EchoStar execs downplay risk of bankruptcy

Execs at EchoStar appear confident that the company will be able to refinance its coming debt obligations or tap into its valuable spectrum holdings as collateral to avoid a potential fall into bankruptcy.

EchoStar has about $2 billion of debt maturing on November 14, and it confirmed that it currently does not have the necessary cash on hand to fund fourth quarter operations or the coming debt maturity. EchoStar, which ended Q2 with $521 million in cash and cash equivalents, previously warned that its ability to continue as a going concern was in question if it could not refinance its debt or raise more cash.

However, the company is in discussions with outside parties to bridge that gap and is considering using a portion of its spectrum as collateral.

“We continue to make progress and are in constructive discussions with counterparties, which we feel best support our objective,” Hamid Akhavan, EchoStar’s president and CEO, explained Friday (August 9) on the company’s Q2 2024 earnings call.

Akhavan didn’t shed much light on the details. “The nature of these discussions require confidentiality. While I cannot provide more detail today, we will have more to share when it’s appropriate,” he said.

However, those discussions “with funding sources at all levels of our capital structure,” company EVP and CFO Paul Orban said.

Spectrum as collateral

Akhavan stressed that EchoStar’s spectrum assets are a possible avenue that can provide the company with years of financial runway.

“We can and we will use those as collateral and the fact that we haven’t done it yet is because we have not…reached a point that we believe the right deal can be made,” he said. “This is a matter of negotiations and progress is being made.”

In a note issued after last week’s earnings call, New Street Research Analyst Jonathan Chaplin said he believes a pair of entities now at EchoStar – DBSD and Terrestar – that hold AWS-3 licenses offer the most likely scenario. He likewise believes those licenses are worth close to $10 billion.

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