Banks line up to finance EchoStar
LONDON - EchoStar could secure the remaining $2.75bn (£1.9bn) it owes General Motors as part of its successful bid to acquire Hughes from the car giant as early as next week.
Several Wall Street investment banks are understood to have approached EchoStar about providing the financing, which was part of EchoStar's $26bn (£17.8bn) takeover of Hughes, the General Motors division which is home to its larger rival, broadcaster DirecTV.
A spokeswoman for GM told FT.com that "General Motors had every expectation that this transaction could and would be financed quickly".
GM and EchoStar agreed the loan after rejecting a package from EchoStar's financial adviser, UBS Warburg, on the grounds that the terms would be too difficult to adhere to. This left the smaller satellite TV group $2.75bn short of the cash it needed to tie up the deal.
General Motors agreed to put up a bridge loan when EchoStar chairman and chief executive Charles Ergen offered $2.75bn of his personal shareholding in the company as security. EchoStar's bid also involves a $2.75bn bridge loan from Deutsche Bank, which was secured last week.
Investment banks are understood to be keen to provide the bridge loan so they can earn fees when EchoStar needs to raise further financing over the next 12 months.
However, on Tuesday, credit ratings agency Moody's downgraded Hughes Electronics shares to junk status, putting further financing at risk. The decision was based on concerns about Hughes' rising debt and poor operating performance. Moody's also placed Hughes on review for a further downgrade.
If you have an opinion on this or any other issue raised on Brand Republic, join the debate in the Forum here.
Latest jobs Jobs web feed
- Account Director - Top London Advertising Agency c£50k Fill Recruitment Ltd c£50k, Central London
- European Brand Manager Ball & Hoolahan £40,000 per annum, South East
- Marketing & Research Manager - $1.8b Global Publisher Recruitment Revolution Excellent Salary + Bonus Potential + Full Corporate Benefits Package, Chichester
- CRM Manager - Iconic London Brand Tarsh Lazare Marketing Recruitment £40K-£60K + Benefits Package, Central London
- Senior Marketing & New Business Manager Dynamic New Alliances £32000.00 - £45000.00 per annum + Benefits, City of London
- Visual Merchandising Manager (Retail, Fashion, Creative, VM) Creative Recruitment £35000 - £40000 per annum + Negotiable, Hertfordshire