A group of creditors associated with Echostar’s pay television service Dish Network have rejected a bond exchange offer from the company, which was one of the contingencies rooted in its proposed merger with rival TV distributor DirecTV.
The rejection came in the form of a letter recently sent to executives at Echostar, details of which were reported by financial news outlet Bloomberg on Monday.
The group of creditors began objecting to the offer earlier this month, saying the company’s loss adjustment for the bonds was not workable.
Under the deal announced in September, DirecTV was set to buy Echostar’s video business — comprised of Dish Video, Dish Network and Sling TV and various advertising units — for one dollar in cash, while assuming Dish’s $9.75 billion in debt.
For that deal to go through, Dish’s creditors had to agree to swap their $9.75 billion in debt for new bonds that would have extended out the maturity date with a minimum loss of $1.5 billion, or $70 million lower than previously accepted.
Dish’s existing creditors believe that isn’t feasible, and are holding out hope that Dish and DirecTV will agree to cut any minimum loss by as much as $300 million.
The deadline for creditors to accept the bond exchange offer is Tuesday — the same day that Echostar reports its latest financial earnings. It isn’t clear how the rejection will impact the merger going forward. A spokesperson for DirecTV declined to comment.
Related: DirecTV announces pending acquisition of Dish video business
Two months ago, Echostar and DirecTV affirmed the need for both video services to combine, saying each are challenged by different trends in the media and entertainment space, including a wave of pay TV cancellations for cheaper, streaming-only options.
While each company has their own streaming TV service, the number of combined subscribers pales in comparison to upstarts like YouTube TV and Hulu with Live TV, though the companies still have more subscribers than Fubo.
“This agreement is in the best interests of EchoStar’s customers, shareholders, bondholders, employees, and partners,” said Hamid Akhavan, the President and Chief Executive Officer of EchoStar.
The original projection for the deal to close was the latter half of 2025, though that might be pushed back if the companies find that securing creditor and regulatory approvals is a longer process than previously expected.
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Editor’s note: This story was updated Tuesday afternoon after a DirecTV spokesperson declined to comment on the matter.
