You need to be a financial wizard to follow this. For the second time in two weeks, DISH Network parent EchoStar Corp. (NASDAQ: SATS) is withdrawing a controversial proposal to restructure its debt after creditors balked at the initial offer, Bloomberg reported. Echostar announced on Monday that it was terminating its offers to exchange with existing bondholders more than $4.9 billion of convertible notes issued by DISH. At the end of January, DISH terminated part of the proposal to restructure more than $5 billion of debt when creditors opposed the proposition.
Rescinding the debt offer poses a real problem for Echostar. The company is struggling to bring under control its debt load of more than $20 billion as DISH tries to transition its business from a satellite pay-TV service provider to a nationwide mobile network operator. To achieve that transition, Echostar still must extend debt maturities and raise new capital to fund the wireless network buildout and attract new subscribers. DISH originally said it expected to spend a total of $10 billion to build its 5G network but is only part way through that construction phase, Inside Towers reported.
In its 3Q23 earnings call, the company said that the DISH 5G network would have over 20,000 cell sites operational and cover roughly 240 million people by the end of 2023. Its next coverage bogey is 75 percent of all Partial Economic Areas in the country by June of 2025. Failure to meet that FCC-imposed deadline could result in fines and/or relinquishing some spectrum licenses.
The proposed debt exchange would have swapped notes due in 2025 and 2026, for new senior secured notes due 2030. However, the offer did not receive enough participation from existing noteholders.
In a statement, the company said, “As of the Expiration Date, holders of the Existing Notes had not tendered sufficient Existing Notes to meet the Minimum Tender Condition with respect to either exchange offer. Accordingly, EchoStar terminated the exchange offers and consent solicitations following the Expiration Date.”
Creditors apparently did not like the terms of the original debt swap offer. They were particularly perturbed, and banded together earlier this year to negotiate more favorable terms. This action came after DISH shifted some of its most valuable spectrum assets out of reach of existing creditors and offered bondholders the ability to swap notes for different instruments, Bloomberg reported.
Echostar has not yet announced when it will report its 4Q23 and full-year 2023 financial and operating results.
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