AlphaStar getting sold off in pieces...............................................
dbsdish.com
TEE-COMM/ALPHASTAR DEAL REACHED
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Attention Financial Editors/Business Reporters:
Loral to buy back satellite transponders /
AlphaStar participates in future profits
TORONTO, July 22 /CNW/ - As an update on the marketing of AlphaStar
Television Network Inc. (``AlphaStar'') and Tee-Comm Electronics Inc.
(``Tee-Comm'') and its subsidiaries, Ernst & Young Inc., the court-appointed
receiver and manager of Tee-Comm announced that a ``backstop'' deal has been
agreed upon. Subject to any better financial offers being received and subject
to court approval, Loral SpaceCom Corporation (``Loral'') has agreed to buy
back from AlphaStar the satellite transponders which Loral leased to AlphaStar
on its Telstar 402R and Telstar 5 satellites.
In summary, the deal calls for a transfer of value to AlphaStar of US$8.7
million, including a cash component of US$5 million, plus a share of the
profit (over and above AlphaStar's existing rent obligations) earned by Loral
through its re-leasing of the Telstar 5 satellite transponders to other
companies. AlphaStar will receive between 35 and 50 per cent of any such
future profit, depending upon the average contract term of the new leases
entered between Loral and other companies. The agreement also entitles Loral
to be paid US$7.3 million under a letter of credit held by it in satisfaction
of AlphaStar's rent arrears to Loral.
AlphaStar in the United States, and its Canadian parent, Tee-Comm,
operate a multichannel, digital, direct-to-home satellite television service
with satellite coverage over all of North America, Hawaii, Central America,
the Caribbean and the northern tip of South America.
AlphaStar was forced to seek protection under Chapter 11 of the U.S.
Bankruptcy Code on May 27, 1997 and Tee-Comm was placed in receivership by
order of the Ontario Court of Justice on June 4, 1997.
Approval by the U.S. and Canadian courts of this agreement with Loral
will be sought on August 5, 1997. In the meantime, AlphaStar and its
financial advisor, Brown, Gibbons, Lang & Company, and Ernst & Young Inc., as
court-appointed receiver and manager of Tee-Comm, continue to solicit offers
for the AlphaStar and Tee-Comm business and their respective assets, including
the satellite transponder rights on Telstar 5. If, as a result of these
marketing efforts, a better offer than Loral's is made on or before August 5,
1997 for all of the Telstar 5 transponder rights, AlphaStar, Tee-Comm and
Loral have each agreed to support the approval of that better offer by the
U.S. and Canadian courts in preference to the Loral offer.
-0- 07/22/97 |
