Telecom collects consents for nearly all New Zealand dollar bonds

By Jennifer Chiou

New York, Sept. 30 - Telecom Corp. of New Zealand Ltd.'s TCNZ Finance Ltd. announced that it received consents from holders of 99.999% of its NZ$541 million of bonds.

Earlier in the month, the company augmented the consent fee it was offering to holders of the New Zealand dollar bonds to 0.5% from 0.25% of the scheduled redemption amount.

The company launched on Aug. 31 a separate solicitation of consents to waive any event of default that may occur as a result of the demerger into Telecom, a telecommunications and IT services company, and Chorus Ltd., a fixed-line access network infrastructure company.

Now that the company's extraordinary resolution has been passed at the Friday meeting, Telecom said it will formally request that trustee New Zealand Guardian Trust Co. Ltd. approve the terms of the demerger.

In addition, if Telecom's credit rating from Standard & Poor's falls to BBB+ and its credit rating from Moody's falls to Baa1, the company proposed that the interest rate for the bonds be increased by 0.5% per year at the date of the demerger.

According to a previous 6-K filing with the Securities and Exchange Commission, Telecom is proposing a further interest increase of 0.5% per year if its credit rating from S&P falls to BBB or lower and its credit rating from Moody's falls to Baa2 or lower.

Because the extraordinary resolution was passed, any holders who previously voted in favor of the extraordinary resolution will automatically receive the higher consent fee of 0.5% if the proposed demerger of Telecom occurs.

Assuming the closing of the demerger, holders may require Telecom to repurchase the securities at 101, according to the bond indenture.

The company had concurrent solicitations for other series of its notes. As previously reported, it has already received tender instructions from holders of more than 75% of its CHF 200 million of 4.375% notes due 2012 voting in favor of the proposed extraordinary resolution.

Also, the company said on Sept. 14 that it received consents from holders of more than 75% of each of its £125 million of 5.625% notes due 2018 and £150 million of 5.75% notes due 2020.

The solicitation for the New Zealand dollar bonds began on Sept. 13.

Questions may be directed to Mark Laing at 64 27 227 5890.

The telecommunications company is based in Auckland, New Zealand.

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