Blockbuster Inc (BLOAQ.PK) for $320 million.
DBSD, a satellite and land-based communications company, went bankrupt in May 2009 on the heels of a liquidity drought brought on by the financial crisis. The company listed debts of $813 million.
Its sale to Dish would pay creditors in full. More than 97 percent of claims against DBSD are held by Dish, which acquired them through a tender offer. Ryan Bennett, an attorney for DBSD, said the timetable for closing the deal is uncertain, but is likely still months away.
Assuming the sale goes ahead, it would continue the growth of billionaire Charles Ergen's satellite empire. Ergen controls Dish and set-top box maker EchoStar Corp (SATS.O), which recently bought Hughes Communications Inc HUGH.O for $1.33 billion.
DBSD's original reorganization plan was put aside in December 2010 after a U.S. appeals court ruled that it violated bankruptcy law. An amended investment agreement with Dish was approved in March, and Bennett said the terms of the sale are consistent with that agreement.
Gerber said he will not enter a confirmation order until Dish has had a chance to respond to a tweak in the language of the plan that preserves Sprint Nextel Corp's (S.N) right to pursue claims against DBSD over obligations to clear spectrum bands to make room for new occupants.
Sprint has levied a $104 million claim against DBSD, but said it wanted to make sure its equitable and contractual claims, as opposed to strictly financial claims, were not impaired by the plan.
The case is DBSD North America Inc, U.S. Bankruptcy Court, Southern District of New York, No. 09-13061.
(Reporting by Nick Brown. Editing by Robert MacMillan)
Credit: Reuters (www.reuters.com)
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