Dish Network 2014 Annual Report Download - page 52

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AWS-3 Auction
The AWS-3 Auction commenced on November 13, 2014 and concluded on January 29, 2015. The FCC’s
prohibition on certain communications related to the AWS-3 Auction expired on February 13, 2015. Also, on
February 13, 2015, Northstar Wireless and SNR Wireless each filed applications with the FCC to acquire certain
AWS-3 Licenses for which it was named as winning bidder and had made the required down payments. Each of
Northstar Wireless and SNR Wireless has applied as a Designated Entity that is entitled to receive a bidding credit
of 25% in the AWS-3 Auction, as defined by FCC regulations.
Northstar Wireless was the winning bidder for the Northstar Licenses with gross winning bids totaling
approximately $7.845 billion, which after taking into account a 25% bidding credit, equals net winning bids totaling
approximately $5.884 billion. Northstar Wireless is a wholly-owned subsidiary of Northstar Spectrum. Through
our wholly-owned subsidiary, American II, we own an 85% non-controlling interest in Northstar Spectrum.
Northstar Manager owns a 15% controlling interest in, and is the sole manager of, Northstar Spectrum. Northstar
Spectrum is governed by the Northstar Spectrum LLC Agreement by and between American II and Northstar
Manager. Pursuant to the Northstar Spectrum LLC Agreement, American II and Northstar Manager agreed to make
pro-rata equity contributions in Northstar Spectrum equal to approximately 15% of the net purchase price of the
Northstar Licenses. American II also entered into the Northstar Credit Agreement by and among American II, as
Lender, Northstar Wireless, as Borrower, and Northstar Spectrum, as Guarantor. Pursuant to the Northstar Credit
Agreement, American II agreed to make loans to Northstar Wireless for approximately 85% of the net purchase
price of the Northstar Licenses. American II made equity contributions to Northstar Spectrum of approximately
$633 million and a loan to Northstar Wireless of approximately $432 million for Northstar Wireless to make the
upfront payment for the AWS-3 Auction and the down payment required for the Northstar Licenses. American II is
also required to make an equity contribution to Northstar Spectrum of approximately $117 million and a loan to
Northstar Wireless of approximately $4.569 billion for Northstar Wireless to make the final payment required for
the Northstar Licenses, which is due to the FCC by March 2, 2015. Consequently, as of March 2, 2015, the total
equity contributions from American II to Northstar Spectrum will be approximately $750 million and the total loans
from American II to Northstar Wireless will be approximately $5.001 billion.
SNR Wireless was the winning bidder for the SNR Licenses with gross winning bids totaling approximately $5.482
billion, which after taking into account a 25% bidding credit, equals net winning bids totaling approximately $4.112
billion. In addition to the net winning bids, SNR Wireless is obligated to make a bid withdrawal payment of
approximately $8 million to the FCC. SNR Wireless is a wholly-owned subsidiary of SNR Holdco. Through our
wholly-owned subsidiary, American III, we own an 85% non-controlling interest in SNR Holdco. SNR
Management owns a 15% controlling interest in, and is the sole manager of, SNR Holdco. SNR Holdco is governed
by the SNR Holdco LLC Agreement by and between American III and SNR Management. Pursuant to the SNR
Holdco LLC Agreement, American III and SNR Management agreed to make pro-rata equity contributions in SNR
Holdco equal to approximately 15% of the net purchase price of the SNR Licenses. American III also entered into
the SNR Credit Agreement by and among American III, as Lender, SNR Wireless, as Borrower, and SNR Holdco,
as Guarantor. Pursuant to the SNR Credit Agreement, American III agreed to make loans to SNR Wireless for the
amount of the bid withdrawal payment and approximately 85% of the net purchase price of the SNR Licenses.
American III made equity contributions to SNR Holdco of approximately $408 million and a loan to SNR Wireless
of approximately $350 million for SNR Wireless to make the upfront payment for the AWS-3 Auction and the down
payment required for the SNR Licenses. American III is also required to make an equity contribution to SNR
Holdco of approximately $116 million and a loan to SNR Wireless of approximately $3.153 billion for SNR
Wireless to make the final payment required for the SNR Licenses, which is due to the FCC by March 2, 2015.
Consequently, as of March 2, 2015, the total equity contributions from American III to SNR Holdco will be
approximately $524 million and the total loans from American III to SNR Wireless will be approximately $3.503
billion.
After Northstar Wireless and SNR Wireless have made the final payments to the FCC for the Northstar Licenses and
the SNR Licenses, respectively, our total non-controlling equity and debt investments in the Northstar Entities and
the SNR Entities will be approximately $9.778 billion. We have funded and will fund these investments from
existing cash and marketable investment securities. Such funding has included and will include $899 million in total
equity and debt investments in the Northstar Entities and SNR Entities during the fourth quarter 2014, cash and
marketable investment securities as of December 31, 2014, cash generated from operations during 2015, and a $400