Long-Term Debt and Finance Lease Obligations

9 Months Ended

Sep. 30, 2020

Long-Term Debt and Finance Lease Obligations

Long-Term Debt and Finance Lease Obligations

8. Long-Term Debt and Finance Lease Obligations

Fair Value of our Long-Term Debt

The following table summarizes the carrying amount and fair value of our debt facilities as of September 30, 2020 and December 31, 2019:

	As of
	September 30, 2020				December 31, 2019
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
	(In thousands)
5 1/8% Senior Notes due 2020 (1)	$	—	$	—	$	1,100,000	$	1,110,208
6 3/4% Senior Notes due 2021 (2)		2,000,000		2,055,660		2,000,000		2,109,420
5 7/8% Senior Notes due 2022		2,000,000		2,090,160		2,000,000		2,129,580
5 % Senior Notes due 2023		1,500,000		1,533,990		1,500,000		1,543,770
5 7/8% Senior Notes due 2024		2,000,000		2,064,700		2,000,000		2,049,080
7 3/4% Senior Notes due 2026		2,000,000		2,202,920		2,000,000		2,128,900
7 3/8% Senior Notes due 2028		1,000,000		1,032,270		—		—
Other notes payable		23,566		23,566		25,996		25,996
Subtotal		10,523,566	$	11,003,266		10,625,996	$	11,096,954
Unamortized deferred financing costs and debt discounts, net		(13,971)				(16,250)
Finance lease obligations (3)		176,180				212,617
Total long-term debt and finance lease obligations (including current portion)	$	10,685,775			$	10,822,363

(1) On May 1, 2020, we redeemed the principal balance of our 5 1/8% Senior Notes due 2020.

(2) Our 6 3/4% Senior Notes due 2021 mature on June 1, 2021 and have been reclassified to “Current portion of long-term debt and finance lease obligations” on our Condensed Consolidated Balance Sheets as of September 30, 2020.

(3) Disclosure regarding fair value of finance leases is not required.

We estimated the fair value of our publicly traded long-term debt using market prices in less active markets (Level 2).

7 3/8% Senior Notes due 2028

On July 1, 2020, we issued $1.0 billion aggregate principal amount of our 7 3/8% Senior Notes due July 1, 2028. Interest accrues at an annual rate of 7 3/8% and is payable semi-annually in cash, in arrears on January 1 and July 1 of each year, commencing on January 1, 2021.

The 7 3/8% Senior Notes are redeemable, in whole or in part, at any time prior to July 1, 2023 at a redemption price equal to 100% of the principal amount plus a “make-whole” premium, as defined in the related indenture, together with accrued and unpaid interest.  On or after July 1, 2023, we may redeem the Notes, in whole or in part, at any time at the redemption prices specified under the related indenture, together with accrued and unpaid interest.  Prior to July 1, 2023, we may also redeem up to 35% of the 7 3/8% Senior Notes at a specified premium with the net cash proceeds from certain equity offerings or capital contributions.

Our 7 3/8% Senior Notes are:

● general unsecured senior obligations of DISH DBS;

● ranked equally in right of payment with all of DISH DBS’ and the guarantors’ existing and future unsecured senior debt; and

● ranked effectively junior to our and the guarantors’ current and future secured senior indebtedness up to the value of the collateral securing such indebtedness.

The indenture related to our 7 3/8% Senior Notes contains restrictive covenants that, among other things, impose limitations on the ability of DISH DBS and its restricted subsidiaries to:

● incur additional debt;

● pay dividends or make distributions on DISH DBS’ capital stock or repurchase DISH DBS’ capital stock;

● make certain investments;

● create liens or enter into sale and leaseback transactions;

● enter into transactions with affiliates;

● merge or consolidate with another company; and

● transfer or sell assets.

In the event of a change of control, as defined in the related indenture, we would be required to make an offer to repurchase all or any part of a holder’s 7 3/8% Senior 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.