Hughes’s Jupiter 3 satellite, which entered service in December 2023. Credit: EchoStar
LA PLATA, Maryland — EchoStar Corp.’s Hughes Satellite Systems said it does not have sufficient liquidity to fund its business for the next 12 months, particularly its debt maturing in August, and is considering options including Chapter 11 bankruptcy as a result.
Hughes’s principal satellite asset, the Jupiter 3/EchoStar 24 Ka-band broadband satellite in geostationary orbit, is owned not by Hughes but, since Dec. 31, 2023, by EchoStar. Hughes leases the satellite’s full capacity from EchoStar for about $190 million per year, according to a Hughes Nov. 14 filing with the US Securities and Exchange Commission (SEC).
The revenue generated by Jupiter 3 has been in decline in recent years as subscribers have migrated to terrestrial options or to SpaceX’s Starlink. Subcribers totaled 783,000 as of Sept. 30.
September’s $17-billion sale of spectrum by EchoStar to SpaceX, expected to close in 2027, includes a commercial terms that will “provide for a fee-based referral system that lets [Hughes] refer existing HughesNet customers and new Starlink customers to SpaceX.”
Hughes said it had $119 million in cash and equivalents as of Sept. 30, and $1.5 billion i debt that matures in August 2026.
The SpaceX transaction gives SpaceX the option to acquire satellites and regulatory authorizations from Hughes and EchoStar.
Hughes said this option triggered an impairment review of its international licenses that are needed to operate the EchoStar and Hughes assets that are included in the EchoStar transaction.
As a result of this review, EchoStar and Hughes “are no longer pursuing a business plan to utilize those complementary assets and as such our assets have no future use.”
The company said it cannot rely on EchoStar’s use of its future cash receipts from SpaceX to relieve Hughes’s liquidity problem.
“Because the SpaceX Transactions… are signed at our parent and/or its subsidiaries, we do not expect completion of the SpaceX Transactions to resolve our going concern qualification,” Hughes said. “In addition, our parent, EchoStar, may not provide additional liquidity in the future necessary to meet our obligations as they come due.”
Hughes said it has opened negotiations with various funding sources to raise capital or restructure its debt.
“We cannot provide assurances that we will be successful in obtaining such new financing and/or restructuring the existing debt obligations necessary for us to have sufficient liquidity.
“Because we do not currently have the necessary cash on hand and/or projected future cash flows or committed financing to fund our obligations, including our debt maturities, for at least twelve months, substantial doubt exists about our ability to continue as a going concern.
“In the event that the going concern qualification continues, we may take additional actions to protect our interest in our assets that may negatively impact the value of your investment in our securities, including, under certain circumstances, filing for relief under Chapter 11 of Title 11 of the United States Code, if we determine that such an action is in the best interests of the Company and our stakeholders,” the company said.