Hedge funds including Silver Point Capital, Redwood Capital Management, and Monarch Alternative Capital, are in line for potentially significant gains following EchoStar Corp’s $17bn sale of wireless spectrum to Elon Musk’s SpaceX, according to a report by Bloomberg.
The transactions mark a major payoff for funds that had spent over a year battling with billionaire Charlie Ergen over corporate debt and asset transfers.
The spectrum sale, which follows AT&T’s $23bn acquisition of other EchoStar rights, allows the company to repay nearly $8bn of notes and redeem or exchange $2bn of convertible securities. Hedge funds that had built positions across EchoStar’s capital structure – including equity, convertibles, and bonds – benefited from the resulting surge in share prices, which jumped roughly 70% on Monday.
Silver Point, Redwood, and Monarch had each doubled or tripled down on bets related to EchoStar and Dish Network, leveraging their holdings to profit from the resolution of a long-running dispute involving FCC oversight, bankruptcy threats, and shareholder litigation. Other key investors, including Apollo Global Management and Fidelity, also saw gains through convertible amendments that enabled the spectrum sales.
While the windfall boosts hedge fund returns, some creditors, particularly holders of Hughes and Dish DBS debt, remain cautious, with ongoing litigation potentially shaping future payouts.
