EchoStar exchange offers, consent bids for DISH Network convertibles short of required minimums

By Mary-Katherine Stinson

Lexington, Ky., Feb. 12 – EchoStar Corp. announced that its exchange offer and consent solicitations for the $1,957,197,000 outstanding 0% convertible senior notes due 2025 (Cusip: 25470MAF6) and $2,908,801,000 outstanding 3.375% convertible senior notes due 2026 (Cusip: 25470MAB5) issued by DISH Network Corp. failed to meet the minimum tender conditions, according to a press release.

As holders of the existing notes did not tender sufficient existing notes to satisfy the minimums for either exchange offer, EchoStar terminated the exchange offers and consent solicitations following the expiration date of 11:59 p.m. ET on Feb. 9.

None of the tendered notes will be accepted for exchange and no consideration will be paid.

The exchange offer was intended to reduce aggregate debt and materially extend the debt maturity profile providing a significant runway for “continued strategic investment and opportunity to combine DISH Network's satellite technology, streaming services and nationwide 5G network with EchoStar's premier satellite communications solutions.”

EchoStar was offering to exchange the notes for 10% senior secured notes due 2030 to be issued by EchoStar to be guaranteed on a senior secured basis by EchoStar’s indirect subsidiary DBSD Corp. and secured by first-priority liens on the 20 MHz of AWS-4 spectrum, and EchoStar’s indirect subsidiary, DBSD Services Ltd. which would have provided a security interest consisting of a first-priority pledge of the equity interests of DBSD. EchoStar estimated that the fair market collateral securing the notes at approximately $9 billion.

Had the offer been successful, the exchange consideration for the 0% convertibles would have been $610 of new notes per $1,000 note. The exchange consideration offered for the 3.375% notes was $510 of new notes per $1,000 note.

In a footnote, the total figures of the amount outstanding on each of the notes is net of $42,803,000 and $91,199,000 held by DISH and not deemed outstanding.

Consents

EchoStar was also soliciting consents from holders of each series to eliminate certain events of default and substantially all of the restrictive covenants in each indenture, including the merger covenant, the reporting covenant and to make certain conforming changes to each indenture. To consent, holders were required to tender their notes. Holders could not tender their notes without consenting to the proposed amendments.

Details

Each exchange offer and consent solicitation was a separate offer and/or solicitation.

White & Case LLP acted as legal adviser to EchoStar and D.F. King & Co., Inc. acted as exchange agent and information agent for the exchange offers and consent solicitations.

EchoStar is an Englewood, Colo.-based provider of equipment sales, digital broadcast operations and satellite services.

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