By Stephanie N. Rotondo
Seattle, Aug. 3 – DISH Network Corp. priced $2.5 billion 10-year convertible notes at par to yield 3.375% with an initial conversion premium of 32.5% on Tuesday, according to a press release published Wednesday.
The Rule 144A notes are convertible under certain circumstances and during certain periods into class A common stock at an initial conversion rate of 15.3429 shares per each $1,000 of notes. That equates to an initial conversion price of $65.18.
Initial price talk for a yield of 3.125% to 3.625% and an initial conversion premium of 30% to 35%, according to a market source.
Deutsche Bank Securities Inc. is running the books.
Upon conversion, DISH will settle its obligations in cash, shares of class A common stock or a combination thereof.
Interest is payable semiannually. The issue is non-callable for life.
There is dividend and cash takeover protection.
Proceeds will be used for strategic transactions, which may include wireless and spectrum-related strategic transactions, and for other general corporate purposes.
The Englewood, Colo.-based company has entered into a convertible note hedge transaction with four financial institutions, including an affiliate of the initial purchaser of the notes. The convertible note hedge transaction is expected generally to reduce potential dilution to stockholders attributable to any conversion of the notes and/or offset any cash payments the company is required to make in excess of the principal amount of converted notes, as the case may be.
DISH has also entered into a warrant transaction with each option counterparty. The warrant transaction could separately have a dilutive effect to the extent that the market price per share of the common stock exceeds the strike price of the warrants, unless the warrants are settled in cash.
The warrants have an initial strike price of $86.0825 per share, a premium of approximately 75% over Aug. 2 closing share price and is subject to certain adjustments under the terms of the warrant transaction.
If the initial purchaser exercises its option to purchase additional notes, DISH expects to enter into an additional convertible note hedge transaction and an additional warrant transaction with each option counterparty.
| Issuer: | DISH Network Corp.
|
| Securities: | Convertible notes
|
| Amount: | $2.5 billion
|
| Greenshoe: | $500 million
|
| Maturity: | Aug. 15, 2026
|
| Bookrunner: | Deutsche Bank Securities Inc.
|
| Coupon: | 3.375%
|
| Price: | Par of $1,000
|
| Yield: | 3.375%
|
| Call: | Non-callable
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| Conversion premium: | 32.5%
|
| Conversion price: | $65.18 per share
|
| Conversion rate: | 15.3429 shares
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| Pricing date: | Aug. 2
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| Settlement date: | Aug. 8
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| Distribution: | Rule 144A
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| Price talk: | 3.125% to 3.625% yield, up 30% to 35%
|
| Stock symbol: | Nasdaq: DISH
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| Stock reference price: | $49.19 as of close on Aug. 2
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