Dish Network 2001 Annual Report Download - page 88

ECHOSTAR COMMUNICATIONS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS – Continued
F–23
In the event of a change of control, as defined in the Seven and Ten Year Notes Indentures, EDBS will be
required to make an offer to repurchase all of the 9 1/4% Seven Year and 9 3/8% Ten Year Notes at a purchase price
equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the date
of repurchase.
10 3/8% Seven Year Notes
On September 25, 2000, our wholly-owned subsidiary, EBC, sold $1 billion principal amount of the 10 3/8%
Seven Year Notes. Interest accrues at an annual rate of 10 3/8% and is payable semi-annually in cash, in arrears on
April 1 and October 1 of each year. The proceeds of the 10 3/8% Seven Year Notes will be used primarily by
EchoStar’s subsidiaries for the construction and launch of additional satellites, strategic acquisitions and other general
working capital purposes.
The indenture related to the 10 3/8% Seven Year Notes (the “10 3/8% Seven Year Notes Indenture”)
contains certain restrictive covenants that generally do not impose material limitations on EchoStar. Subject to
certain limitations, the 10 3/8% Seven Year Notes Indenture permits EBC to incur additional indebtedness, including
secured and unsecured indebtedness that ranks on parity with the 10 3/8% Seven Year Notes. Any secured
indebtedness will, as to the collateral securing such indebtedness, be effectively senior to the 10 3/8% Seven Year
Notes to the extent of such collateral.
The 10 3/8% Seven Year Notes are:
• general unsecured obligations of EBC;
• ranked equally in right of payment with all of EBC’s existing and future senior debt;
• ranked senior in right of payment to all of EBC’s other existing and future subordinated debt; and
• ranked effectively junior to (i) all liabilities (including trade payables) of EBC’s subsidiaries and (ii)
all of EBC’s secured obligations, to the extent of the collateral securing such obligations, including any
borrowings under any of EBC’s future secured credit facilities, if any.
Except under certain circumstances requiring prepayment premiums, and in other limited circumstances, the
10 3/8% Seven Year Notes are not redeemable at EchoStar’s option prior to October 1, 2004. Thereafter, the 10 3/8%
Seven Year Notes will be subject to redemption, at EchoStar’s option, in whole or in part, at redemption prices
decreasing from 105.188% during the year commencing October 1, 2004 to 100% on or after October 1, 2006, together
with accrued and unpaid interest thereon to the redemption date.
In the event of a change of control, as defined in the 10 3/8% Seven Year Notes Indenture, EBC will be
required to make an offer to repurchase all or any part of a holder’s 10 3/8% Seven Year Notes at a purchase price
equal to 101% of the aggregate principal amount thereof, together with accrued and unpaid interest thereon, to the
date of repurchase.
Under the terms of the 10 3/8% Seven Year Notes Indenture, EBC has agreed to cause its subsidiary, EDBS to
make an offer to exchange (the “EDBS Exchange Offer”) all of the outstanding 10 3/8% Seven Year Notes for a new
class of notes issued by EDBS as soon as practical following the first date (as reflected in EDBS’ most recent quarterly
or annual financial statements) on which EDBS is permitted to incur indebtedness in an amount equal to the
outstanding principal balance of the 10 3/8% Seven Year Notes under the “Indebtedness to Cash Flow Ratio” test
contained in the indentures (the “EDBS Indentures”) governing the EDBS 9 1/4% Seven Year Notes and 9 3/8% Ten
Year Notes, and such incurrence of indebtedness would not otherwise cause any breach or violation of, or result in a
default under, the terms of the EDBS Indentures. Pursuant to the terms of the EDBS indentures, the actual EDBS
Exchange offer will be effected during the first quarter of 2002.