EchoStar Communications Corp. landed the $5.5 billion it needed to help finance its merger with Hughes Electronics, even as the U.S. Federal Communications Commission appoints a review board for the merger.
Credit Suisse First Boston and Deutsche Bank each pitched in $2.75 billion, with Credit Suisse's commitment replacing General Motor's temporary bridge financing.
Hughes' parent, GM, and EchoStar announced the $25 billion, stock-and-cash merger last week. GM had been in lengthy negotiations with News Corp. for an undisclosed bid, but News Corp. walked out of the talks, citing GM's failure to decide on Hughes' future, "despite a year and a half of negotiations and numerous extended deadlines," Chair and CEO Rupert Murdoch said in a statement.
Under the EchoStar deal, GM would spin off Hughes, which would then merge with EchoStar, with headquarters in Littleton, Colo. The combined company would use EchoStar's name and take the DirecTV brand for the products and services. EchoStar chief Charlie Ergen would be chair and CEO of the new group.
EchoStar said then it planned to raise $5.5 billion before closing, including bridge loans of about $2.75 billion each from GM and Deutsche Bank. GM's commitment was secured by $2.75 billion in EchoStar stock held in a trust under Ergen's control, GM said at the time.
Meantime, the FCC announced that W. Kenneth Ferree, head of the Cable Services Bureau and the future Media Bureau, will oversee an intra-agency group of FCC officials reviewing "whether EchoStar Communications Corp.'s proposed acquisition of (Hughes) … is in the public interest," FCC says.
Senior leaders are Jim Bird, senior counsel at the Office of the General Counsel, and David Sappington, FCC Chief Economist. Also on the board are Barbara Esbin, Cable Services Bureau's associate bureau chief; Julius Knapp, Office of Engineering & Technology's deputy chief; JoAnn Lucanik, from the International Bureau's satellite unit; Royce Dickens Sherlock, deputy chief of CSB's policy unit; Donald Stockdale, an economist at the Office of Plans and Policy; and Doug Webbink, an economist at the International Bureau.
FCC Chair Michael K. Powell promised rigorous scrutiny of the deal, "given the significant concentration that would result from this transaction."