(Bloomberg) -- Dish Network Corp.’s Chairman Charlie Ergen sees a “narrow window” to address the company’s capital structure, which includes $14.7 billion of distressed debt that has been sliding further into troubled territory for the past few months.
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Ergen told analysts during an earnings call Monday that the debt market is challenging and effectively closed to the company. That has Dish considering assets — particularly airwave licenses — as either collateral on new loans or some other option to help it handle its debt.
Debt of the Englewood, Colorado-based company has been under pressure for the past three months, falling as much as 30 cents on the dollar in some cases. Its distressed debt — the largest among US issuers — now trades at levels of 1,000 basis points above the benchmark rate, according to data compiled by Bloomberg. The company has $20.4 billion of long-term debt as of March 31, a regulatory filing shows.
The satellite-TV company, which has been losing subscribers for a decade, has started a costly transition to become a wireless broadband provider in an attempt to find new growth. This pivot has left the company facing a challenging market to find additional financing.
Dish is also reeling from the impact of a cyber-security attack in February that disrupted its payments system. Since then, bonds of the company have been “in a vortex,” CreditSights senior analyst Davis Hebert wrote in a note Monday.
Dish’s July 2026 notes have fallen nearly 31 cents on the dollar since early February, while its 7.375% notes due July 2028 have fallen almost 28 cents over the same period.
“With DISH needing additional capital and debt maturities next year, we need to see a major step change in the level of cash burn to get comfortable with the wireless side of the business,” Hebert wrote.
A representative for Dish didn’t respond to requests for comment.
Dish’s shares oscillated between gains and losses on Monday after the company reported first-quarter results that lagged analyst estimates. Its July 2026 notes fell less than one cent to 52 cents while its July 2028 notes were unchanged as of 2:10 p.m. New York time, according to price-reporting system Trace.
Path Forward
Heavily indebted companies have been attempting to restructure their debt loads with varying degrees of success. WeWork Inc. saw an 86% participation rate for its debt swap, while Carvana Co. extended its deadline twice and sweetened deal terms for bondholders.
The path forward for Dish is less clear, with S&P Global Ratings analysts writing in a late April note that the company’s capital “may be unsustainable long term” given higher rates and refinancing requirements next year. S&P analysts expect that Dish will need up to $16 billion in new capital between 2024 and 2026 to fund capital spending, wireless costs and address upcoming debt maturities.
Dish’s last debt issuance was in January, when it upsized its deal and sold $1.5 billion in notes due 2027 with a hefty coupon of 11.75%. Those notes last traded hands at 93.2 cents on the dollar as of 2:10 p.m. New York time, according to Trace.
Credit markets have grown even warier of Dish in recent months. The cost to insure against default in five years for the company’s senior debt has surged to 48 points upfront, meaning it would cost $4.8 million to insure a $10 million pile of the company’s debt.
--With assistance from Scott Moritz.
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