A battle royale is heating up to provide a $2.75 billion bridge loan to EchoStar Communications to finance the Hughes Electronics acquisition from General Motors for $24.6 billion in cash and stock as a number of banks that advised the counterparties are now free to bid for the business. GM is actively seeking one or two banks to provide the loan after UBS Warburg did not provide its part of a $5.5 billion bridge loan with Deutsche Bank, despite advising EchoStar on the merger.
GM stepped in to provide the $2.75 billion bridge after UBS Warburg executives in Switzerland refused to provide the loan on terms sought by EchoStar and GM. Banks believed to be in the running are Bear Stearns and Merrill Lynch, which GM used for financial advice, and Goldman Sachs and Credit Suisse First Boston, financial advisers for Hughes. UBS spokesman David Walker said, "The bank was fully prepared to extend financing to EchoStar, but not in an imprudent and unconditional basis."
Judianne Atencio, EchoStar spokeswoman could not comment on the timing for putting the alternative financing in place or likely bidders. The adviser to News Corp could not be confirmed, though one market source said it was Salomon Smith Barney. Calls to Dan Noonan, spokesman, were not returned. The banker explained all the players involved in the bidding are familiar with the company and would want the bridge business. UBS is not 100% ruled out, but it is not likely they would be given it now, he added. The News Corp adviser would be unlikely to either bid for the business or be a desirable partner to EchoStar, noted market players. A banker commented that News Corp would not likely be pleased with the bank assisting the competition and would not want to damage that relationship.Andrew Butcher, spokesman for News Corp, declined to comment.