(Bloomberg) -- A financing led by TPG Angelo Gordon amid the proposed tie-up between satellite pay-TV providers Dish Network and DirecTV is creating a fresh wrinkle in an already complicated and contentious deal process.
Dish agreed last month to merge with DirecTV via a series of transactions that would see AT&T Inc. transfer its majority stake in DirecTV to private equity firm TPG Inc. At issue is a loan that TPG’s credit arm, TPG Angelo Gordon, agreed to provide to pay off some $2 billion in unsecured Dish notes due later this month, whether the deal goes through or not.
TPG wants to use collateral tied to Dish subscribers as extra backing for this loan, but the assets are currently tied to other Dish secured debt issued by its DBS unit. US Bank Trust, the collateral agent and trustee of the debt, is now asking holders for guidance on the proposed move, which would give TPG some claim to the collateral of the existing secured bonds, according to a notice viewed by Bloomberg News. It set a deadline for feedback of Nov. 4, just 11 days ahead of the maturity of the unsecured notes.
While it’s unclear whether bondholders can effectively keep TPG from gaining more protection against its loan, the move has the potential to stoke friction among Dish debtholders, many of whom are already disenchanted. A group of creditors holding $8.9 billion of Dish notes has for weeks resisted a debt exchange component of the deal that would have seen the value of their holdings slashed by $1.6 billion. Dish on Tuesday extended the exchange deadline and improved some terms, trimming potential losses.
Bonds rallied on that news, with Dish’s 7.375% senior unsecured notes due 2028 up by almost 3 cents on the dollar to 73.3 cents as of 08:58 a.m. New York Time.
Representatives at US Bank and TPG declined to comment, while messages left with Dish weren’t returned.
Dish DBS creditors are already embroiled in litigation with Dish. They sued the company in April after Dish announced it was shuffling assets including valuable spectrum licenses and a few million Dish subscribers away from the reach of DBS holders. Creditors contend the move violated debt documents. The case is still pending in court in New York.
The combination of Dish and DirecTV would create the largest US pay-TV provider, a move touted as a way for both to better compete in an increasingly crowded TV landscape disrupted by streaming.
(Updates to include details on revised debt exchange terms and bond moves in fourth and fifth paragraphs.)
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