NEW YORK (Reuters) - TerreStar Networks Inc TSTRT.UL said it has received a $1.375 billion cash bid from billionaire Charlie Ergen’s Dish Network Corp (DISH.O) to buy the telecommunications company’s assets through a bankruptcy auction, court papers show.
Ergen, who also controls EchoStar Corp (SATS.O), has been competing against other potential bidders, including a group of senior noteholders and wireless communications company MetroPCS Communications Inc PCS.N, people familiar with the process have said.
Dish will allow TerreStar to extend a deadline to obtain bids for its assets to June 27 from June 15, with a court-supervised auction to take place on June 30, according to a filing early Wednesday in Manhattan bankruptcy court.
Any sale requires court approval.
TerreStar has operated under Chapter 11 bankruptcy protection since October 19. Its most sought-after assets include wireless airwaves used by wireless service providers.
Dish is a so-called “stalking horse bidder,” which makes an initial bid for assets of a company in bankruptcy.
Stalking horse bids are designed to ensure a company does not fetch unreasonably low bids for assets, which can harm creditors.
Any superior bid would have to top Dish’s bid by $55.5 million, under procedures set by the bankruptcy court, according to Wednesday’s filing. The breakup fee is $27.5 million.
Ergen is seeking for the third time this year to buy a large pool of assets through the bankruptcy process.
In March, Dish agreed to pay $1.4 billion for similar assets from DBSD North America, and the following month it agreed to buy movie rental chain Blockbuster Inc BLOAQ.PK.
EchoStar, also a TerreStar creditor, in February walked away from a proposed debt-for-equity transaction involving the company after agreeing to buy broadband services provider Hughes Communications Inc HUGH.O for $1.33 billion.
In Wednesday’s filing, TerreStar also said EchoStar, its so-called debtor-in-possession lender, would raise to $90 million from $75 million the amount of financing available for it to operate during the bankruptcy, provided Dish’s bid were successful.
The case is In re: TerreStar Networks Inc et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-015446.
Reporting by Jonathan Stempel in New York; Editing by Maureen Bavdek