Advanced Television

EchoStar under threat from Dish investors

January 22, 2024

By Chris Forrester

EchoStar, having recently merged with Dish Network, has upset some investors and creditors in Dish.

An Ad-hoc grouping of Dish Network investors and holders of the company’s debt have reportedly met and drafted an agreement to band together in potential negotiations with the company.

The groups are exploring legal options, including default notices under certain issuances, after Dish shifted certain assets (about 3 million Dish Network subscribers) into a newly created unrestricted subsidiary and launched two coercive exchanges as part of the company’s merger with EchoStar.

Describing founder Charlie Ergen’s financing plans as “aggressive debt manoeuvres” the grouping could be setting the stage for a potential lengthy legal battle with Ergen’s business empire and plans for refinancing. Dish DBS’s notes due 2026 are declining in value almost day-by-day and quoted at around 72 cents on the dollar, down from 79 cents on January 15th.

Not helping is a Standard & Poors downgrade which last week which lowered its issue-level rating on Dish DBS Corp.’s secured debt to ‘B-‘ from ‘B’ and its issue-level rating on the company’s unsecured debt to ‘CCC+’ from ‘B-‘ based on their lower recovery prospects following a series of asset transfers.

“Any rating upside – which we view as unlikely over the next year given the company’s high debt load– is dependent on the company’s achievement of greater visibility into sustainably positive free operating cash flow generation from profitable market share gains in its wireless segment. This would likely involve a public disclosure of its network partners and enterprise contracts that increases our confidence its wireless strategy can generate significant revenue and cash flow,” added S&P.

Categories: Articles, Business, M&A

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