Debt backing DISH Network was significantly lower in high-volume trading this morning after EchoStar announced that it has transferred some of DISH’s wireless spectrum licenses to a newly formed subsidiary and engaged advisors for potential strategic alternatives. The action has different influence on various subsidiary bonds, but the broad arc is reshuffling of subscribers and earnings associated for further liquidity enhancing transactions and a path forward for the company facing 2024 and 2025 debt maturities, according to sources.
Top traded at nearly $130 million were the nearest-term 7.875% senior note bullets due in November, which were generally steady to higher in the mid-90s; top decliners included 7.75% 2026 senior note bullets of DISH DBS, trading down about 10 points to around 59 with some $80 million traded, and 7.75% 2026 11.75% 2027 first-lien notes changing hands around 103, from 104-104.5 market quotes prior, and some $36 million traded, according to sources and trade data. Recall the latter, at $3.5 billion, represents an initial sale in late 2022 at just under par and an add-on for $1.5 billion one year ago at 102 via Deutche Bank leading and proceeds for GCP.
The company announced Houlihan Lokey and White & Case as financial and legal advisors to evaluate potential strategic alternatives, according to a company statement. The company also announced that it is transferring some of DISH’s wireless spectrum licenses to a newly formed subsidiary, EchoStar Wireless Holding, according to the same statement.
DISH Network is also letting go of employees, with 150 set to be laid off March 8, after 499 layoffs on January 7 and 8 in order to reduce operational costs and expenses throughout the company. The issuer’s unsecured notes were making the most moves across the board, with another set of 5.25% senior notes due 2026 changing hands at either side of 79, down from trades at either end of 85.5 yesterday, trade data showed.
In its statement, EchoStar said that today’s asset transfer further unlocks “incremental strategic, financial and operating flexibility for its business following completion of its merger,” which will provide the business with optimized strategic and financing flexibility.
Last month, the Federal Communications Commission signed off on the planned merger. In August, DISH Network entered into a merger agreement to acquire EchoStar through its subsidiary, Eagle Sub Corp, with EchoStar surviving the transaction as a wholly owned subsidiary of DISH. Upon completion of the merger, existing DISH Network shareholders will own approximately 69% and existing EchoStar shareholders will own approximately 31% of the common stock of the combined company.
DISH Network has struggled over the past few years, as its legacy pay-TV business has yielded less subscribers while its wireless communication business hasn’t been as successful as expected, with the company having nearly $25 billion in debt.
Peter Agra
LevFin Insights
