DISH Network creditors are looking into legal options including sending the company a default notice after it “moved prized assets out of bondholders’ reach,” people familiar with the matter told Bloomberg.
This comes after the newly formed EchoStar Corporation reported a series of completed transactions that would boost the company’s strategic, financial, and operating flexibility. As a part of these extremely complicated transactions, which initially had investors and analysts scratching their heads, DISH transferred certain of its wireless spectrum licenses under the umbrella of a newly formed branch of the company, EchoStar Wireless Holding.
In the wake of the transfer, DISH’s bond prices dropped because they were no longer linked to to ownership of the company’s valuable spectrum, according to the report. This could lead to future financial headaches for existing creditors.
As a result, creditors are looking into whether DISH’s asset shuffle could be a breach of its debt contract, sources told Bloomberg. In addition, the discussions are still in early stages and no decision has been made.
EchoStar completed its acquisition of DISH earlier this month. Shortly after, the company said it was exploring new funding options to build out DISH’s wireless network.
While DISH is set to remain a cable TV brand, it’s had long-held aspirations of becoming a competitive wireless provider. The cash influx from EchoStar will help pay down the telecom company’s mountain of debt that DISH racked up building out its 5G network. The combined company still intends to keep building out its wireless network, although it’s hitting a point where it will need to spend more to reach fewer people as it widens its coverage zone.
EchoStar wasn’t immediately available for comment.