- Agreement to sell DISH DBS to DIRECTV refocuses
portfolio on growing wireless and satellite connectivity
markets
- Raises $5.1 billion of capital
from existing stakeholders for investment in nationwide 5G Open RAN
network and other general corporate purposes
- Funds near-term maturity and significantly reduces
refinancing needs in the next 24-36 months
- Provides access to approximately $1.5
billion of DISH Pay-TV cash flow pending closing of
DISH DBS sale1
- Conference call for EchoStar investors at 8:30 am ET Monday Sept 30th
ENGLEWOOD, Colo., Sept. 30,
2024 /PRNewswire/ -- EchoStar Corporation
("EchoStar"), a global, fully integrated communication and content
delivery leader and provider of technology, spectrum, engineering,
manufacturing, networking services, television entertainment and
connectivity, today announced a suite of transformative
transactions, including:
- an agreement to sell DISH DBS Corporation ("DBS") (its
Pay-TV business, which includes Sling TV) to DIRECTV creating a
combined company that will be better positioned to invest in its
services and negotiate with programmers for the content that
consumers demand, delivering more choices and better value to its
consumers;
- the receipt of approximately $2.5
billion in new financing from TPG Angelo Gordon and certain
co-investors at DBS to address its November
2024 debt maturity and provide interim liquidity;
- various exchange offers to DBS bondholders providing the
opportunity for its stakeholders to support the combination of the
DBS and DIRECTV business and roll into the attractive combined
credit;
- a comprehensive financing solution and balance sheet
optimization transaction at EchoStar through:
- a Transaction Support Agreement with certain holders (the "DISH
Supporting Investors") of its subsidiary DISH Network Corporation's
0% convertible notes due 2025 (the "2025 Notes") and 3.375%
convertible notes due 2026 (the "2026 Notes" and, together with the
2025 Notes, the "DISH Convertible Notes") providing for the
exchange of DISH Convertible Notes for new EchoStar secured
notes maturing in 2030; and
- a Commitment Agreement with certain of the DISH Supporting
Investors to invest $5.1 billion of
new capital in EchoStar through the purchase of EchoStar
secured notes maturing in 2029.
Today's announcements accelerate EchoStar's mission of deploying
a nationwide facilities-based wireless service to compete with
dominant incumbent wireless carriers and its ability to further
leverage its satellite assets and experience, including developing
innovative direct-to-device (D2D) solutions. U.S. consumers
will benefit from EchoStar's ability to focus more clearly on
enhancing and further deploying its nationwide 5G Open RAN wireless
network, which will provide more choices and better service to
consumers under the Boost Mobile brand, while driving innovation at
a faster pace.
"Today's strategic actions will advance our ability to
aggressively compete in the U.S. wireless market. Customers of
legacy incumbents will be waking up and paying attention to our
state-of-the-art network," said Hamid
Akhavan, President and Chief Executive Officer, EchoStar.
"With an improved financial profile and a unique approach, we
expect to gain share, drive shareholder value, and provide
more options for U.S. wireless consumers. Our collaboration with
our existing stakeholders to achieve this holistic recapitalization
solution at EchoStar is a testament to their continued support of
our vision, and we greatly appreciate their partnership and
continued investment in our mission."
DIRECTV Transaction; DBS Exchange Offers and TPG Angelo
Gordon Financing
Under the terms of an equity purchase agreement between EchoStar
and DIRECTV, DIRECTV will acquire EchoStar's video distribution
businesses, DISH and Sling TV, in exchange for the assumption of
DBS debt and certain other consideration, including the release of
all DISH Network intercompany obligations to DISH DBS. DBS has
commenced exchange offers and consent solicitations for five
different series of DBS notes with a total face value of
approximately $9.75 billion,
including seeking certain consents from the holders of such notes
to facilitate the acquisition, including to convert such notes,
upon closing of the acquisition, into DIRECTV debt which will have
terms that mirror DIRECTV's existing secured debt.
The transaction, which the boards of directors of both companies
have unanimously approved, is expected to close in the fourth
quarter of 2025. The transaction is subject to various closing
conditions, including, but not limited to, a requisite amount of
the outstanding DBS notes being tendered into the Exchange Offer,
completion of a pre-closing reorganization, and receipt of required
regulatory approvals.
In addition, TPG Angelo Gordon and certain co-investors have
provided $2.5 billion of financing to
DBS to fully refinance DBS' November
2024 debt maturity and provide interim liquidity.
Furthermore, the release of intercompany obligations in
connection with the closing of the transaction creates the ability
for EchoStar to fully unencumber the 3.45-3.55 GHz spectrum
unlocking incremental strategic and operating flexibility.
Comprehensive EchoStar Financing Solution and Balance Sheet
Optimization
Under the terms of a Transaction Support Agreement between
EchoStar and the DISH Supporting Investors collectively
representing over 85% of the aggregate principal amount outstanding
of the DISH Convertible Notes, all holders of DISH Convertible
Notes will have the opportunity to exchange their DISH Convertible
Notes for new secured notes and secured convertible notes of
EchoStar maturing in 2030. The DISH Supporting Investors have
committed to participate with all of their DISH Convertible Notes
in the exchange. In addition, certain members of the DISH
Supporting Investors and a related party of Charles W. Ergen, the Company's chairman, have
entered into a Commitment Agreement pursuant to which EchoStar will
issue $5.1 billion of new senior
secured notes maturing in 2029 for cash. These new notes will be
secured by EchoStar's AWS-3 and AWS-4 spectrum assets. The
commitment of the Ergen related party is for $100 million of such notes and was unanimously
approved by the Audit Committee of the Company's Board of
Directors.
The $5.1 billion new money
financing from the Supporting Investors will provide EchoStar with
significant capital for the buildout of its Boost Mobile nationwide
5G Open RAN network. The commitment from the DISH Convertible Notes
will significantly improve EchoStar's debt maturity profile through
the extension of debt maturities from 2025 and 2026 to 2029.
Finally, the Company entered into subscription agreements with
certain accredited investors and CONX Corp., a Nevada corporation ("CONX") indirectly
controlled by Charles W. Ergen (the
"PIPE Investors" and the subscription agreements, the "Subscription
Agreements"), pursuant to which the PIPE Investors have agreed,
subject to the terms and conditions set forth therein, to purchase
from the Company an aggregate of 14.265 million shares (the "PIPE
Shares") of the Company's Class A common stock, par value
$0.01 per share, at a purchase price
of $28.04 per share, the closing
price for the Company's Class A common stock on September 27, 2024, for an aggregate cash
purchase price of approximately $400
million (such investment, the "PIPE Investment"). The
portion of the PIPE Investment represented by the CONX Subscription
Agreement represents an agreement to purchase from the Company an
aggregate of 1.551 million shares of the Company's Class A common
stock for an aggregate cash purchase price of approximately
$43.5 million. The CONX Subscription
Agreement was unanimously approved by the Audit Committee of the
Company's Board of Directors. The PIPE Investment is conditioned on
and expected to close concurrently with the closing of the DISH
Convertible Notes exchange offers and new senior secured notes,
subject to the terms and conditions set forth in the Subscription
Agreements.
Advisors
J.P. Morgan acted as financial advisor to EchoStar for the
DIRECTV and TPG Angelo Gordon transactions. Houlihan Lokey, Inc. served as financial advisor
for the transactions with the DISH Supporting Investors.
White & Case LLP served as legal advisor to EchoStar for both
transactions.
Centerview Partners served as exclusive financial advisor and
Paul, Weiss, Rifkind, Wharton & Garrison LLP served as
exclusive legal advisor to the ad hoc group of holders of 2025 DISH
Convertible Notes, and Perella Weinberg Partners served as
exclusive financial advisor and Akin Gump Strauss Hauer & Feld
LLP served as exclusive legal counsel to the ad hoc group of
holders of 2026 DISH Convertible Notes.
Conference Call
EchoStar will host a conference call on Monday, September 30, at 8:30 a.m. ET to discuss these transactions. To
attend the call, please dial the number below and provide the
conference ID when prompted. A presentation to accompany the call
will be available on ir.echostar.com at the time of the
call.
Participant conference numbers: (877) 484-6065 (U.S.) and
(201) 689-8846
Conference ID: 13749306
Please dial in at least 10 minutes before the call to ensure
timely participation.
*********
1 Cash flow for period from June 30, 2024 to September
30, 2025.
About EchoStar (NASDAQ: SATS)
EchoStar
Corporation (Nasdaq: SATS) is a premier provider of
technology, networking services, television entertainment and
connectivity, offering consumer, enterprise, operator, and
government solutions worldwide under its EchoStar®, Boost Mobile®,
Sling TV, DISH TV, Hughes®, HughesNet®, HughesON™ and JUPITER™
brands. In Europe, EchoStar operates under
its EchoStar Mobile Limited subsidiary and
in Australia, the company operates as EchoStar Global
Australia. For more information, visit www.echostar.com and follow
EchoStar on X (Twitter) and LinkedIn.
©2024 EchoStar. Hughes, HughesNet, DISH and Boost Mobile
are registered trademarks of one or more affiliate companies
of EchoStar Corp.
No Offer
This communication is not intended to and does not constitute an
offer to sell, buy or subscribe for any securities or otherwise,
nor shall there be any sale, issuance or transfer of securities in
any jurisdiction in contravention of applicable law. In particular,
this communication is not an offer of securities for sale into
the United States. No offer of
securities shall be made in the United
States absent registration under the Securities Act of 1933,
as amended, or pursuant to an exemption from, or in a transaction
not subject to, such registration requirements.
Note Regarding Forward-Looking Statements
This document contains forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995,
the accuracy of which are necessarily subject to risks,
uncertainties, and assumptions as to future events that may not
prove to be accurate. Such statements include, in particular,
statements about potential exchange offers and financing
transactions. These statements are neither promises nor guarantees
but are subject to a variety of risks and uncertainties, many of
which are beyond EchoStar and the Company's control, which could
cause actual results to differ materially from those contemplated
in these forward-looking statements. Existing and prospective
investors are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof.
Factors that could cause actual results to differ materially from
those expressed or implied include the factors discussed under the
section entitled "Risk Factors" of EchoStar and the Company's
Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the Securities and
Exchange Commission ("SEC"), and under the section entitled "Risk
Factors" of EchoStar's Annual Report on Form 10-K for the fiscal
year ended December 31, 2023, filed
with the SEC. EchoStar and the Company undertakes no obligation to
update or supplement any forward-looking statement, whether as a
result of new information, future developments or otherwise, except
as required by law.
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