EchoStar to transfer BSS business to DISH
(20 May 2019 - EchoStar) EchoStar Corporation announced today that it executed an agreement with DISH Network Corporation to transfer to DISH the portion of its EchoStar Satellite Services business that manages and provides broadcast satellite services primarily to DISH and its subsidiaries (BSS Business).
EchoStar shareholders will receive 22,937,188 shares of DISH Class A common stock upon consummation of the transaction.
The BSS Business includes the business of EchoStar that manages and provides broadcast satellite services to DISH and its subsidiaries and DISH Mexico, S. de R.L. de C.V. It also provides telemetry, tracking and control services to satellites owned by DISH and a portion of EchoStar's other businesses. The transaction will also include the products, assets, licenses and technology, and the business operations, revenues, billings, liabilities and operating activities, primarily related to those businesses and certain other EchoStar real estate properties.
Mike Dugan, President and CEO of EchoStar said. "This transaction will allow EchoStar to focus our efforts on our high growth business of broadband services and other initiatives, while eliminating a negative growth component of our financial performance and the risk associated with providing services to a solitary customer."
At closing of the transaction, each EchoStar shareholder as of the distribution record date will receive shares in a newly created subsidiary of EchoStar housing the BSS Business and other assets transferring in the transaction to reflect such stockholder's pro rata ownership of EchoStar Class A and Class B common stock in the aggregate ("Distribution"). Immediately following the Distribution, a subsidiary of DISH will merge with and into such entity and each EchoStar stockholder as of the distribution record date will receive a number of shares of DISH Class A common stock equal to 22,937,188 divided by the total number of shares of EchoStar Class A and Class B common stock outstanding on the distribution record date. The distribution record date has not yet been determined. As of May 16, 2019, the total outstanding shares of EchoStar Class A and Class B common stock was approximately 95,719,000, which would result in the issuance of approximately 0.24 shares of DISH Class A common stock for each share of EchoStar Class A and Class B common stock outstanding on that date. The final exchange ratio will be determined on the distribution record date.
The transaction is structured in a manner intended to be tax-free to EchoStar and its shareholders. It is expected to close during the second half of 2019, subject to customary conditions, including receipt of certain regulatory approvals.
Deutsche Bank Securities Inc. acted as financial advisor to EchoStar in the transaction. White & Case LLP acted as legal counsel for EchoStar in the transaction.
EchoStar Corporation (NASDAQ: SATS) is a premier global provider of satellite communications solutions. Headquartered in Englewood, Colo., and conducting business around the globe, EchoStar is a pioneer in secure communications technologies through its Hughes Network Systems and EchoStar Satellite Services business segments.