Dish Network

Denver’s Dish Network set to purchase TerreStar Network for $1.375 billion

Fortune 500 company, Dish Network Corporation, with headquarters in Denver, Colorado, has experienced success despite the recessed economy. The communications corporation has made several large purchases of businesses in financial trouble including DBSD North America earlier this year for approximately $1.4 billion and Blockbuster Inc for nearly $320 million.

According to sources that remain anonymous pursuant to the private sale, Dish Network is at it again. On June 15, 2011 Dish Network submitted a bid for TerreStar Networks Inc, a corporation which filed for bankruptcy protection back in October of this year.

A bidding deadline of 5:00 p.m. passed this Monday, June 27, 2011 with only one offer on the table from Dish Network Corporation for $1.375 billion. TerreStar’s purchasing draw has been their innovation in marketing the first satellite smartphone and their spectrum of approximately 20 megahertz.

Although the billion dollar bid is currently the only one in play, there is a remote possibility that the court could allow another bid to be entered past the Monday deadline. Any new bid, however, would have to be at least $55.5 million over the bid submitted by Dish Network Corporation pursuant to the bankruptcy procedures set out by the bankruptcy court in New York. The higher bid would have to include a $27.5 million “breakup” fee that would have to be paid to Dish Network, the corporation with the “stalking horse” bid.

There is a sale hearing on the bankruptcy court docket for July 7, 2011. Until that point, the definite future of the bankrupt business remains unknown.

Source: Reuters, “Dish stands alone in TerreStar bid,” Nick Brown, 27 June 2011

Colorado-based Dish Network Corp acquires Blockbuster Inc.

Almost a month ago, our blog featured a story on a pending US Bankruptcy Court action for the movie and video game rental company Blockbuster Inc. The national retailer has struggled to compete with new companies such as Netflix Inc. and Redbox Automated Retail. Blockbuster filed for Chapter 11 bankruptcy protection in September, but failed to turn their financial situation around.

Last week, a US Bankruptcy Court judge officially approved the sale between Blockbuster Inc. and Dish Network Corp, a Colorado-based company. At the end of the auction, Dish acquired Blockbuster for an estimated $320 million dollars, with the company expecting to pay closer to $228 million after taking Blockbuster’s current inventory into account.

According to Blockbuster’s legal representation, proceeds from the sale will be used to cover the majority of the company’s outstanding debt. A Bloomberg report stated specific numbers, including almost $180 million dollars to be set aside for senior lenders, in addition to another $10 million for movie studio debts and $20 million for administrative claims.

However, the extent of Blockbuster’s debt cannot be completely covered by the Dish Network sale. Bloomberg also reports that the $320 million dollar settlement will not be enough to pay several of Blockbuster’s secured noteholders and Chapter 11 service providers.

Blockbuster began closing many of its nationwide locations in September as part of its Chapter 11 reorganization strategy, including several Colorado stores. According to the company’s Chief Executive Officer, roughly 1,700 Blockbuster locations will remain in operation at the end of the bankruptcy sale. The CEO did not, however, specify where these locations would be located, leaving the fate of the remaining Colorado locations up in the air.

Source: Bloomberg Buisnessweek, “Blockbuster, Lehman, Vitro, Accredited Home: Bankruptcy.” Bill Rochelle, 8 April 2011

Colorado satellite company DBSD buyout contingent on emergence from bankruptcy

Colorado-based DBSD North America Inc., a small satellite firm, recently filed for bankruptcy protection and satellite television mega giant Dish Network Corp. has announced their intent to purchase the smaller corporation contingent upon their emergence from bankruptcy protection.

DBSD has been developing a complex new system that would combine satellite and terrestrial communication capabilities used for services including wireless voice, data and internet. The new system sparked the interest of Dish Network and led to a $1 billion offer to purchase the company and its new software.

As a part of the deal, Dish Network would provide a term loan of $87.5 million to DBSD as a debtor-in-possession. The deal also includes the interest that has been accruing on the satellite company’s debt. While Dish Network would receive 100 percent of DBSD’s reorganized equity, it would pay their senior notes in full to facilitate recovery for the small corporation’s unsecured creditors.

The Dish Network buyout deal requires approval from the Federal Communications Commission, but those involved are optimistic about the outcome. Dish Network has experienced growth in performance during the recessed economy based upon their new target market of lower-end customers who are in need of the offered low prices. Dish Network’s earnings reportedly tripled in the third quarter despite the subscriber losses that they suffered.

Dish Network’s CEO hopes that the growth will continue after the buyout of DBSD and prior acquisitions by creating a national network to compete with video-over-internet providers.

Source: Wall Street Journal, “Dish Network to Buy Satellite Firm for $1 Billion” Lauren Pollock, 2/2/11