DISH Network (DISH) - Get DISH Network Corporation Class A Report fell Wednesday after the satellite-TV company said it plans to offer $2 billion of convertible notes to help build out its 5G network.
Shares of the Englewood, Colo.-based company finished off 11.7% at $31.51.
DISH said in a statement that it is granting the initial purchaser an option to buy up to an additional $300M aggregate principal amount to cover any over-allotments.
The notes will be unsecured obligations and Dish will settle any conversion obligation with cash, stock or a combination thereof.
Moody's assigned a B1 rating to the offering, saying in a statement that the rating is supported by the substantial asset value derived from DISH's "vast spectrum holdings, although they have yet to be deployed and monetized."
Moody's said that DISH's subsidiary, Dish DBS has a B2 rating, one notch lower than DISH's.
Moody's said this rating "reflects our concern that competition from cable and telecommunication companies, who offer multiple products (video, voice, and data in particular), and pressure from changing television consumption habits towards SVOD (subscription video on demand) services like Netflix (NFLX) - Get Netflix, Inc. Report and other emerging OTT (over-the-top media) platforms, will result in increasing cord cutting of traditional linear pay TV."
DISH co-founder and chairman Charles Ergen "has until recent years, maintained a moderately leveraged balance sheet, but has demonstrated the willingness to be highly acquisitive, particularly when distressed assets are up for sale," Moody's said.
Earlier this month, the U.S. Department of Justice said DISH Network would pay $210 million as part of a settlement over telemarketing call violations.
The court settlement was the largest civil penalty ever paid to resolve telemarketing violations, according to the department.