With discussion swirling that Dish DBS, which is comprised of the Dish direct broadcast satellite TV service and its Sling TV companion, is filing for Chapter 11 bankruptcy protection by the end of the day, RBR+TVBR in early June learned that Dish’s former treasurer — an individual employed by entities owned or controlled by Charlie Ergen for more than three decades — has just acquired a 75% stake in a group of low-power television properties under the HC2 Broadcasting banner.
Now, paperwork reflecting the deal has arrived at the FCC for its approval.
Jason Kiser is the CEO of CONX Broadcast Group, which happens to share the same address as Dish’s headquarters in Littleton, Colo.
With the legal hand of Matthew Friedman at Steptoe LLC, CONX has agreed to acquire a group of LPTV stations from “Innovate 2 Corp.,” an HC2 entity.
HC2 Station Group Inc. stations are being transferred in a separately filed deal with the Commission.
It’s likely a spectrum-fueled merger deal, one likely linked to cellular phone service aspirations. And, paperwork filed with the FCC for its regulatory approval shows that the agreements were signed by both parties on May 29, a few days before RBR+TVBR shared the news regarding the transaction.
Pending FCC approval, INNOVATE 2 Corp. would hold 25% ownership of the properties, with “DTV America Corp.” merged into CONX Broadcast Group.
As part of the merger, CONX has agreed to provide HC2 Broadcasting with an equity commitment of up to $75 million to be funded after closing of the merger, subject to reduction for post-closing purchase price adjustments, and certain expense and indemnification obligations.
For an 18-month period from and after the closing date, Innovate will have the option to purchase up to 15% of HC2 Broadcasting’s ownership, on a fully diluted basis, from CONX.
Meanwhile, an affiliate of CONX has secured a letter agreement granting it the option, exercisable for a period of two years, to acquire up to 80.1% of the equity interests of HC2 Broadcasting on a fully diluted basis.
The CONX deal coincides with HC2 Broadcasting entering into a $105 million new loan agreement with “HC2 Merger Sub,” which is a CONX subsidiary.
Proceeds of the New Loan were used to fully satisfy HC2 Broadcasting’s existing 8.5% and 11.45% notes to fund the repurchase of certain equity interests held by HC2 Broadcasting’s noteholders. The funds will also be used to pay related transaction costs.
The New Loan and interest accrued are expected to be extinguished as consideration in the merger and will not require cash repayment upon closing of the merger. The New Loan matures on May 29, 2027, subject to earlier acceleration in accordance with its terms.
