DISH Network Convertible Notes Become Convertible Into Shares of EchoStar Corporation

Rhea-AI Summary

DISH Network Corporation (DISH) announced the merger with EchoStar Corporation, resulting in DISH becoming a wholly owned subsidiary of EchoStar. The 2.375% Convertible Notes due 2024, 0% Convertible Notes due 2025, and 3.375% Convertible Notes due 2026 have become convertible into shares of EchoStar Common Stock. The merger resulted in an adjusted Conversion Rate of 4.2677 for the 2024 Notes, 8.5657 for the 2025 Notes, and 5.3835 for the 2026 Notes. Holders of the Notes have the right to surrender them for conversion until February 21, 2024, with additional rights for the 2024 Notes until March 15, 2024.

Insights

Financial Analyst

The merger between DISH Network Corporation and EchoStar Corporation has significant implications for bondholders and investors in both companies. The conversion of DISH's convertible notes into EchoStar Class A common stock alters the investment's nature and potential returns. The adjusted conversion rates need to be scrutinized against the current market valuation of EchoStar's shares to assess the attractiveness of the conversion option for note holders.

Furthermore, the conversion offer's time-sensitive nature, with a deadline set for the 35th Trading Day post-merger, requires a strategic decision from investors. They must consider market trends, EchoStar's stock performance and future growth prospects. The impending maturity date of the 2024 Notes adds urgency for holders to evaluate their options.

Investors should also monitor EchoStar's post-merger integration process and potential synergies, as these factors could influence EchoStar's stock performance and, by extension, the value derived from converting the notes.

Market Research Analyst

The merger has strategic implications for the competitive landscape of the satellite and communications industry. It is essential to analyze how the consolidation affects market dynamics, customer base and technological capabilities. The merger's success in generating value will be reflected in EchoStar's stock performance, which is now directly relevant for note holders due to the conversion terms.

Understanding the historical performance of both DISH and EchoStar, their market positioning and the anticipated operational efficiencies post-merger can provide insights into the potential long-term benefits for stakeholders. Additionally, the broader market's reception of the merger and subsequent stock behavior will be indicative of investor confidence in the combined entity's future.

Legal Expert

The conversion of notes as a result of a merger is governed by complex contractual agreements and securities law. The supplemental indenture and the terms set forth for the conversion of the notes require careful legal interpretation to ensure compliance and to understand the rights and obligations of the note holders.

It's critical to evaluate the legal provisions of the indenture agreements, such as the definition of 'Trading Day' and 'Scheduled Trading Day,' and their implications for the timing of conversions. Legal precedents and regulations around mergers and convertible securities might also provide a framework for assessing the fairness and legality of the conversion terms offered to note holders.

ENGLEWOOD, Colo., Jan. 2, 2024 /PRNewswire/ -- DISH Network Corporation ("DISH") today announced that, in connection with the closing of the merger between DISH and EchoStar Corporation ("EchoStar") on December 31, 2023, as a result of which DISH survived the merger as a wholly owned subsidiary of EchoStar, DISH's 2.375% Convertible Notes due 2024 (the "2024 Notes"), 0% Convertible Notes due 2025 (the "2025 Notes") and 3.375% Convertible Notes due 2026 (the "2026 Notes" and, together with the 2024 Notes and 2025 Notes, the "Notes") have become convertible into shares of EchoStar Class A common stock, par value $0.001 per share ("EchoStar Common Stock"). The Notes were previously convertible into shares of DISH Class A common stock, par value $0.01 per share ("DISH Common Stock"). 

Pursuant to a supplemental indenture with respect to each series of Notes entered into in connection with the closing of the merger by and among DISH, EchoStar and U.S. Bank Trust Company, National Association (as successor to U.S. Bank National Association), as trustee, the right of the holders of the Notes that were outstanding as of the closing of the merger to convert each $1,000 principal amount of such Notes into shares of DISH Common Stock was changed into a right to convert such principal amount of Notes into the number of shares of EchoStar Common Stock that a holder of a number of shares of DISH Common Stock equal to the applicable Conversion Rate (as defined in the applicable indenture) would have been entitled to receive upon the closing of the merger. Upon the closing of the merger, each then-outstanding share of DISH Common Stock was converted into the right to receive 0.350877 shares of EchoStar Common Stock, resulting in an adjusted Conversion Rate of 4.2677 for the 2024 Notes, 8.5657 for the 2025 Notes and 5.3835 for the 2026 Notes.

As a result of the merger and pursuant to the terms of the applicable indenture, holders of the Notes may surrender all or any portion of their Notes (that is $1,000 in principal amount or an integral multiple thereof) for conversion at any time from or after the open of business on January 2, 2024 until the close of business on the 35th Trading Day (as defined in the applicable indenture) after the date of the merger, which is expected to be February 21, 2024. In addition, pursuant to the terms of the indenture governing the 2024 Notes, holders of the 2024 Notes currently have the right to surrender all or any portion of their Notes (that is $1,000 in principal amount or an integral multiple thereof) for conversion at any time prior to the close of business on the second Scheduled Trading Day (as defined in the indenture governing the 2024 Notes) immediately preceding March 15, 2024 (the maturity date of the 2024 Notes).   

About DISH Network
DISH Network Corporation is a connectivity company. Since 1980, it has served as a disruptive force, driving innovation and value on behalf of consumers. Through its subsidiaries, the company provides television entertainment and award-winning technology to millions of customers with its satellite DISH TV and streaming SLING TV services. In 2020, the company became a nationwide U.S. wireless carrier through the acquisition of Boost Mobile. DISH continues to innovate in wireless, building the nation's first virtualized, O-RAN 5G broadband network. As of December 31, 2023, DISH Network Corporation is a wholly owned subsidiary of EchoStar Corporation (Nasdaq: SATS).

About EchoStar
EchoStar Corporation (Nasdaq: SATS) is a global connectivity leader with wireless, satellite and video distribution capabilities that offer consumer, enterprise, operator, and government solutions under a suite of brands, including Hughes^®, Hughesnet^®, JUPITER™, HughesON™, EchoStar^®, DISH Wireless^®, Boost Wireless™, Sling TV^® and DISH TV™. 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 Twitter and LinkedIn.

©2023 EchoStar. Hughes and HughesNet are registered trademarks of Hughes Network Systems, LLC, an EchoStar company.

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SOURCE DISH Network Corporation

FAQ

What is the merger between DISH and EchoStar Corporation about?

The merger resulted in DISH becoming a wholly owned subsidiary of EchoStar.

What are the Notes mentioned in the PR and how have they been affected by the merger?

The 2.375% Convertible Notes due 2024, 0% Convertible Notes due 2025, and 3.375% Convertible Notes due 2026 have become convertible into shares of EchoStar Common Stock.

What is the adjusted Conversion Rate for the Notes after the merger?

The adjusted Conversion Rate is 4.2677 for the 2024 Notes, 8.5657 for the 2025 Notes, and 5.3835 for the 2026 Notes.

Until when can holders of the Notes surrender them for conversion?

Holders of the Notes can surrender them for conversion until February 21, 2024, with additional rights for the 2024 Notes until March 15, 2024.