Research Update: DirecTV Entertainment Holdings LLC Ratings Placed On CreditWatch Negative On TPG Purchase And Merger With Dish DBS Corp.

U.S.-based pay-TV company DirecTV Entertainment Holdings LLC (DTV) announced that it will acquire pay-TV provider Dish DBS Corp. (Dish) for $1 plus assumed debt (following a subpar exchange at Dish). At the same time, TPG Capital announced its intention to purchase AT&T's remaining 70% stake in DTV. To support this change in ownership structure, DTV plans to raise an additional $1.6 billion in new secured debt to pay a pro rata dividend to existing owners. Dish noteholders that participate in the exchange offer will be pari passu with DTV secured lenders with respect to the assets of the combined company, which will likely result in a lower recovery rating of '3' (from '2') for existing DTV secured debt following closing.

...- U.S.-based pay-TV company DirecTV Entertainment Holdings LLC (DTV) announced that it will acquire pay-TV provider Dish DBS Corp. (Dish) for $1 plus assumed debt (following a subpar exchange at Dish). - At the same time, TPG Capital announced its intention to purchase AT&T's remaining 70% stake in DTV. To support this change in ownership structure, DTV plans to raise an additional $1.6 billion in new secured debt to pay a pro rata dividend to existing owners. - Dish noteholders that participate in the exchange offer will be pari passu with DTV secured lenders with respect to the assets of the combined company, which will likely result in a lower recovery rating of '3' (from '2') for existing DTV secured debt following closing. - The incremental debt will result in weaker credit metrics, with pro forma gross debt to EBITDA approaching 3x in 2026 from about 1.4x currently. - We have reviewed the implications of the proposed transactions and placed all ratings on CreditWatch with negative...

Research Update