(Bloomberg) — EchoStar Corp., which early this year tabled a controversial debt-restructuring effort, may need to sell more bonds backed by its wireless spectrum to extend maturities, according to Bloomberg Intelligence.
Again calling EchoStar’s $22 billion of borrowings “likely untenable,” senior credit analyst Stephen Flynn wrote Monday that steps the firm could take to improve liquidity and push out due dates include using “unencumbered assets to facilitate debt-for-debt exchanges or raise new capital, with proceeds funding bond tender offers.”
The firm’s main unit, Dish Network Corp., sold a combined $3.5 billion of 11.75% notes in late 2022 and early 2023 backed by its spectrum. EchoStar could sell as much as $3 billion of airwaves-backed bonds to help raise cash for a $2 billion note that is due Nov. 15, according to Flynn.
The companies have struggled to pivot away from pay television toward wireless services, between racking up significant debt to buy wireless spectrum and the legacy business continuing to lose subscribers. Dish was sued in April by some bondholders after the firm transferred assets out of creditors’ reach.
EchoStar had $521 million of cash on hand as of June 30, versus $2.44 billion to start the year, according to its second-quarter report. The firm added that while it has been in “active discussions with funding sources to raise additional capital,” it couldn’t assure success.
Based on cash forecasts, “we do not currently have the necessary cash on hand and/or projected future cash flows to fund” fourth-quarter operations or the November bond maturity, EchoStar also said in the filing. Still, the note trades at 96 cents on the dollar, according to data provider Trace.
If EchoStar and Dish do attempt to sell debt — something they haven’t done since January 2023 — investors will likely need to be offered high coupons. Flynn said that most notes issued by EchoStar subsidiaries trade at distressed levels, with $12 billion of principal currently below 75 cents.
More stories like this are available on bloomberg.com