[Satellite TODAY Insider 07-07-11] AT&T Corp. and Space Systems/Loral (SS/L) are objecting to Dish Network’s auction purchase of bankrupt satellite company TerreStar Network, according to court papers the two companies filed July 6 with the U.S. Bankruptcy Court of New York.
SS/L, which built TerreStar’s current on-orbit satellite, claimed in the papers that Dish Network’s acquisition plan would only pay SS/L $5.6 million as a cure amount — a fraction of the $43 million that TerreStar owes the manufacturer under its three active satellite contracts.
TerreStar confirmed that it is in negotiations with SS/L to resolve the matter. SS/L filed the objection to protect itself in case the two parties were unable to reach an adequate solution, the company said in the filing.
AT&T Corp., which sells TerreStar’s Genus satellite smartphone, also objected to the sale, claiming that Dish Network’s plan could prevent it from seeking indemnity from TerreStar consumers that file damage claims against AT&T for issues related to the TerreStar phone.
TerreStar Networks filed for Chapter 11 bankruptcy protection in October. TerreStar Corp., TerreStar Networks’ parent company, also filed for Chapter 11 bankruptcy protection in February. TerreStar Networks originally requested bankruptcy court approval to auction its assets in April, convincing a bankruptcy judge that the auction would urge its creditors to resolve their differences and come up with a viable alternative to a complete company sale.
TerreStar held its bankruptcy auction late last month, but canceled it and declared Dish Network’s $1.375 billion opening acquisition offer the winning bid on June 28. TerreStar’s 20 megahertz of spectrum has been coveted by Dish and its sister company EchoStar since the company filed for bankruptcy. If the acquisition is approved and completed, the sale will be the fourth major acquisition for Dish in 2011, including DBSD North America, Blockbuster Inc. and Hughes Network Systems.
U.S. Bankruptcy Judge Sean Lane is scheduled to approve the TerreStar sale during a July 7 hearing.
