EchoStar falls as uncertainty surrounds DirecTV bid
LONDON - US satellite broadcaster EchoStar has seen the value of its $1bn (£703.1m) convertible bonds issue fall 3%, as uncertainty about its chances of acquiring its larger rival DirecTV mounted.
EchoStar is launching a bid in competition to News Corporation, which has been chasing DirecTV -- owned by Hughes, a division of General Motors -- for months. It is believed to be seeking a US telecoms partner to support its bid.
Recent reports have suggested that EchoStar was talking to SBC Communications, BellSouth Corp and Deutsche Telekom.
News Corp chairman Rupert Murdoch needs the satellite TV network to fill a major gap in his international network. However, months of talks have failed to result in a finalised deal.
By late afternoon yesterday, EchoStar's 5.75% convertible notes due in 2008 had fallen to around $97.25 (£68.35) from Friday's close of $100.25 (£70.46).
The decline is said to have been due to the near two-point drop in the company's ordinary shares to $32.20 (£22.63) and fears about the deal with DirecTV.
Investors said that although the bonds' price had been lowered last week to entice buyers before Friday's deadline, they were still put off by the potentially long drawn-out auction for the General Motors division and an even lengthier anti-trust investigation.
Speculation has gathered pace over the past weeks about an EchoStar bid for DirecTV.
The issue got off to a bad start last week when Morgan Stanley Dean Witter backed out from underwriting the deal due to a disagreement with co-manager UBS Warburg over the pricing and fee structure.
It has also been hampered by the fact that the bonds market has been flooded with deals over the past few weeks.