US DTH provider Dish Network has sold US$1.5bn worth of ten-year senior unsecured notes as it considers next steps for its terrestrial spectrum.
Issued via its subsidiary, DISH DBS Corporation, the notes carry a 5% coupon and priced at par. They mature…
US DTH provider Dish Network has sold US$1.5bn worth of ten-year senior unsecured notes as it considers next steps for its terrestrial spectrum.
Issued via its subsidiary, DISH DBS Corporation, the notes carry a 5% coupon and priced at par. They mature in March 2023.
As with Dish DBS’ existing senior unsecured notes, the new debt will be guaranteed by Dish’s subsidiaries and not the parent company.
Dish stated that net proceeds from the financing will be used for general corporate purposes, including “spectrum-related strategic transactions”.
According to ratings agency Moody’s, which assigned the new notes a Ba2 rating, a portion of the proceeds could be used to fund debt maturities over the coming years.
Moody’s stated in a ratings note: “The company has about US$1.5bn of debt maturing over the next two years and, in the absence of a revolving credit facility, Moody’s believes this is a prudent measure.”
However, given the company’s reference to spectrum related transactions and the fact that the FCC recently gave it permission to use its satellite spectrum for terrestrial purposes, it is likely that Dish will seek to utilise some of the cash to fund its as yet undefined wireless broadband strategy.
Neil Begley, a Moody’s senior vice president, argued: “In the past, we had concerns that the company might consider a solo build out strategy. However, we now anticipate that the company will not build out a network alone and instead, we believe that a partnership is highly likely which would reduce the overall funding need and hasten the time to launch a competitive product.”
The satellite broadcaster has other costs it will need to take into account, including the US$700m settlement with US-based HD TV network Voom and its planned US$1 per share dividend that will total around US$450m.
Dish is a perennial visitor to the US bond markets, last tapping the buoyant investor demand in July when Dish DBS raised US$1bn in 10-year 5.875% senior notes. These notes were an add-on to a previous bond offering that took place in May 2012.
Deutsche Bank is understood to have arranged that transaction and is thought to be lead manager on this latest deal.
On completion of the offering, Dish’s leverage ratio will rise from approximately 3.9x gross debt-to-EBITDA to nearer 4.1x.
