International satellite radio company WorldSpace will go on the auction block later this month. The US-based broadcaster which operates only overseas has been in Chapter 11 bankruptcy since last October.
WorldSpace has continued to operate as a debtor-in-possession (DIP) with $13 million of DIP financing, which has priority over other creditors. Its assets include two satellites in orbit, AfriStar, over Africa, and AsiaStar, over Asia. It also has a third satellite in storage and various associated ground systems for operating the satellites. As of June 30, 2008, the most recent date cited in its court filings, it had over 170,000 paying subscribers spread out over 10 countries.
The DIP loan has a due date of January 29, 2009, which is now the date for the bankruptcy court to rule on the outcome of the auction. Bids are due January 26th. According to a court filing, WorldSpace is in “discussions with a number of potential purchasers” and its financial advisor, The Bank Street Group, has contacted numerous potential financial and strategic purchasers.
RBR/TVBR observation: Although the bankruptcy court documents indicate that multiple potential bidders have been kicking the tires, no one has stepped up to make a “stalking horse” bid to claim the company unless a higher bid is submitted. So, this will be a wide open bidding process. The question is: Even if you wipe out all of the past debt, has anyone figured out how to make money going forward with satellite radio?