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DirecTV Plans to Cancel Dish Deal Unless Debt Swap Resolved

By Reshmi Basu and Michelle F. Davis
A Dish Network Corp. remote control is arranged for a photograph in Princeton, Illinois, U.S., on Friday, July 26, 2019. The U.S. Justice Department approved T-Mobile US Inc.'s acquisition of Sprint Corp., a deal it rejected under the previous administration, clearing one of the biggest hurdles to a takeover that will reshape the wireless industry. T-Mobile and Sprint agreed to sell multiple assets to Dish Network as a condition for approval. Photographer: Daniel Acker/Bloomberg (Daniel Acker/Bloomberg)

(Bloomberg) -- DirecTV intends to terminate its planned acquisition of Dish Network Corp. in just over a week’s time if bondholders don’t agree to a debt exchange.

“A successful exchange was a condition for acquiring the Dish video business,” a DirecTV spokesperson said in an emailed statement. “Given the outcome of the EchoStar exchange, DirecTV will have no choice but to terminate the acquisition of Dish by midnight on Nov. 22.”

A group of Dish bondholders on Monday rejected an improved offer put forward by DirecTV at the end of October. The revised terms lowered the minimum loss on $8.9 billion of bonds by $70 million to $1.5 billion.

DirecTV has no plans to sweeten the debt-exchange proposal again, people familiar with the matter said, asking not to be identified discussing private information. Negotiations will now need to take place between EchoStar Chairman Charlie Ergen and Dish creditors, they added.

A representative for Dish, which was acquired by EchoStar Corp. in the past year, said EchoStar’s business would be able to grow regardless of the exchange outcome.

“EchoStar received $2.5 billion in financing in September to pay its upcoming debt maturity, and raised an additional $5.6 billion in financing as part of a series of financial transactions recently announced,” the company said in an emailed statement, adding that those funds are unaffected by the DirectTV transaction.

DirecTV, owned by AT&T Inc. and joint venture partner TPG Inc., agreed with Dish in September to combine in a deal that would create the biggest pay-TV provider in the US with about 18 million subscribers. Under the terms of the original transaction, DirecTV would acquire Dish TV and Sling TV from Dish for a nominal consideration of $1 plus the assumption of about $9.75 billion of debt, according to earlier statements.

The deal was contingent, though, upon holders of unit Dish DBS Corp.’s bonds agreeing to take a haircut on the principal amount of the company’s debt. 

TPG plans to buy out AT&T’s stake in DirecTV in a separate transaction regardless of the outcome of the Dish merger.

(Updates with a statement from Dish in sixth paragraph.)

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