Dish Network 2001 Annual Report Download - page 87

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–22
4. Long-Term Debt
9 1/4% Seven Year and 9 3/8% Ten Year Notes
On January 25, 1999, EDBS sold $375 million principal amount of the 9 1/4% Seven Year Notes and $1.625
billion principal amount of the 9 3/8% Ten Year Notes. Interest accrues at annual rates of 9 1/4% and 9 3/8%,
respectively and is payable semi-annually in cash in arrears on February 1 and August 1 of each year, commencing
August 1, 1999.
Concurrently with the closing of the 9 1/4% Seven Year Notes and 9 3/8% Ten Year Notes offering, EchoStar
used approximately $1.658 billion of net proceeds received from the sale of the 9 1/4% Seven Year and 9 3/8% Ten
Year Notes to complete tender offers for its then outstanding senior notes issued in 1994, 1996 and 1997. In February
1999, EchoStar used approximately $268 million of net proceeds received from the sale of the 9 1/4% Seven Year and
9 3/8% Ten Year Notes to complete the tender offers related to the 12 1/8% Senior Exchange Notes due 2004, issued
on January 4, 1999, in exchange for all issued and outstanding 12 1/8% Series B Senior Redeemable Exchangeable
Preferred Stock.
With the exception of certain de minimis domestic and foreign subsidiaries, the 9 1/4% Seven Year and 9
3/8% Ten Year Notes are fully, unconditionally and jointly and severally guaranteed by all subsidiaries of EDBS. The
9 1/4% Seven Year and 9 3/8% Ten Year Notes are general senior unsecured obligations which:
• rank pari passu in right of payment to each other and to all existing and future senior unsecured
obligations;
• rank senior to all existing and future junior obligations; and
• are effectively junior to secured obligations to the extent of the collateral securing such obligations,
including any borrowings under future secured credit facilities.
Except under certain circumstances requiring prepayment premiums, and in other limited circumstances, the
9 1/4% Seven Year and 9 3/8% Ten Year Notes are not redeemable at EDBS’s option prior to February 1, 2003 and
February 1, 2004, respectively. Thereafter, the 9 1/4% Seven Year Notes will be subject to redemption, at the option of
EDBS, in whole or in part, at redemption prices decreasing from 104.625% during the year commencing February 1,
2003 to 100% on or after February 1, 2005, together with accrued and unpaid interest thereon to the redemption date.
The 9 3/8% Ten Year Notes will be subject to redemption, at the option of EDBS, in whole or in part, at redemption
prices decreasing from 104.688% during the year commencing February 1, 2004 to 100% on or after February 1, 2008,
together with accrued and unpaid interest thereon to the redemption date.
The indentures related to the 9 1/4% Seven Year and 9 3/8% Ten Year Notes (the “Seven and Ten Year Notes
Indentures”) contain restrictive covenants that, among other things, impose limitations on the ability of EDBS to:
• incur additional indebtedness;
• apply the proceeds of certain asset sales;
• create, incur or assume liens;
• create dividend and other payment restrictions with respect to EDBS’s subsidiaries;
• merge, consolidate or sell assets; and
• enter into transactions with affiliates.
In addition, EDBS may pay dividends on its equity securities only if no default shall have occurred or is
continuing under the Seven and Ten Year Notes Indentures; and after giving effect to such dividend and the incurrence
of any indebtedness (the proceeds of which are used to finance the dividend), EDBS’ ratio of total indebtedness to cash
flow (calculated in accordance with the Indentures) would not exceed 8.0 to 1.0. Moreover, the aggregate amount of
such dividends generally may not exceed the sum of the difference of cumulative consolidated cash flow (calculated in
accordance with the Indentures) minus 120% of consolidated interest expense of EDBS (calculated in accordance with
the Indentures), in each case from April 1, 1999 plus an amount equal to 100% of the aggregate net cash proceeds
received by EDBS and its subsidiaries from the issuance or sale of certain equity interests of EDBS or EchoStar.