(Reuters) – A group of EchoStar’s Dish bondholders rejected a proposed debt-exchange offer from DirecTV that was contingent upon them accepting a “haircut” of $1.5 billion, a document viewed by Reuters on Monday showed.
The group represents more than 85% of Dish’s bondholders. It was not immediately clear how the rejection will affect DirecTV’s plan to acquire EchoStar’s satellite television business that includes Dish TV, which was announced in September.
As part of the two-step transaction, DirecTV was to pay $1 to buy the pay TV business called Dish DBS that includes Dish and Sling TV, while agreeing to assume about $9.75 billion of Dish’s debt. Dish and DirecTV launched an exchange offer at a discounted rate for the debt to help extend the maturities.
For the deal to go through, Dish DBS debtholders had to agree to exchange their debt for new debt in the merged entity at a discounted rate, taking a haircut of about $1.57 billion on the debt.
The deal will provide a crucial lifeline to EchoStar, which was co-founded by telecommunications entrepreneur Charlie Ergen and is currently saddled with more than $20 billion in debt.
DirecTV and EchoStar did not immediately respond to Reuters’ requests for comment.
(Reporting by Nilutpal Timsina in Bengaluru and Dawn Chmielewski in Los Angeles; Editing by Sonali Paul)
