EchoStar’s Hughes unit gets no tenders in offers for 6˝%, 7 5/8% notes

By Wendy Van Sickle

Columbus, Ohio, June 7 – No notes were tendered in Hughes Satellite Systems Corp.’s recently concluded change-of-control offers for its 6˝% senior secured notes due 2019 and 7 5/8% senior notes due 2021, according to a news release from parent company EchoStar Corp.

The company had offered 101% of par plus accrued interest in the offer, which began May 6 and expired at 5 p.m. ET on June 6.

On March 1, 2014, EchoStar issued shares of Hughes retail preferred tracking stock and Hughes issued shares of Hughes retail preferred tracking stock to DISH Network Corp. in exchange for five satellites and $11.4 million of cash, and DISH Network began receiving satellite services on these five satellites from Hughes.

Hughes said it became aware of a possible interpretation under which the transaction may be considered to be a change of control. Under the indentures governing the notes, a change of control occurs when EchoStar ceases to beneficially own 100% of the equity interests of Hughes.

As previously reported, the company said both series of notes have traded at prices well above 101% of par at all times since the transaction. In addition, both prior to and following the transaction, Charles Ergen held and exercised, and continues to hold and exercise, voting control over both DISH Network and EchoStar. Therefore, the company argued that the ultimate voting control as to all matters regarding the equity interests of Hughes was not affected by the transaction.

EchoStar and Hughes said it believed that a change of control or related default may not have occurred but determined that it would be “prudent” to make the change-of-control offers. EchoStar and Hughes said they do not believe there is any continuing default under the indentures.

All outstanding notes will again be reported as long-term debt on EchoStar’s and Hughes’ consolidated balance sheets, the press release noted.

EchoStar is an Englewood, Colo.-based provider of satellite and video delivery solutions. Hughes is a Germantown, Md.-based provider of broadband satellite networks and services.

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