US DTH giant Dish Network has raised US$2.6bn from its second multi-billion dollar bond in six weeks to help fund plans to buy Sprint.
The company said proceeds will go into an escrow account, and the notes will be fully redeemed if its proposed $25.5bn…
US DTH giant Dish Network has raised US$2.6bn from its second multi-billion dollar bond in six weeks to help fund plans to buy Sprint.
The company said proceeds will go into an escrow account, and the notes will be fully redeemed if its proposed $25.5bn deal for the third largest mobile operator in the US falls through.
It priced US$1.25bn of 5% senior notes due 2017, and US$1.35bn of 6.25% senior notes due 2023. Both tranches priced at par, and the total transaction size was increased by US$100m from original plans to raise US$2.5bn. Dish expects to close the offering on 28 May.
The news comes shortly after unconfirmed reports claimed Sprint’s rival suitor, Japanese telco Softbank, had warned banks that helping Dish could see them miss out on the forthcoming IPO of Chinese e-commerce giant Alibaba, in which Softbank owns one third.
In early April, before Dish made its surprise offer to take over Sprint, the group priced US$2.3bn in notes for purposes including “wireless and spectrum-related strategic transactions.” That bond came on top of previous debt issuances to give Dish nearly US$10bn of cash in total.
Deutsche Bank was the initial purchaser of Dish’s previous bond.
However, funding concerns have reportedly led Sprint’s board to resist giving Dish access to its books, prompting the satellite operator to bring in Jefferies to help Barclays arrange financing for the bid. In addition to these, Macquarie and Royal Bank of Canada are thought to be managing the latest offering. Dish had previously said publicly that it had been assured by Barclays that it could raise the necessary funds.
In connection with the marketing of the new notes, Dish stated in an SEC filing on 14 May: “Dish Network has had multiple meetings and communications with the advisors to the special committee of the board of directors of Sprint, as well as with senior members of Sprint’s management team. Dish Network has provided information and documentation in response to all of their questions and is unaware of any items that remain outstanding.”
According to analysts at New Street Research, Dish’s new bond would leave US$6.6bn in additional incremental funding required to finance its Sprint bid.
The analyst firm said: “It remains to be seen whether this will be sufficient for the special committee to allow Dish to commence due diligence, or if they will want to see committed financing for the full amount.
“We believe time is of the essence – Dish needs to get started with due diligence promptly if they are serious about a bid.”
Softbank has so far refused to budge from its bid to control Sprint, claiming the US$20.1bn offer it launched back in October is superior, and would come with significantly less leverage.
Sprint shareholders are set to vote on Softbank’s offer at an EGM on 12 June.
Softbank is being financially advised by The Raine Group, Mizuho and Deutsche Bank.
Sprint’s co-lead financial advisers are Citigroup, Rothschild and UBS.
