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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): February 24, 2004
Hughes Electronics Corporation
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-26035 52-1106564
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(Commission File Number) (I.R.S. Employer Identification No.)
2250 East Imperial Highway
El Segundo, California 90245
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(Address of Principal Executive offices) (Zip Code)
(310) 964-0808
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(Registrant's Telephone Number, Including Area Code
Not Applicable
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(Former Name or Former Address, if changed Since Last Report)
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ITEM 5. OTHER EVENTS.
As previously reported, on March 18, 2003, DIRECTV Latin America,
LLC, a Delaware limited liability company ("DTVLA"), filed a voluntary petition
for reorganization under chapter 11 of title 11 of the United States Bankruptcy
Code (the "Bankruptcy Code") in the United States Bankruptcy Court for the
District of Delaware (the "Bankruptcy Court"). At the time of filing the
petition, DTVLA's equity interests were owned as follows: DIRECTV Latin America
Holdings, Inc. ("DTVLH") - approximately 75%; Darlene Investments LLC
("Darlene") - approximately 21%; and Raven Media Investments LLC ("Raven") -
approximately 4%. DTVLH is an indirect wholly-owned subsidiary of Hughes
Electronics Corporation ("Hughes").
On December 11, 2003, DTVLA filed its proposed Plan of Reorganization
(as from time to time amended, the "Plan") with the Bankruptcy Court, and on
January 9, 2004, the Bankruptcy Court approved DTVLA's disclosure statement for
soliciting creditor approval of the proposed Plan. The Plan was approved by
requisite vote of the creditors and on February 13, 2004, the Bankruptcy Court
entered an order (the "Confirmation Order") confirming the Plan.
On February 24, 2004, DTVLA consummated the Plan and emerged from
bankruptcy protection as a reorganized entity ("Reorganized DTVLA"). A copy of
the Confirmation Order, the Plan as referenced in the Confirmation Order and the
press release issued regarding Reorganized DTVLA's emergence are filed as
Exhibits 99.1, 99.2 and 99.3 hereto, respectively, and are incorporated herein
by reference.
In connection with the consummation of the Plan, Hughes fully funded
a $300 million debtor-in-possession ("DIP") financing facility, which was
converted to equity interests in Reorganized DTVLA pursuant to the Plan. In
addition, the equity interests in DTVLA's local operating companies owned by
Hughes and Darlene, and certain related equity interests, as well as certain
debt and other interests, were contributed to Reorganized DTVLA and, in
connection with this contribution and the other transactions, Hughes and Darlene
received approximately 86% and 14%, respectively, of the equity interests in
Reorganized DTVLA (the "Roll-up Transaction"). Hughes also entered into a new
credit agreement with Reorganized DTVLA as described below.
Set forth below is a summary of the material features of the Plan and
the Roll-up Transaction. Such summary is qualified in its entirety by reference
to the Plan and the Confirmation Order. Capitalized terms used but not defined
herein shall have the meanings ascribed to them in the Plan.
Effective Date
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The Effective Date of the Plan occurred on February 24, 2004.
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Reorganized DTVLA Capital Structure
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On the Effective Date, the equity interests of Reorganized DTVLA were
distributed to DTVLH and to Darlene. All previously existing DTVLA equity
interests (including the 4% interest formerly held by Raven) were cancelled and
fully extinguished.
Also on the Effective Date, Reorganized DTVLA entered into a
revolving credit agreement with Hughes pursuant to which Reorganized DTVLA may
borrow from Hughes, subject to the terms and limitations of the credit
agreement, up to $200,000,000. Under the terms of the credit agreement,
Reorganized DTVLA may use proceeds of loans to fund the Plan, to fund its and
its subsidiaries, operating expenses incurred in the ordinary course of business
and for working capital, capital expenditures and other general corporate
purposes. Reorganized DTVLA's obligations under the credit agreement are
guaranteed by its material subsidiaries. Each of Reorganized DTVLA and the
subsidiary guarantors has secured its obligations under the credit agreement by
pledging all of its property and assets.
Seconded Amended and Restated LLC Agreement
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On the Effective Date, Reorganized DTVLA, DTVLH, Hughes and Darlene
(collectively, the "Parties") entered into the Second Amended and Restated
Limited Liability Company Agreement (the "LLC Agreement"), in accordance with
the Plan. A copy of the LLC Agreement is attached as Exhibit 10.1 hereto and is
incorporated herein by reference. On the Effective Date, DTVLH received
approximately 86%, and Darlene received approximately 14%, of the equity
interests in Reorganized DTVLA. The parties further agreed that: (i) from the
first anniversary of the Effective Date through the sixth anniversary thereof
(the "Liquidity Period"), each of Hughes and Darlene have the right, subject to
certain terms and conditions, to require the other to use commercially
reasonable efforts to cause the Company to (x) complete an initial public
offering meeting certain agreed-upon qualifications (a "Qualified IPO") or (y)
enter into a transaction or series of related transactions resulting in a sale
or other disposition of Reorganized DTVLA as a whole to non-affiliated entities,
by means of a stock sale, merger, consolidation or a sale or other disposition
of all or substantially all of its assets (a "Complete Sale"); (ii) during the
Liquidity Period, Darlene has the right to require Hughes to purchase all of
Darlene's equity interests in Reorganized DTVLA and all outstanding debt, if
any, of Reorganized DTVLA and its subsidiaries payable to Darlene or any of its
affiliates ("Darlene Indebtedness") for $200 million (plus the amount of any
Darlene Indebtedness) if (x) there is a combination of business or operations of
Reorganized DTVLA with substantially all of the Latin American direct to home
satellite television business of Sky or the operations of Sky (for purposes
hereof, "Sky" means (i) Innova S. de R.L., de C.V., Sky Multi-Country Partners
and NetSat Servicios Ltda., taken together or (ii) Innova S. de R.L de C.V. or
NetSat Servicios Ltda. individually or taken together) and a Qualified IPO,
Complete Sale or other liquidation or dissolution (other than one attributable
to certain failures to obtain financing) has not then occurred or (y) there is
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an unfair shift of value away from Reorganized DTVLA because of actions or
inactions of Hughes and its affiliates and/or The News Corporation Limited
("TNCL") and any of its affiliates that can reasonably be considered different
from actions or inactions that would have been pursued if TNCL had not acquired
34% of the outstanding common stock of Hughes; and (iii) unless Darlene has
waived its "put" right under clause (ii) above, Hughes has the right (subject to
similar conditions) to require Darlene to sell all of its equity interests in
Reorganized DTVLA and all Darlene Indebtedness to Hughes for $400 million (plus
the amount, if any, of any Darlene Indebtedness), thereby terminating the
liquidity and other rights of Darlene under the LLC Agreement. Hughes and
Darlene also agreed in the LLC Agreement as to the distribution of proceeds
among themselves upon completion of a Qualified IPO or a Complete Sale and
further agreed to certain governance rights relating to the management and
operation of Reorganized DTVLA. The foregoing summary of the LLC Agreement is
qualified in its entirety by reference to such agreement.
Distributions
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The following table describes the distributions under the Plan to
holders of Claims and Interests.
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CLASS DESCRIPTION TREATMENT
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--- Administrative Expense Claims Paid in Cash in the
ordinary course of business or on
the later of the Effective Date or
the date that such Claim becomes an
Allowed Claim.
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--- Priority Tax Claims Paid in Cash on the later of the
Effective Date or the date that
such Claim becomes an Allowed
Claim.
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--- DIP Facility Claims Received a portion of the Class 3
Share on the Effective Date.
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1 Priority Claims At the election of DTVLA, will
receive one of the following
treatments: (i) to the extent then
due and owing on the Effective
Date, payment in full in Cash on
the Effective Date; (ii) to the
extent not due and owing on the
Effective Date, payment in full in
Cash when and as such Claim becomes
due and owing in the ordinary
course of business; or (iii) such
treatment so that the Claim would
otherwise be rendered Unimpaired
pursuant to section 1124 of the
Bankruptcy Code.
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2 Secured Claims At the election of DTVLA, will
receive one of the following
treatments: (i) the legal,
equitable and contractual rights to
which such Claim entitles the
Holder will be reinstated and the
Holder will be paid in accordance
with such rights; (ii) the
surrender of all collateral
securing such Claim; or (iii) such
treatment so that the Claim would
otherwise be rendered Unimpaired
pursuant to section 1124 of the
Bankruptcy Code.
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3 Hughes Claims Received the Class 3 Share on the
Effective Date.
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4 General Unsecured Claims On or
before the first Distribution Date
after becoming an Allowed Claim,
shall receive Cash payments in an
aggregate amount equal to 20% of
each Holder's Allowed Class 4
General Unsecured Claim.
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5 Subsidiary Claims No distributions.
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6 Put Agreement Claims and No distributions.
Interests
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7 Old DTVLA Membership
Interests No distributions.
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Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(c) Exhibits.
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Exhibit No. Exhibit
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10.1 Second Amended and Restated Limited Liability
Company Agreement
99.1 Confirmation Order
99.2 Plan of Reorganization
99.3 DTVLA press release, dated February 13, 2004
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
as amended, the registrant has duly caused this Report to be signed on its
behalf by the undersigned hereunto duly authorized.
HUGHES ELECTRONICS CORPORATION
Date: March 2, 2004 By: /s/ Larry D. Hunter
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Name: Larry D. Hunter
Title: Executive Vice President,
General Counsel and
Secretary
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EXHIBIT INDEX
Exhibit No. Exhibit
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10.1 Second Amended and Restated Limited Liability
Company Agreement
99.1 Confirmation Order
99.2 Plan of Reorganization
99.3 DTVLA press release, dated February 13, 2004
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