US Bankruptcy Court Judge Robert Gerber has approved the amended and restated investment agreement between DBSD North America and Dish Network. The decision means that Dish will now push ahead with its plan to acquire 100% of the equity of the…
US Bankruptcy Court Judge Robert Gerber has approved the amended and restated investment agreement between DBSD North America and Dish Network. The decision means that Dish will now push ahead with its plan to acquire 100% of the equity of the reorganised DBSD for approximately US$1.4bn.
Under the terms of the amended investment agreement, DISH will receive 10,000 shares in the reorganised company in return for satisfying in full all of the claims of the holders of the 7.5% Convertible Senior Secured Notes due 2009, 100% of the general unsecured claims, including approximately US$40m to settle the claims of Sprint Nextel, and 100% any allowed administrative claim. Holders of DBSD capital stock, including ICO Global, will be paid an aggregate of US$290m.
In addition, Dish will fully repay the existing debtor-in-possession credit facility and then provide a new US$87.5m multiple-draw DIP facility.
In a statement supporting the revised investment agreement, ICO stated: “The last forty-five days have seen extraordinary developments in the debtors’ cases. These developments have resulted in Dish submitting an amended investment agreement in which all creditors are unimpaired and will be paid the full amount of their allowed claims and equity will receive a substantial distribution.
“This substantially increased distribution to all stakeholders is due to an active and competitive bidding process that has taken place over the last several weeks. Accordingly, ICO Global is now convinced that the current version of the investment agreement represents the highest and best value available to the estate.”
The bankruptcy court’s approval also triggered both the restructuring support agreement and implementation agreement that ICO and DISH signed on 15 March. The former requires ICO to support the plan of reorganisation and take certain actions to facilitate the consummation of this plan, including opposing any alternative transaction.
The implementation agreement sees ICO receive approximately US$325m in return for certain assets and spectrum rights. The payment is split between US$35m that is payable within five days of bankruptcy court approval of the implementation agreement, US$279.5m payable when DISH repurchases greater than 50% of the 7.5% Convertible Senior Secured Notes, and US$10m when DBSD emerges from bankruptcy protection. However, the total amount received by ICO will ne subtracted from its portion of the US$290m equity distribution outlined in the restated investment agreement.
In exchange, ICO has agreed to sell to DISH its priority spectrum rights vis-à-vis DBSD’s G1 satellite; provide DISH with a contingent call right on ICO’s equity interest in DBSD, exercisable in certain circumstances; pay over to DISH any distributions that ICO receives pursuant to any alternative restructuring plan proposed by a party other than DISH, less an amount equivalent to what ICO would receive in the implementation agreement; and grant DISH an option to purchase certain international assets owned by ICO, including its medium earth orbit (MEO) satellites and trademarks.
The last condition is only applicable if the existing option to acquire ICO’s MEO assets held by Jay and Jayendra is not taken up. Indeed, ICO stated that the implementation agreement does not alter its obligations to J&J, nor does it affect the
Judge Gerber’s decision also thwarts the counter offer that was made by Harbinger Capital Partners and Solus Alternative Asset Management. The hedge funds submitted a non-binding term sheet that proposed a new plan of reorganisation and DIP financing. The two investors have made a similar restructuring bid for Terrestar Networks.
DBSD is being advised by Jefferies & Company, Kirkland & Ellis and Davis Wright Tremaine. Linklaters is counsel to DISH Network while UBS Securities and Milbank, Tweed Hadley & McCloy are advising the Ad Hoc Committee of noteholders.
