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EchoStar Is Said to Bid for Loral

Satellite-TV firm may compete with Intelsat to buy company assets from Chapter 11.

August 20, 2003|From Dow Jones/Associated Press

EchoStar Communications Corp., which operates the DISH satellite TV network, has offered to buy Loral Space & Communications Ltd. for more than $1.45 billion, a source close to Loral's Chapter 11 case said.

The source, who was at a hearing in U.S. Bankruptcy Court in Manhattan on Monday, said EchoStar distributed a letter that proposed to acquire New York-based Loral's North American satellite fleet for more than $1 billion, as well as the firm's other assets for $450 million.

The letter was addressed to Loral's board of directors and directed to the attention of Chief Executive Bernard L. Schwartz.

Satellite network Intelsat Ltd. earlier offered more than $1 billion in cash for Loral's North American satellite fleet, but its bid didn't include the company's other assets.

The Bankruptcy Court on Monday approved modified bidding procedures under which Loral can solicit additional offers for its North American fleet and other assets, according to the source.

Under the procedures, Intelsat will remain the lead bidder at an Oct. 20 auction. The bankruptcy court has set a bidding deadline of Oct. 15.

The source said EchoStar, based in Littleton, Colo., proposed to pay $5 million more than Intelsat's bid for the fleet.

Steve Caulk, a spokesman for EchoStar, said the company had not decided whether to bid on Loral.

A Loral spokesman wasn't available for comment.

Loral filed for bankruptcy protection July 15 in an effort to trim its debt and sell its North American telecommunications satellites.

The company said it planned to reorganize around its remaining five satellites and its satellite-building operations.

In other developments, EchoStar joined DirecTV Inc., the largest U.S. satellite broadcaster, in suing the state of Tennessee, claiming they were unfairly being taxed more than cable-TV companies.

Tennessee places an 8.25% sales tax on satellite subscribers' bills, DirecTV and EchoStar said in a statement.

The companies, which filed their lawsuit in state court in Nashville, claim the first $15 of cable customers' bills are exempt from the tax.

DirecTV and EchoStar took steps in June against two other states that they claim unfairly tax their customers.

The companies sued to block Ohio from charging a 6% sales tax that would add $3 a month to customers' bills and requested a $30-million refund from North Carolina for a 5% sales tax. Cable operators are exempt from those taxes, they said.

"We have every intention of filing suits against any state that we believe is planning to or does impose a discriminatory tax on satellite customers," DirecTV spokesman Robert Marsocci said. "Obviously there are several states in fiscal crisis, and they are looking to raise revenue."

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Bloomberg News was used in compiling this report.

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