EchoStar announces termination of exchange.

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EchoStar Corporation Announces Termination of Exchange Offers and Consent Solicitations by DISH DBS Issuer LLC for Certain Existing Senior Notes Issued by DISH DBS Corporation​

ENGLEWOOD, Colo., Jan. 29, 2024 /PRNewswire/ -- EchoStar Corporation (Nasdaq: SATS) ("EchoStar") today announced that its subsidiary DISH DBS Issuer LLC ("DBS Issuer") has elected in its sole discretion to terminate the offers (the "Exchange Offers") to exchange certain existing senior notes issued by DISH DBS Corporation (the "Existing DBS Notes") in the amounts and subject to the terms, in each case, described in the exchange offer memorandum and consent solicitation statement, dated January 16, 2024 (the "Exchange Offer Memorandum") into new senior secured notes issued by DBS Issuer described in the Exchange Offer Memorandum. DBS Issuer has also elected in its sole discretion to terminate its solicitation of consents (the "Consent Solicitations") from holders of each series of the Existing DBS Notes to amend the terms of the applicable indentures governing such Existing DBS Notes upon the terms described in the Exchange Offer Memorandum.

EchoStar (PRNewsfoto/EchoStar Corporation)
Since the Exchange Offers have been terminated, the exchange consideration will not be paid or become payable to holders of the Existing DBS Notes who have validly tendered their Existing DBS Notes for exchange in connection with the Exchange Offers, and the Existing DBS Notes tendered for exchange pursuant to the Exchange Offers will be promptly returned to the tendering holders.

The termination of the Exchange Offers has no effect on the previously announced exchange offers by EchoStar in respect of DISH Network Corporation's outstanding 0% Convertible Notes due 2025 and 3.375% Convertible Notes due 2026.

D.F. King & Co., Inc. is acting as exchange agent and information agent for the Exchange Offers and Consent Solicitations. You should direct all questions and requests for assistance at DISH@dfking.com or by calling (800) 967-5084 (U.S. toll-free) or (212) 269-5550 (banks and brokers).
 

From the article:

Zoom out: Though these types of asset transfers have become more common, they never fail to light up the debt market with fury and pushback (see also: Revlon, Neiman Marcus).
  • The deals usually wind up in court, because the way the covenants are written often leaves room for interpretation, and creditors look for any legal hook to block the transaction. (Court verdicts have so far been a mixed bag.)
  • The Dish situation already looks to be heading toward litigation. Multiple groups of bondholders have formed and hired lawyers — and at least one of those groups already sent a threatening letter to Dish's board alleging the transactions are fraudulent, Bloomberg reported.
Worth noting: From the company viewpoint, these transactions are supposed to buy them time.
  • But for all the time and resources spent fighting over their legality, the transactions often don't accomplish their ultimate goal: keeping the companies out of bankruptcy.
  • J. Crew, Revlon and Neiman Marcus all ultimately filed for Chapter 11 within a few years of their asset transfers.
The bottom line: A central paradox of financial capitalism is that bondholders have first claim on a company's assets, but shareholders are the ones who actually run it.
  • The closer a company gets to bankruptcy, the greater the tensions that tend to result.
 

From the article:

Zoom out: Though these types of asset transfers have become more common, they never fail to light up the debt market with fury and pushback (see also: Revlon, Neiman Marcus).
  • The deals usually wind up in court, because the way the covenants are written often leaves room for interpretation, and creditors look for any legal hook to block the transaction. (Court verdicts have so far been a mixed bag.)
  • The Dish situation already looks to be heading toward litigation. Multiple groups of bondholders have formed and hired lawyers — and at least one of those groups already sent a threatening letter to Dish's board alleging the transactions are fraudulent, Bloomberg reported.
Worth noting: From the company viewpoint, these transactions are supposed to buy them time.
  • But for all the time and resources spent fighting over their legality, the transactions often don't accomplish their ultimate goal: keeping the companies out of bankruptcy.
  • J. Crew, Revlon and Neiman Marcus all ultimately filed for Chapter 11 within a few years of their asset transfers.
The bottom line: A central paradox of financial capitalism is that bondholders have first claim on a company's assets, but shareholders are the ones who actually run it.
  • The closer a company gets to bankruptcy, the greater the tensions that tend to result.
Doesn't really say much other than Dish is in big trouble
 
Doesn't really say much other than Dish is in big trouble

At this point, most of the traditional providers are doing little more than rearranging the deck chairs on the Titanic, Dish included.

To continue the analogy, this move is just attempting to re-prioritize who has dibs on lifeboats and give cover to other assets and services from the inevitable sinking.
 
I suspect this was related to one of their moves where they recently announced they were moving assets into other totally owned companies. Then the bondholders said they were going to court to claim their collateral. So, they may have had a change of heart (after the bondholder said they would fight it) and decided to leave things alone.
 
I suspect this was related to one of their moves where they recently announced they were moving assets into other totally owned companies. Then the bondholders said they were going to court to claim their collateral. So, they may have had a change of heart (after the bondholder said they would fight it) and decided to leave things alone.
This is my take on things as well.
 
Another article that says that all these deals Dish/Echostar keep trying to do, then abandoning them when lawsuits are threaten, is just making more and more upset at them and pretty much says it will be extremely hard to get anyone else to invest in the company, from the article-

Any further restructuring is expected to be a highly contentious, lengthy process that is likely to descend into litigation, according to creditors.

“No one trusts Charlie and everyone is on edge,” said one person close to a group of the creditors, a majority of whom have joined forces to hold their ground against Dish.

Ergen and his team “obviously tried to come up with a transaction that was creative, and the market just said ‘no’,” according to another debt market participant.
The restructuring Ergen proposed was the latest in a string of so-called “distressed exchanges” across corporate America: a type of deal that typically strips debt holders of claims to a company’s underlying assets.

Distressed exchanges have soared in popularity as a way for shareholders to preserve their equity and forestall bankruptcy.