UPDATE 1-EchoStar terminates deal with TerreStar

Thu Feb 17, 2011 10:13am EST

(Adds details)

FEB 17 (Reuters) - Digital set-top box maker EchoStar Corp said it ended a proposed debt-for-equity restructuring deal with bankrupt telecommunications company TerreStar Networks Inc, just days after it unveiled a $1.33 billion deal to buy broadband services provider Hughes Communications Inc .

In a filing with the U.S. Securities and Exchange Commission, EchoStar said the restructuring support agreement with TerreStar was terminated by mutual consent.

It was not immediately clear why the two companies terminated the deal.

In a court notice filed late on Wednesday, TerreStar said it had withdrawn its reorganization plan and a confirmation hearing scheduled in March, 2011, had been cancelled.

EchoStar is TerreStar's largest secured creditor and had earlier agreed to provide $75 million of financing to help TerreStar operate while in bankruptcy.

It had also agreed to backstop a $100 million rights offering to help TerreStar emerge from Chapter 11.

The rights offering has also been withdrawn by TerreStar.

In December, a source familiar with the matter told Reuters that MetroPCS was considering buying assets from TerreStar.

Formerly known as Motient Corp, TerreStar launched its first satellite, TerreStar-1, in July 2009, and has been building a second, TerreStar-2.

TerreStar Corp , the parent company of TerreStar Network which was earlier excluded from the bankruptcy proceeding also filed for Chapter 11 on Wednesday.

The case is In re: TerreStar Networks Inc, U.S. Bankruptcy Court, Southern District of New York, No. 10-15446. (Reporting by Santosh Nadgir; Editing by Jarshad Kakkrakandy)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.