05:14 PM ET 12/29/98
S&P may raise EchoStar Communications
(Press release provided by Standard & Poor's)
NEW YORK, Dec 29 - Standard & Poor's today placed its
ratings of EchoStar Communications Corp. and subsidiaries on
CreditWatch with positive implications (see list below).
About $1.5 billion of rated debt is affected.
The CreditWatch placements reflect the credit impact of two
recently announced potential transactions.
In the first transaction, EchoStar plans to issue new
stock to News Corp. and MCI/Worldcom, giving them 30% and 7%
economic ownership of EchoStar, respectively.
In return, EchoStar gains strategic satellite properties,
which should more effectively position it against direct
broadcast satellite (DBS) leader DirecTV.
Additionally, this transaction ends the legal battle
between EchoStar and News Corp. and suggests migration of the
DBS industry towards a duopoly structure, which Standard &
Poor's views as a significant favorable development for
EchoStar's business prospects.
The second transaction is the tender offer that EchoStar
commenced on Dec. 23 to purchase all outstanding debt of three
of its subsidiaries.
If successful, the refinancing of much or all of this high
coupon debt would substantially reduce EchoStar's interest
costs and have a clear positive impact on the company's
overall credit profile.
In conjunction with the tender offers, EchoStar is
soliciting consents to amend the indentures of the subsidiary
debt issues, which would effectively remove certain protective
covenants.
Even if these covenants are removed, the ratings on the
subsidiary debt issues would still benefit from EchoStar's more
creditworthy profile.
Standard & Poor's expects to resolve the CreditWatch
listings in the near term.
RATINGS PLACED ON CREDITWATCH WITH POSITIVE IMPLICATIONS
EchoStar Communications Corp.
Corporate credit rating B-
EchoStar Satellite Broadcasting Corp.
Corporate credit rating B-
Senior secured debt CCC+
Dish Ltd.
Corporate credit rating B-
Senior secured debt B-
Echostar DBS Corp.
Corporate credit rating B-
Senior secured debt B-
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