DirecTV to call off Dish takeover after bondholders balk
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DirecTV has notified EchoStar Corp. of its intention to terminate an acquisition of Dish Network Corp. after bondholders failed to consent to a key debt exchange, all but killing a deal to create the largest U.S. pay-TV service.
DirecTV, which warned earlier this month it would terminate the deal by midnight Friday without an agreement on the debt, said it had given EchoStar formal notice. Dish hasn’t initiated fresh discussions with bondholders to try and salvage the deal as of late Thursday evening, a person familiar with the matter said.
Under an agreement reached in late September, DirecTV was to acquire Dish and Sling TV from EchoStar for $1 plus the assumption of about $9.75 billion of debt. DirecTV, which is owned by AT&T Inc. and joint venture partner TPG Inc., would have become the largest pay-TV provider in the US with about 18 million subscribers.
“While we believed a combination of DirecTV and Dish would have benefitted all stakeholders, we have terminated the transaction because the proposed exchange terms were necessary to protect DirecTV’s balance sheet and our operational flexibility,” DirecTV Chief Executive Officer Bill Morrow said in a statement.
EchoStar confirmed in a filing on Friday that it had received written notice from DirecTV on Nov. 20. It added no termination fee or other payment is due from either party as a result.
A group of Dish bondholders rejected an improved offer put forward by DirecTV at the end of October. Revised terms lowered the minimum loss on $8.9 billion of bonds by $70 million to $1.5 billion.
The action doesn’t impact TPG’s planned acquisition of AT&T’s stake in DirecTV. Axios reported earlier on DirecTV’s plans.