DISH Network Places Offering of $2.5 Billion in Convertible Notes
August 03 2016 - 8:30AM
Business Wire
DISH Network Corporation (“DISH Network”) (NASDAQ: DISH) today
announced that on August 2, 2016, it priced an offering of $2.5
billion aggregate principal amount of 3.375% Convertible Notes due
2026 (the “Notes”). In connection with the offering, DISH Network
also granted the initial purchaser a 30-day option to purchase up
to an additional $500 million in aggregate principal amount of the
Notes.
The Notes will mature on August 15, 2026. Interest on the Notes
will be paid on February 15 and August 15 of each year, commencing
on February 15, 2017. The Notes will be convertible under certain
circumstances and during certain periods into DISH Network’s Class
A Common Stock at an initial conversion rate of 15.3429 shares of
DISH Network’s Class A Common Stock per $1,000 principal amount of
Notes, equivalent to an initial conversion price of approximately
$65.18 per share, which represents an approximately 32.5%
conversion premium over the last reported sale price of $49.19 per
share of DISH Network’s Class A Common Stock on The NASDAQ Global
Select Market on August 2, 2016. Upon any conversion, DISH Network
will settle its conversion obligation in cash, shares of its Class
A Common Stock or a combination of cash and shares of its Class A
Common Stock, at its election.
In connection with the pricing of the Notes, DISH Network has
entered into a convertible note hedge transaction with four
financial institutions, including an affiliate of the initial
purchaser of the Notes (each, an “option counterparty”). The
convertible note hedge transaction is expected generally to reduce
potential dilution to holders of DISH Network’s Class A Common
Stock attributable to any conversion of the Notes and/or offset any
cash payments DISH Network is required to make in excess of the
principal amount of converted Notes, as the case may be. DISH
Network 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
DISH Network’s Class A Common Stock exceeds the strike price of the
warrants, unless DISH Network elects to settle the warrants in
cash. The warrants have an initial strike price of $86.0825 per
share, which represents a premium of approximately 75% over the
last reported sale price of DISH Network’s Class A Common Stock on
the NASDAQ Global Select Market on August 2, 2016, 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 Network expects to enter into an additional
convertible note hedge transaction and an additional warrant
transaction with each option counterparty.
DISH Network has been advised by each option counterparty that,
in connection with establishing its initial hedge of the
convertible note hedge and warrant transactions, such option
counterparty or an affiliate thereof expects to enter into various
derivative transactions with respect to DISH Network’s Class A
Common Stock concurrently with or shortly after the pricing of the
Notes. This activity could increase (or reduce the size of any
decrease in) the market price of DISH Network’s Class A Common
Stock or the Notes at that time. In addition, each option
counterparty or an affiliate thereof may modify its hedge position
by entering into or unwinding various derivatives with respect to
DISH Network’s Class A Common Stock and/or purchasing or selling
DISH Network’s Class A Common Stock or other securities of DISH
Network in secondary market transactions following the pricing of
the Notes and prior to the maturity of the Notes (and is likely to
do so during any observation period related to a conversion of
Notes). This activity could also cause or avoid an increase or a
decrease in the market price of DISH Network’s Class A Common Stock
or the Notes, which could affect the ability of Note holders to
convert the Notes and, to the extent the activity occurs during any
observation period related to a conversion of Notes, it could
affect the number of shares and value of the consideration that
Note holders will receive upon conversion of the Notes.
The net proceeds of the offering (after payment of the net cost
of the contemporaneous convertible note hedge transactions and the
warrant transactions) are intended to be used for strategic
transactions, which may include wireless and spectrum-related
strategic transactions, and for other general corporate
purposes.
The offering is expected to close on August 8, 2016, subject to
customary conditions.
The Notes will only be offered and sold to qualified
institutional buyers in accordance with Rule 144A under the
Securities Act of 1933, as amended (the “Securities Act”). The
Notes and shares of DISH Network’s Class A Common Stock issuable
upon the conversion of the Notes, if any, have not been and will
not be registered under the Securities Act or the securities laws
of any other jurisdiction. The Notes may not be offered or sold in
the United States absent registration or an applicable exemption
from registration requirements. This press release does not
constitute an offer to sell or a solicitation of an offer to buy
any of the Notes; nor shall there be any sale of these Notes in any
state or jurisdiction in which such an offer, solicitation or sale
would be unlawful.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
Except for historical information contained herein, the matters
set forth in this press release are forward-looking statements. The
forward-looking statements set forth above involve a number of
risks and uncertainties that could cause actual results to differ
materially from any such statement, including the risks and
uncertainties discussed in DISH Network’s Disclosure Regarding
Forward-Looking Statements included in its recent filings with the
Securities and Exchange Commission, including its annual report on
Form 10-K and quarterly reports on Form 10-Q. The forward-looking
statements speak only as of the date made, and DISH Network
expressly disclaims any obligation to update these forward-looking
statements.
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version on businesswire.com: http://www.businesswire.com/news/home/20160803005535/en/
DISH Network CorporationBob Toevs, 720-514-5351news@dish.com
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