Ergen seeks $4.9bn swap of new bonds
January 15, 2024
By Chris Forrester
Charlie Ergen’s EchoStar is reportedly looking to swap around $4.9 billion (€4.4bn) of debt for new bonds that will be backed by the company’s extensive portfolio of 5G wireless spectrum.
The plan was announced after the market closed on January 12th and in essence said that holders of existing convertible debt – already significantly downgraded in the debt market – for new debt that would pay interest of 10 per cent, and backed – says EchoStar – by wireless spectrum that it values at some $9 billion.
If the plan progresses, and Charlie Ergen is no slouch when it comes to refinancing, the proposal would usefully trim EchoStar’s existing $20 billion or so of debt obligations.
Ergen wants to transform EchoStar, which now includes the Dish Network and associated pay-TV assets, into a major nationwide wireless operator.
The existing bond-holders are, says Bloomberg, very unhappy given that the old debt would be transferred at a rate of just 51 – 61 cents on the dollar. This sum is slightly ahead of the very distressed market value of the bonds. Bondholders are said to meeting with lawyers to consider their own action which could include accusing EchoStar of being in default of its legal obligations.
Some $16.6 billion the $20 billion overall debt is said to be “in distress” and worth considerably less than the bonds face value.