Article/Intelligence
CORRECTION: EchoStar Elects Not to Make $326M Cash Interest Payment Due May 30 With Respect to 10.75% Senior Spectrum Secured Notes Due 2029 Amid FCC Review
Editor’s Note: The headline of the story has been revised to reflect that EchoStar is facing inquiries from the Federal Communications Commission.
EchoStar Corp. today disclosed that it has elected not to make an approximately $326 million cash interest payment due today, Friday, May 30, with respect to its 10.75% senior spectrum secured notes due 2029.
Under the indenture governing the 2029 spectrum notes, such non-payment is a default, and the company has a 30-day grace period to make the interest payment before such non-payment constitutes an event of default with respect to the 2029 spectrum notes.
The company said it was not making the payment in light of the uncertainty from the Federal Communications Commission’s review of the company’s 5G buildout obligations and its mobile-satellite service rights in the 2 GHz band.
The company has elected not to make the interest payment to allow time for the FCC to provide the relief requested in the company’s response prior to the expiration of the 30-day grace period, so that it may confidently continue investing in its network buildout and expansion of its Boost business and MSS service.
EchoStar said that the uncertainty over its spectrum rights has “effectively frozen” its ability to make decisions regarding its Boost business, including continued network buildout and adversely impacts the company’s ability to implement and adjust its overall business plan and requires EchoStar to re-evaluate the deployment of its resources.
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