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TerreStar to sell assets to DISH unit for $1.375 billion; proceeds will to go to repay DIP loan
By Lisa Kerner
Charlotte, N.C., July 7 - TerreStar Networks Inc.'s sale of its assets to Gamma Acquisition LLC, a unit of DISH Network Corp., for $1.375 billion in cash was approved on Thursday, according to an attorney familiar with the case.
No other qualified bids were received by the June 27 deadline for the June 30 auction, which was canceled.
As previously reported Gamma Acquisition, the stalking horse bidder, agreed to fund 97% of the purchase price before receipt of Federal Communications Commission or Industry Canada approval for the sale.
The court also approved an amendment to TerreStar's debtor-in-possession financing amendment, allowing the company to repay the $88.8 million under its DIP agreement using the asset sale proceeds, the attorney said.
On July 6, TerreStar asked the court for approval to repay its existing secured debt on or as soon as possible after it can access $1.345 billion of the asset sale proceeds to eliminate monthly interest payments on its more than $1.1 billion of secured obligations, including the DIP financing.
The debt also includes $97 million owed on a purchase money credit agreement and $1.077 billion on TerreStar's 15% senior secured notes.
TerreStar said $40 million in interest accrues each quarter on the 15% notes, $3.4 million to $3.5 million per quarter on the purchase money loan and $3 million per quarter on the DIP facility.
Based in Reston, Va., TerreStar is a holding company with subsidiaries that operate satellite-based digital mobile communications systems. The company filed for bankruptcy on Oct. 19, 2010. The Chapter 11 case number is 10-15446.
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