Liberty’s role as a white knight to beleaguered satellite radio company WorldSpace has come crashing to a halt. Strategic transaction negotiations between the two parties have been terminated, and the two are now squabbling over WorldSpace’s proposal to…
Liberty’s role as a white knight to beleaguered satellite radio company WorldSpace has come crashing to a halt. Strategic transaction negotiations between the two parties have been terminated, and the two are now squabbling over WorldSpace’s proposal to the Delaware Bankruptcy Court to decommission its satellites, AsiaStar and AfriStar.
In a statement, WorldSpace said: “WorldSpace is awaiting information from Liberty as to its expectations as WorldSpace’s secured lender, with respect to the handling of Liberty’s collateral. In the interim, WorldSpace is planning for a potential decommissioning of its satellites and is reviewing its strategic alternatives in light of the termination of negotiations.”
WorldSpace also filed an emergency motion to deorbit its satellites with the bankruptcy court. In response, Liberty filed a petition stating that the satellites are not assets of WorldSpace and therefore the request should be should denied. On March 24, the bankruptcy court judge, Peter J Walsh, ruled in favour of WorldSpace’s plan and the company will now seek to decommission its two satellites with Intelsat expected to carry out the procedure.
WorldSpace has been in Chapter 11 bankruptcy protection in the US since October 2008 after it defaulted on US$72.4m of debt. Via its subsidiary Liberty Satellite Radio Inc, Liberty became WorldSpace’s debtor-in-possession lender last year, and has since been effectively conducting due diligence on WorldSpace’s assets.
With Liberty having taken a 40% stake in US-based satellite radio provider Sirius XM last year after bailing it out with a US$250m loan, the media group’s interest in WorldSpace has widely been seen as a pre-emptive move to expanding Sirius XM’s satellite radio service globally. While WorldSpace’s satellites are not particularly valuable, the company does have global frequency and operating licences that would be very useful to launching such a global service.
At the end of 2009, WorldSpace released a statement on its website saying that its subsidiary WorldSpace India had ceased all operations.
Shearman & Sterling and Pachulski Stang Ziehl & Jones are counsel to WorldSpace on the bankruptcy case.