Terrestar Networks has requested a 120 day extension to the exclusivity periods during which only it may file a chapter 11 plan and solicit acceptances for it. The company is seeking to extend the exclusive filing period from 16 February 2011 to 16 June…
Terrestar Networks has requested a 120 day extension to the exclusivity periods during which only it may file a chapter 11 plan and solicit acceptances for it. The company is seeking to extend the exclusive filing period from 16 February 2011 to 16 June and the exclusive solicitation period to 16 August.
The rationale for the request centres on both the ongoing Terrestar Network asset sales and the anticipation that parent company, Terrestar Corporation, will shortly file for bankruptcy protection.
In a court filing dated 26 January, Terrestar Networks argued that these two reasons were enough of a ‘demonstration of cause’ for the bankruptcy court to permit the extension request.
Explaining the ongoing asset sale, Terrestar stated: “Concurrently with the plan process, the TSN Debtors (Terrestar Networks) are conducting a comprehensive and robust marketing process in an effort to consummate a sale of any or all of the TSN Debtors’ assets that will maximize value for all stakeholders. At this point, and as a result of such sale process as well as other contested items in the cases, the TSN Debtors do not know whether they will need to avail themselves of an extension of the Exclusive Periods to file another plan or solicit votes thereon.
“Accordingly, because the present Exclusive Filing Period expires on 16 February 2011, prudence dictates seeking an extension of the Exclusive Periods in the event additional time is needed to obtain confirmation of the Plan or to draft a revised chapter 11 plan and solicit votes thereon for the TSN Debtors.”
At the end of 2010, rumours emerged that US wireless network provider MetroPCS was eyeing up some of Terrestar’s assets.
The company then turned its attention to its parent company: “The Debtors anticipate that TSC (Terrestar Corporation) will file a petition for relief under chapter 11 in the near term, and shortly thereafter, the Non-TSN Debtors will be included in a chapter 11 plan with TSC.
“However, as those negotiations have not yet finalized, the Non-TSN Debtors require more time to formulate their plan. As a result, the Non-TSN Debtors also seek a 120-day extension of their Exclusive Periods.”
Following Terrestar Networks filing for chapter 11 protection on 19 October 2010, the company and its largest creditor, EchoStar, proposed a plan of reorganisation on 5 November. The restructuring agreement would see holders of the US$944m outstanding of the 15% Senior Secured PIK Notes, of which EchoStar currently owns more than 50%, convert their debt into 97% of the equity in Terrestar Networks. The remaining 3% would be owned by the holders of the exchangeable notes, which is predominantly Harbinger Capital Partners, and other unsecured claims.
An additional US$125m would then be raised via a rights offering with EchoStar agreeing to backstop US$100m of it.
Blackstone is Terrestar’s financial adviser for the process, while Akin Gump Strauss Hauer & Feld and Fraser Milner Casgrain are its legal counsels. Willkie Farr & Gallagher is legal counsel to EchoStar, with Weil, Gotshal & Manges counsel to Harbinger Capital Partners and Quinn Emanuel Urquhart & Sullivan representing the ad hoc group of the 6.5% senior exchangeable noteholders.
