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As per media reports, DISH Network Corp. (DISH - Analyst Report) has added Scotiabank to a list of four other banks with whom the second-largest satellite TV operator in the U.S is negotiating to finance the proposed $25.5 billion bid for Sprint-Nextel Corp. (S - Analyst Report).

This is the fifth bank which has been added for the deal by DISH. Englewood-based DISH is already in talks with Barclays, Macquarie Group, Jefferies and Royal Bank of Canada to help it raise $9 billion in debt to fund the acquisition. However, DISH has not disclosed any details yet.

DISH’s subsidiary, DISH DBS Corporation plans to offer senior notes worth $2.6 billion to finance a portion of the cash consideration for its proposed Sprint acquisition. This is the second debt sale by DISH in the last six weeks after it raised $2.3 billion from the market in Apr 2013.

In Oct 2012, Japan’s SoftBank Corp. proposed to buy 70% of Sprint’s stakes for a total consideration of $20.1 billion. Nevertheless, DISH Network outbid SoftBank’s proposal by making a counter offer to completely acquire Sprint for $25.5 billion. DISH has offered $7 for each Sprint share, which includes $4.76 in cash and 0.05953 shares in DISH.

The Sprint acquisition, should it go through, is expected to generate positive synergies for both the companies in terms of countering stiff competition from market leaders like AT&T Inc. (T - Analyst Report) and Verizon Communication Inc. (VZ - Analyst Report), which dominate nearly 35% of the U.S. market.

Recently, SoftBank loosened its proposed terms with Sprint, providing the latter a scope to consider DISH’s bid. However, DISH has to overcome a lot of regulatory hurdles and challenges from SoftBank before completing the acquisition.

We believe DISH has managed to put up a decent financing effort after SoftBank attempted to restrict major Wall Street banks from financing DISH’s bid. Nevertheless, DISH exited the first quarter of 2013 with $11.3 billion in long-term debt and $7.1 billion in cash. Additionally, the complete acquisition of Sprint by DISH will increase its leverage position to an enormous $28 billion. So, further debt issue will only increase the financial risk for the company in terms of higher interest payments and increased leverage.

Currently, DISH carries a Zacks Rank #4 (Sell).

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