Refinancing May Shave EchoStar Payments

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In an effort to lower its annual interest payments and to
attain greater financial flexibility, EchoStar Communications Corp. is in the midst of
refinancing its preferred debt.

The company said last Monday that it had successfully
completed a tender offer to repurchase virtually all of the senior secured notes issued by
EchoStar DBS Corp. (at 12.5 percent), as well as the senior secured discount notes issued
by EchoStar Satellite Broadcasting Corp. (at 13 1/8 percent) and the senior exchange notes
issued by EchoStar Communications Corp. (at 12 1/8 percent).

EchoStar was expected to refinance nearly $2 billion in
debt at interest rates of around 9 percent, which could end up saving the company about
$50 million to $70 million in annual interest payments, according to one Wall Street
analyst.

Refinancing entails some hefty prepayment penalties, said
another analyst, adding that it's worth it to EchoStar to gain the lower interest
rates and to extend payments on the new debt by up to 10 years. The terms of the original
notes had limited EchoStar's ability to seek additional funding.

Sources expected EchoStar's new debt coupon to be
priced last Friday. In addition to the debt refinancing, the transaction is expected to
raise more than $150 million in cash, which EchoStar can use to help fund its business in
the wake of its purchase of American Sky Broadcasting Inc.

For example, the company is expected to compensate its
dealers for repointing subscribers' satellite dishes to accept signals from the 110
degrees west longitude orbital slot.

EchoStar's ability to restructure its financing is one
indication that Wall Street currently favors the direct-broadcast satellite company. Its
stock price has also risen steadily in recent weeks.

Last Wednesday, Standard & Poor's assigned a
single-B rating to EchoStar DBS Corp.'s $500 million senior notes due 2006, and to
its $1.4 billion senior notes due 2009. Standard & Poor's Corp. also raised its
corporate credit rating of EchoStar to "single-B" from
"single-B-minus." The ratings were removed from CreditWatch.

Last Tuesday, Moody's Investors Service Inc. assigned
"B2" ratings to the $1.9 billion in senior notes.

Both Moody's and S&P stated that EchoStar faces
challenges over the next few years, including hurdles for its local-into-local plans and
delays in seeing significant cash flow due to heavy promotional and subscriber-acquisition
expenses.

EchoStar executives could not comment last week on the
transactions or on any forward-looking statements because the company was in a quiet
period, according to a spokesman.

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