Merger could be terminated November 22nd

[Bruce]

They probably believe TPG will up their offer.

TPG is telegraphing that by constantly changing/adding more days to the deadline.

After the bond holders rejected the first offer TPG said they would not change the offer and then they did. If TPG doesn't they will probably vote again to accept it before the 22nd rolls around. They know they still have 10 days left.

Actually, there is more risk going with TPG, considering how terrible the Traditional TV Market is, staying with Echostar might be the better gamble, at least they have the spectrum.

 

[b4pjoe]

Actually, there is more risk going with TPG, considering how terrible the Traditional TV Market is, staying with Echostar might be the better gamble, at least they have the spectrum.

Are the bonds they hold for Dish or Echostar?

 

[Bruce]

Are the bonds they hold for Dish or Echostar?

Some with either/both for what I have read.

 

[navychop]

Shareholders are the ones at the most risk during a bankruptcy, usually the list is, first, secured creditors, then bond holders, then last, those who own stock in the company.

Would not the unsecured creditors get cash before shareholders?

 

[b4pjoe]

That's a SERIOUS mistake on their part. Metv is by FAR our most-watched subchannel. Sinclair owns/controls 3 of our locals in Flint-Saginaw-Bay City DMA, and combined, I don't watch any of them as much as Metv stuff.

Although the link is titled

https://thedesk.net/2024/11/directv-dish-merger-termination-november-22/Me

...it goes to a complete different article that is more than 2 years old dated August 26, 2022. The /ME at the end of the link takes it to the old MeTV article.

 

[nelson61]

For 5G internet, T-Mobile, AT&T and Verizon have a massive head start, if Echostar/Dish tries to undercut their services with pricing, they will do the same if Echostar starts gaining subscribers.

Cell service has evolved into a classic oligopoly. A few players essentially have all the customers.
In an oligopoly, when one cuts price, the others follow and nothing changes excepting they all make less money
If one increases prices, the others all keep prices constant, figuring they the customers will move to them.

After a few "lessons" they learn and stop trying to poach customers or increase prices. prices rarely move either up or down.

 

[primestar31]

Although the link is titled

https://thedesk.net/2024/11/directv-dish-merger-termination-november-22/Me

...it goes to a complete different article that is more than 2 years old dated August 26, 2022. The /ME at the end of the link takes it to the old MeTV article.

Primestar, I believe you and I both made comments about an old subject that was mistakenly posted in this thread about the current merger situation. I kind of wondered what MeTV had to do with the whole deal.

I deleted my reply once I noticed Scott's link didn't match the thread title

 

[MikeD-C05]

It is already dealt with.

Dish/Echostar already received $2 Billion from TPG for use against the immediate debt owed, which has already been distributed to those creditors/bondholders.

If the deal is dead, I have no idea/information on the terms to pay back that $2 Billion back to TPG after the deal collapses.

Echostar received another $5 Billion for bonds, that’s was linked to in one of these merger threads, with that, can use towards next year’s bonds when they come due and/or for the continued build out.

So the debt is handled for now.

The bad news, even if Echostar finishes the build out, no evidence that will mean increased business.

It is starting to look like having a Cell Phone Service is not the positive Dish thought it would be, since they have now lost 3 Million Subscribers, they had 10M when they acquired Boost.

For 5G internet, T-Mobile, AT&T and Verizon have a massive head start, if Echostar/Dish tries to undercut their services with pricing, they will do the same if Echostar starts gaining subscribers.

So the $9.75 billion in debt has gone to TPG? From what I posed before the article said and I took that to mean the two-step part of the deal was $1 to buy DISH video business, but the second step was for TPG to assume the debt too. So if the acquisition is called off on the 22nd then the debt stays with Charlie as well as the DBS Video business? I know he got his $2.5 billion in financing from TPG for the debt payment that was due this month, but I am still wondering if the $9.75 billion goes back to Charlie as well?

 

[Bruce]

So the $9.75 billion in debt has gone to TPG?

No, Dish only received the $2 Billion towards this year’s debt that was due.

They also received $5B that was raised selling more bonds, that will largely handle next year’s debt payment, I do not believe that have a large amount due in 2026.

So basically, if the sale does not happen, Echostar is basically safe for the next couple of years.

But this is just regarding their debt, they still have problems, like declining revenue, loss of TV/Phone/Hughes subscribers.

They really need to figure out how to monetize the 5G Spectrum, but in doing so, will also increase the expenses, because they will largely be starting up a new business venture.

For example, if they offer 5G Internet at home, they will need to design and build modems that will receive the signal, those type of expenses.

 

[dishdude]

For example, if they offer 5G Internet at home, they will need to design and build modems that will receive the signal, those type of expenses.

I'd think they could strike a deal with an existing hardware manufacturer to build a modem for them in exchange for committing to buy a large quantity.

 

[dishdude]

Cell service has evolved into a classic oligopoly. A few players essentially have all the customers.
In an oligopoly, when one cuts price, the others follow and nothing changes excepting they all make less money
If one increases prices, the others all keep prices constant, figuring they the customers will move to them.

After a few "lessons" they learn and stop trying to poach customers or increase prices. prices rarely move either up or down.

Sorta, but they're operating an MVNO and there are a ton of those competing at the lower end of the prepaid market.

 

[Bruce]

I'd think they could strike a deal with an existing hardware manufacturer to build a modem for them in exchange for committing to buy a large quantity.

I agree, but still a expense.

 

[Bruce]

Sorta, but they're operating an MVNO and there are a ton of those competing at the lower end of the prepaid market.

And most, if not all, are owned by the big three.

For example TracFone is owned by Verizon, Mint Mobile is owned by T-Mobile, who also owns MetroPCS, etc.

Like I said, if Echostar does get any momentum, they will be smooshed.

And again, Dish/Echostar has to prove they can successfully run a Cell Phone Provider, losing 3 Million subscribers out of 10M in just 4 years, 30% of the customers, plus multiple failed marketing attempts, is not a good sign.

 

[b4pjoe]

So the $9.75 billion in debt has gone to TPG? From what I posed before the article said and I took that to mean the two-step part of the deal was $1 to buy DISH video business, but the second step was for TPG to assume the debt too. So if the acquisition is called off on the 22nd then the debt stays with Charlie as well as the DBS Video business? I know he got his $2.5 billion in financing from TPG for the debt payment that was due this month, but I am still wondering if the $9.75 billion goes back to Charlie as well?

TPG provided $2.5 billion in financing to EchoStar to help refinance Dish's debt maturity in November 2024, but EchoStar is selling Dish Network to DirecTV for $1 and $9.75 billion in debt:

• Financing
  TPG Angelo Gordon and co-investors provided $2.5 billion in financing to help Dish refinance its debt maturity in November 2024. This financing was intended to provide interim liquidity and ensure Dish could continue to operate while the transaction with DirecTV was finalized.

• Acquisition
  DirecTV is acquiring Dish Network and Sling TV from EchoStar in exchange for taking on $9.75 billion of Dish's debt. The deal is expected to close in the fourth quarter of 2025, subject to regulatory approval and other conditions.

What is not clear is what happens to the $2.5 billion if the deal doesn't go through but since it states that "TPG Angelo Gordon and co-investors provided $2.5 billion in financing to help Dish refinance its debt maturity in November 2024" which means it was a loan. That would mean that DISH will be paying TPG back that $2.5 billion and Dish would still have the debt that they have now.

 

[nelson61]

Bloomberg this week says they are close to moving away from MVNO since their network area has increased dramatically in the past year.

 

[CSM]

How could TPG pay off the rest of Dish Network debt without making a lot of profit to do it?

 

[telstar_1]

Charlie? Brazen? Say it ain't so!

 

[b4pjoe]

How could TPG pay off the rest of Dish Network debt without making a lot of profit to do it?

They aren't going to pay the debt off. They are going to assume it.

 

[Bruce]

Would not the unsecured creditors get cash before shareholders?

bondholders are unsecured creditors

Dish/Echostar is very heavily in debt, doubtful share holders would get anything.

• EchoStar total liabilities for the quarter ending September 30, 2024 were $35.623B, a 1288.32% increase year-over-year.

That was before the current deals.

EchoStar Total Liabilities 2010-2024 | SATS

EchoStar total liabilities from 2010 to 2024. Total liabilities can be defined as the total value of all possible claims against the corporation. <ul style='margin-top:10px;'> <li>EchoStar total liabilities for the quarter ending September 30, 2024 were...

www.macrotrends.net

 

[CSM]

They aren't going to pay the debt off. They are going to assume it.

Never understood how companies can operate with a lot of debt.