Hughes Network bondholders hire Jones Day ahead of $1.5 billion August debt deadline

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Summary · why it matters

Creditors of EchoStar's Hughes Network Systems have retained restructuring lawyers from Jones Day as the satellite internet company approaches a $1.5 billion debt maturity due on August 1, the Wall Street Journal reported. A group holding a majority of Hughes Network's bonds is exploring options including a potential restructuring. Hughes Network had $102 million in cash as of March 31 and said in its May earnings report that it would need to raise capital, refinance, or restructure the debt before it matures, adding that EchoStar may not provide additional liquidity. The creditor group's efforts gained urgency after EchoStar's satellite pay-TV unit, Dish DBS, filed for bankruptcy last week, with bondholders viewing that case as a possible template for how EchoStar and Chairman Charlie Ergen could address claims against Hughes Network. The report said Hughes Network has not engaged in discussions with its lenders, though EchoStar has previously repaid debt at the last minute on behalf of affiliated entities. Hughes Network paid nearly $1.3 billion in stock dividends to EchoStar during the first quarter of 2024, and similar dividends by Dish DBS had prompted a fraudulent transfer lawsuit from bondholders that was dismissed in March as part of a restructuring support agreement. Separately, EchoStar is awaiting the closing of agreements to sell licenses to AT&T and SpaceX, with proceeds expected to be used to reduce debt, and the SpaceX agreement includes a referral program under which EchoStar can refer Hughes Network customers to SpaceX.

Impact on stocks 3

Cloud & Digital Infrastructure± Mixed · 2 stocks
EchoStar Corporation
ECHO
▼ NegativeCapitalrelevance

Hughes Network faces $1.5B debt maturity in August with only $102M cash, requiring restructuring or capital raise; EchoStar may not provide liquidity.

AT&T Inc.
T
▲ PositiveCapitalDemandrelevance

EchoStar is selling licenses to AT&T, with proceeds to reduce debt, benefiting AT&T's spectrum position.

Space Economy▲ · 1 stocks

Off-coverage companies 2

Dish DBS CorporationPrivate▼ Negative
Capitalrelevance

Dish DBS filed for bankruptcy, serving as a possible template for Hughes Network restructuring, indicating financial distress.

Jones DayPrivate± Mixed
relevance

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