Pegasus Media & Communications term loan "D" inched up to the 99 1/4-99 3/4 level after Pegasus Satellite Television, Pegasus Satellite Communications and Pegasus Media filed for bankruptcy last week. The Pegasus Communications Corp. subsidiaries sought Chapter 11 protection to prevent the National Rural Telecommunications Cooperative (NRTC) and DirectTV from terminating Pegasus Satellite Television's contract for the exclusive distribution of DirectTV services.
Pegasus' filing allows the company to freeze both a $62.5 million payment to DirectTV and the NRTC's termination of Pegasus Satellite Television's agreement, stated Joel Luton, senior v.p. and director of APS Financial Corp. According to Luton, the decision to terminate the contract could be a political move to force Pegasus to sell its subscribers at a relatively low value. "They do have an offer [from DirectTV] to sell those assets for $675 per subscriber," Luton noted. Pegasus has 1.1 million subscribers. Officials at Pegasus did not return calls for comment.
Pegasus' asset value covers the banks and potentially also the bondholders claims, Luton said. In addition to its subscribers, Pegasus Satellite Communications owns nine television stations that market participants believe are worth $90-100 million. The sale of the company's subscribers at DirectTV's offer and that of the television stations could also cover the senior notes, he noted. Pegasus has aproximately $760 million of debt outstanding. In the meantime, Chapter 11 protection could give Pegasus time to explore other options, such as a sale to EchoStar Communications Corp., Luton added.