Dish Network 2003 Annual Report Download - page 95

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ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–28
3% Convertible Subordinated Note due 2010
On July 21, 2003, we sold $500.0 million principal amount of the 3% Convertible Subordinated Notes which mature
July 21, 2010 to SBC Communications, Inc. (“SBC”) in a privately negotiated transaction. Interest accrues at an annual
rate of 3% and is payable semi-annually in cash, in arrears on June 30 and December 31 of each year, commencing
December 31, 2003.
The 3% Convertible Subordinated Notes are convertible into approximately 6.87 million shares of our class A
common stock at the option of SBC at $72.82 per share, subject to adjustment in certain circumstances.
The 3% Convertible Subordinated Notes are:
• general unsecured obligations;
• ranked junior in right of payment with all of our existing and future senior debt;
• ranked equal in right of payment to our existing convertible subordinated debt; and
• ranked equal in right of payment to all other existing and future indebtedness whenever the instrument
expressly provides that such indebtedness ranks equal with the 3% Convertible Subordinated Notes.
The indenture related to the 3% Convertible Subordinated Notes contains certain restrictive covenants that do not
impose material limitations on us.
In the event of a change of control, as defined in the related indenture, we will be required to make an offer to
repurchase all or any part of the holder’s 3% Convertible Subordinated Notes at a purchase price equal to 100% of
the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date of repurchase.
Commencing July 21, 2008, we may redeem, and SBC may require us to purchase, all or a portion of the note
without premium.
Floating Rate Senior Notes due 2008
On October 2, 2003, EDBS sold $500.0 million principal amount of Floating Rate Senior Notes which mature October
1, 2008 in a private placement to qualified institutional buyers in reliance on Rule 144A under the Securities Act of
1933. Interest accrues at a floating rate based on LIBOR and is payable quarterly in cash in arrears on January 1, April
1, July 1 and October 1 of each year, commencing January 1, 2004. The interest rate at December 31, 2003 was 4.41%.
The proceeds, along with proceeds from the 5 3/4% and 6 3/8% Senior Notes, will be used primarily to repurchase or
redeem all or a portion of EDBS’ outstanding 9 3/8% Senior Notes due 2009 and other outstanding debt securities and
for general corporate purposes.
EDBS has agreed to offer to exchange the Floating Rate Senior Notes for new issues of identical debt securities
registered under the Securities Act of 1933.
The Floating Rate Senior Notes will be redeemable, in whole or in part, at any time after October 1, 2005 at redemption
prices decreasing from 102% during the year commencing October 1, 2005 to 100% on or after October 1, 2007. Prior
to October 1, 2006, we may also redeem up to 35% of each of the Floating Rate Senior Notes at premiums specified in
the indenture with the net cash proceeds from certain equity offerings or capital contributions.
The Floating Rate Senior Notes are:
• general unsecured senior obligations of EDBS;
• ranked equally in right of payment with all of EDBS’ and the guarantors’ existing and future
unsecured senior debt;
• ranked effectively junior to our and the guarantor’s current and future secured senior indebtedness up
to the value of the collateral securing such indebtedness.