Satellite maker objects to TerreStar sale to Dish

Reuters News
|
Posted: Jul 06, 2011 9:58 AM
Satellite maker objects to TerreStar sale to Dish

By Nick Brown

NEW YORK (Reuters) - Bankrupt telecommunications firm TerreStar Networks Inc is facing two objections to its proposed sale to Dish Network Corp <DISH.O>, including from the maker of its geosynchronous satellite.

Space Systems/Loral Inc, manufacturer of the TerreStar satellite currently orbiting the earth, filed court papers Tuesday in U.S. Bankruptcy Court in Manhattan saying the plan would pay it only a fraction of what is owed under three satellite contracts.

The plan would require TerreStar to pay about $5.6 million as a so-called cure amount, far less than the roughly $43 million Space Systems says it is owed, according to the filing.

Space Systems said it is working with TerreStar to resolve the issue, but filed the objection to preserve its rights in case talks fall apart.

AT&T Corp, a unit of AT&T Inc <T.N> that sells TerreStar's satellite smartphone, also objected to the plan ahead of Tuesday's deadline.

AT&T said the plan could prevent it from seeking indemnity from Dish in certain cases where consumers claim damages against AT&T for problems related to the TerreStar phone.

An attorney for TerreStar declined comment Tuesday.

TerreStar, which tried to market the first satellite smartphone, was coveted for its roughly 20 megahertz of spectrum. It filed for bankruptcy in October with more than $1 billion in debt.

Dish, which set a $1.375 billion minimum bid for the company on June 15, won the right to buy it after receiving no competing offers.

If consummated, the sale would be at least the third major acquisition in 2011 for Dish, joining DBSD North America and Blockbuster Inc <BLOAQ.PK>, bought for $1.4 billion and $320 million, respectively.

The TerreStar sale is slated for an approval hearing before Bankruptcy Judge Sean Lane in Manhattan on Thursday.

(Reporting by Nick Brown, editing by Matthew Lewis)