EchoStar Communications said Monday that investment bank Credit Suisse First Boston had stepped up to provide the $2.75 billion the company needs to pursue its proposed merger with Hughes Electronics.
Hughes parent General Motors had demanded $5.5 billion in cash. But when the partners announced a deal last week, EchoStar topper Charlie Ergen had only a $2.75 billion commitment from Deutsche Bank in hand. To cover the rest and get the deal finalized, Hughes parent General Motors offered an unusual bridge loan that was backed by Ergen’s own EchoStar stock that he put in escrow.
Ergen’s lack of financing after several potential agreements fell through in recent months was one factor that had tilted many Wall Streeters toward believing –incorrectly — that GM would ultimately favor a rival bid by Rupert Murdoch’s News Corp.
Murdoch, who badly wanted Hughes’ DirecTV satellite unit, had been negotiating with Hughes and GM for nearly 18 months. He walked away from the table just over a week ago when the automaker’s board remained indecisive. The next day, the board chose Ergen’s cash and stock deal worth about $28 billion.
With the financing cleared, EchoStar and DirecTV now face a much longer and thornier challenge –convincing antitrust regulators to approve a merger of the nation’s only two satellite providers.
Shares of Hughes, currently a tracking stock of GM, rose 3.13% on Monday to $13.51. EchoStar edged higher 0.67% to $23.45.