Court approves loan for bankrupt DirecTV Latin America

Posted on Wed, Jun. 04, 2003 CHRISTOPHER SCINTA Associated Press

WASHINGTON - DirecTV Latin America LLC said Wednesday it has received bankruptcy court approval of a $300 million credit line from majority owner Hughes Electronics Corp.

The debtor-in-possession loan, approved by the U.S. Bankruptcy Court in Wilmington, Del., is meant to finance the company until it emerges from Chapter 11 bankruptcy.

Some minor changes were made to the agreement that clarify and modify Hughes' rights, should DirecTV Latin America default on the loan, said Jannice Reyes, spokeswoman for the satellite broadcaster. Hughes of El Segundo, Calif., made the changes to address concerns from its unsecured creditors committee.

DirecTV Latin America, based in Fort Lauderdale, Fla., filed for Chapter 11 in March, and soon after, the court gave interim approval for the company to borrow $30 million on the Hughes credit line, pending the final approval. DirecTV Latin America said in its request for the interim loan that without the financing, it would be forced to cease operations.

The satellite-television company already owes Hughes about $1.35 billion. In return for the DIP loan, Hughes received first-priority liens and security interests in all of DirecTV Latin America's property.

DirecTV Latin America said in previous court filings that it expects to draw $258.8 million on the $300 million loan agreement until February 2004. The company said it expects negative net cash flow of $259.4 million for the same period.

General Motors Corp. agreed to sell its stake in Hughes to News Corp., with News Corp. gaining a controlling stake in Hughes and consequently in DirecTV Latin America.

When it filed for bankruptcy, DirecTV Latin America listed assets of $600 million and liabilities of $1.6 billion as of December. The company attributed its Chapter 11 filing to economic and political crises in Argentina, Venezuela and Brazil.