DBSD North America is set to emerge from bankruptcy protection after the FCC’s International Bureau granted New DBSD Debtor-in-Possession’s request to transfer certain earth station licences, including authorization for an ancillary terrestrial component…
DBSD North America is set to emerge from bankruptcy protection after the FCC’s International Bureau granted New DBSD Debtor-in-Possession’s request to transfer certain earth station licences, including authorization for an ancillary terrestrial component (ATC), to New DBSD, paving the way for a change of ownership in the company.
The decision was a key requirement for the reorganisation plan that was approved by the US Bankruptcy Court for the Southern District of New York a year ago. Under that plan, holders of DBSD North America’s outstanding US$750m of convertible senior secured 7.5% notes, due 2009, will swap their debt for 95% of the equity in the new DBSD with ICO Global owning the remaining 5%, as well warrants for an additional 10%. As this constitutes a change of control of the company and requires the subsequent transfer of the ownership of DBSD’s North American 2GHz spectrum licence, it had to be approved by the FCC.
In making its decision, the FCC rejected Sprint Nextel’s petition to deny the applications. Sprint argued that to grant of the transfer of control applications would not be in the public interest and that New DBSD has no plans to build out its ATC
system, has not yet found a strategic partner, and has no plans for commencing operations or generating revenue before 2014.
The FCC stated: “We believe that granting New DBSD DIP’s transfer of control applications will serve the public interest….
“The Commission has held in the past that allowing a company to consummate itscompany to consummate its court-approved bankruptcy reorganization plan will serve the public interest by furthering the equitable purposes of the Federal Bankruptcy Act.
“Further, the Commission recognizes that as a general matter approving transfer of control or assignment applications for purposes of post-bankruptcy restructuring will strengthen the commercial viability of the applicant in the provision of service.”
However, given that Sprint’s appeal with the 2nd US Circuit Court of Appeals over the lower court’s ruling that upheld the bankruptcy plan is still pending, the FCC has agreed with New DBSD DIP to defer the effective date of its order for seven calendar days from September 29 in order to ensure Sprint an opportunity to be heard by the Court of Appeals.
