EchoStar Makes Bid of $1.85 Billion To Acquire Loral. Loral Chairman Rejects Offer as Too Low, Says Intelsat Sale Is 'Best Course of Action'
Ye Ha! and the fun continues... (check my bold at the end. Seems like the BK judge turned 'our' pleas down cause bigger fish were already in line to contest the Intelsat deal. BLS showing more of his true colors?)
Jeff Vayda
The Wall Street Journal 10/09/03
author: Andy Pasztor
(Copyright (c) 2003, Dow Jones & Company, Inc.)
EchoStar Communications Corp., girding for a fight to acquire additional satellites to broadcast video programming throughout the U.S., has made a $1.85
billion bid to acquire all of Loral Space & Communications Ltd., which is under federal bankruptcy protection.
The all-cash bid, presented with the preliminary support of the committee representing Loral's unsecured creditors, trumps a previous $1 billion offer by
satellite operator Intelsat Ltd., an EchoStar rival, for four of Loral's existing satellites and additional orbital slots over the U.S. The New York bankruptcy
judge in charge of the case has authority to revise bidding procedures to consider both proposals. If that happens, the competition will pave the way for an
unexpectedly volatile auction later this year, reflecting maneuvering by both sides to snare all-important capacity in the U.S. video-broadcast market.
EchoStar Chairman Charles Ergen's bid also promises to shake up the industry in a number of other unpredictable, potentially far-reaching ways. For
starters, it amounts to an end-run around Bernard Schwartz, New York-based Loral's chairman, who has worked for months to structure a piecemeal,
out-of-court deal with Intelsat. Mr. Schwartz has aimed to pay off debt, and to retain control of a slimmed-down Loral that could emerge relatively quickly
from bankruptcy proceedings with its manufacturing business intact.
In addition, Loral is building and plans to build satellites for Mr. Ergen's competitors, including Intelsat and Hughes Electronics Corp.'s DirecTV
satellite-to-home broadcasting unit. By opting to formally go after Loral's satellite-manufacturing operations, EchoStar, which is based in Littleton, Colo.,
could slow down or complicate manufacturing that is already under way. If EchoStar's bid ends up being approved by the bankruptcy court, those rival
satellite operators will be forced to look elsewhere, particularly Europe, to acquire future spacecraft.
A further complication: News Corp. Chairman Rupert Murdoch, who has agreed to pay about $6.6 billion to take control of Hughes, is a longtime nemesis
of Mr. Ergen. The two strong-willed adversaries are preparing for a new round of competition in trying to expand their satellite-broadcasting networks, and
one of their biggest challenges is how to lock up additional capacity to broadcast high-definition channels and other premium services. News Corp. is
expected to win federal approval of its Hughes takeover by the end of the year.
After receiving a letter from EchoStar demanding access to Loral's books and asking to "meet with Loral and its advisors immediately" to advance the
proposal, Mr. Schwartz flatly rejected the proposal. Speaking for his board, Mr. Schwartz said "EchoStar's bid undervalues Loral's businesses," and
reiterated that the Intelsat offer is "the best course of action for Loral to enhance the value of its assets." Now, the bankruptcy-court judge will have to
decide if he wants to open up bidding beyond the U.S. satellites Intelsat is eager to acquire, and whether the previous late October deadline should be
extended to mid-December, as EchoStar has requested
The EchoStar bid follows a number of other filings by various customers and business partners, including Boeing Co., Lockheed Martin Corp. and
Japanese government agencies, raising objections to aspects of the proposed Intelsat agreement.
Renowned for keeping friends and foes guessing about his strategy, Mr. Ergen's latest move surprised those who initially saw Mr. Ergen's interest in Loral
as more of an effort to impede the pending Loral-Intelsat deal than to launch a bidding war for the entire company. For Intelsat, a Bermuda operator with
headquarters in Washington, the U.S. satellites are essential for long-term growth.
As part of its filing, EchoStar asserted that Loral's management failed to use "reasonable business judgment" in accepting the Intelsat deal, and further
claimed that Loral will have "little hope" of successfully reorganizing under that scenario. |
