Conx Corporation, a special-purpose acquisition company formed by Dish Network and Echostar founder Charlie Ergen six years ago, has agreed to acquire a controlling stake in low-power television broadcaster HC2 Broadcasting.
The deal, which requires approval from the Federal Communications Commission (FCC), would give Conx approximately 75 percent ownership of HC2 Broadcasting. Innovate Corporation, the current owner of HC2 Broadcasting, would retain the remaining 25 percent stake through a separate holding company.
Financial terms include a $105 million bridge loan from “HC2 Merger Sub,” a newly-formed subsidiary of Conx Proceeds from the loan were used to retire HC2 Broadcasting’s existing 8.5 percent and 11.45 percent notes, repurchase certain equity interests held by noteholders and cover transaction-related costs.
Light Reading, a publication that covers the telecommunications industry, was the first to report on the deal between Conx and HC2 Broadcasting on Tuesday.
Conx has also committed up to $75 million in equity funding after the merger closes, subject to adjustments and certain obligations. The merger agreement includes termination rights if the transaction does not close by the end of November, with potential extensions into next year.
The deal appears to be predicated on Ergen’s interest in reusing licensed broadcast TV spectrum for 5G wireless connections. HC2 Broadcasting has expressed a similar interest in repurposing its spectrum for the technology, which would allow compatible 5G wireless devices to receive video, one-way data and other services.
Last year, executives at HC2 Broadcasting petitioned the FCC for permission to create the country’s first 5G station over spectrum reserved for low-power TV broadcasting. The petition proposed maintaining a single traditional TV feed, while using the rest of the licensed spectrum for datacasting.
