Verizon begins five-day exchange, tender offers for 18 note series

By Susanna Moon

Chicago, Jan. 25 – Verizon Communications Inc. said it began two related offers to repurchase 18 series of its outstanding notes, one set consisting of any-and-all exchange offers and the other cash tender offers.

The first component consists of 18 separate private offers to exchange the notes for a combination of newly issued Verizon notes and, for some of the note series, cash, according to a company announcement.

The second part comprises 18 separate cash tender offers organized in three groups. Under the maximum total payment condition, Verizon will pay up to $400 million for the group 1 offers, up to $240 million for the 5.15% notes due 2023 and up to $125 million for the group 3 offers.

The offers will remain open until 5 p.m. ET on Jan. 31, and tendered notes may be withdrawn at any time before the offer ends.

Settlement has been set for Feb. 3.

2022 notes exchange

In the exchange, Verizon is offering to issue new notes due 2022 with pricing per $1,000 principal amount for the following notes:

• $737,058,000 5.5% notes due 2018 with pricing to be set using the 1% Treasury note due Feb. 15, 2018 plus 30 basis points for a hypothetical purchase price of $1,044.15;

• $752,516,000 6.1% notes due 2018 with pricing based on the 0.75% Treasury note due April 15, 2018 plus 40 bps for a hypothetical purchase price of $1,056.25;

• $2,698,070,000 3.65% notes due 2018 with pricing based on the 1% Treasury note due Sept. 15, 2018 plus 35 bps for a hypothetical purchase price of $1,034.78;

• $500 million 2.55% notes due 2019 with pricing based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps for a hypothetical purchase price of $1,022.09;

• $1 billion 1.375% notes due 2019 with pricing based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps for a hypothetical purchase price of $994.51; and

• $3,304,145,000 2.625% notes due 2020 with pricing based on the 1.375% Treasury note due Jan. 15, 2020 plus 40 bps for a hypothetical purchase price of $1,021.80.

2039 notes exchange

In exchange for the following issues, the company is offering new notes due 2039 with pricing per $1,000 principal amount:

• $8,516,519,000 5.15% notes due 2023 with pricing based on the 2% Treasury note due Dec. 31, 2021 plus 125 bps for a hypothetical purchase price of $1,116.68;

• $930,260,000 7.75% notes due 2030 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 95 bps for a hypothetical purchase price of $1,392.51 and $240.00 in cash for a total hypothetical purchase price of $1,152,51;

• $217,822,000 7.75% notes due 2032 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps for a hypothetical purchase price of $1,375.19; and

• $1,729,489,000 6.4% notes due 2033 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps for a hypothetical purchase price of $1,237.84 and $160.00 in cash for a total hypothetical purchase price of $1,077.84.

2049 notes exchange

In exchange for the following notes, the issuer is offering new notes due 2049 with pricing per $1,000 principal amount:

• $1,250,414,000 5.85% notes due 2035 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 145 bps for a hypothetical purchase price of $1,166.01;

• $636,164,000 6.25% notes due 2037 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 160 bps for a hypothetical purchase price of $1,204.71;

• $750,121,000 6.4% notes due 2038 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps for a hypothetical purchase price of $1,222.34;

• $384,147,000 6.9% notes due 2038 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps for a hypothetical purchase price of $1,289.82;

• $290,083,000 8.95% notes due 2039 with pricing based on 2.25% Treasury note due Aug. 15, 2046 plus 170 bps for a hypothetical purchase price of $1,566.55;

• $412,283,000 7.35% notes due 2039 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 170 bps for a hypothetical purchase price of $1,350.33;

• $1 billion 6% notes due 2041 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a hypothetical purchase price of $1,167.12 and $220.00 in cash for a total hypothetical purchase price of $947.12; and

• $4,245,055,000 6.55% notes due 2043 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a hypothetical purchase price of $1,257.65 and $190.00 in cash for a total hypothetical purchase price of $1,067.65.

The hypothetical total exchange price was set at 2 p.m. ET on Jan. 24 using the fixed spread plus the yield of the reference U.S. Treasury security.

More exchange terms

Holders who tender their notes for exchange before 5 p.m. ET will receive the total exchange price for each $1,000 principal amount.

Pricing will be set at 11 a.m. ET on Jan. 31 using the reference yield based on the bid-side price of the reference U.S. Treasury security.

The new notes due 2022 will mature on March 15, 2022, with interest equal to the sum of the yield of the 2% U.S. Treasury security due Dec. 31, 2021 plus 105 bps.

The new notes due 2039 will mature on March 15, 2039, with interest equal to the sum of the yield of the 2.25% U.S. Treasury security due Aug. 15, 2046 plus 175 bps.

The new notes due 2049 will mature on April 15, 2049, with interest equal to the sum of the yield of the 2.25% U.S. Treasury security due 2046 plus 195 bps.

The minimum issue condition requires that at least $1 billion of new notes be issued for each of the three new series of notes.

The exchange offers are being made to qualified institutional buyers under Rule 144A or to non-U.S. persons under Rule 902.

Global Bondholder Services Corp. (866 470-3800, 212 430-3774 or http://gbsc-usa.com/eligibility/verizon-xo) is the information agent and the tender agent.

Cash tender offers

In the cash tenders, the group 1 offers consist of the following series of notes, with pricing per $1,000 principal amount:

• $737,058,000 5.5% notes due 2018 with pricing based on the 1% Treasury note due Feb. 15, 2018 plus 30 bps for a hypothetical purchase price of $1,044.15;

• $752,516,000 6.1% notes due 2018 with pricing based on the 0.75% Treasury note due April 15, 2018 plus 40 bps for a hypothetical purchase price of $1,056.25;

• $2,698,070,000 3.65% notes due 2018 with pricing based on the 1% Treasury note due Sept. 15, 2018 plus 35 bps for a hypothetical purchase price of $1,034.78;

• $500 million 2.55% notes due 2019 with pricing based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps for a hypothetical purchase price of $1,022.09;

• $1 billion 1.375% notes due 2019 with pricing based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps for a hypothetical purchase price of $994.51; and

• $3,304,145,000 2.625% notes due 2020 with pricing based on the 1.375% Treasury note due Jan. 15, 2020 plus 40 bps for a hypothetical purchase price of $1,021.80.

Group 2 cash offers

The group 2 notes are as follows, with pricing per $1,000 principal amount:

• $8,516,519,000 5.15% notes due 2023 with pricing based on the 2% Treasury note due Dec. 31, 2021 plus 125 bps for a hypothetical purchase price of $1,116.68;

• $930.26 million 7.75% notes due 2030 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 95 bps for a hypothetical purchase price of $1,392.51;

• $217,822,000 7.75% notes due 2032 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps for a hypothetical purchase price of $1,375.19;

• $1,729,489,000 6.4% notes due 2033 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps for a hypothetical purchase price of $1,237.84.

Group 3 Cash Offers

The group 3 notes are as follows, with pricing per $1,000 principal amount:

• $1,250,414,000 5.85% notes due 2035 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 145 bps for a hypothetical purchase price of $1,166.01;

• $636,164,000 6.25% notes due 2037 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 160 bps for a hypothetical purchase price of $1,204.71;

• $750,121,000 6.4% notes due 2038 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps for a hypothetical purchase price of $1.222.34;

• $384,147,000 6.9% notes due 2038 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps for a hypothetical purchase price of $1,289.82;

• $290,083,000 8.95% notes due 2039 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 170 bps for a hypothetical purchase price of $1,566.55;

• $412,283,000 7.35% notes due 2039 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 170 bps for a hypothetical purchase price of $1,350.33;

• $1 billion 6% notes due 2041 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a hypothetical purchase price of $1,167.12; and

• $4,245,055,000 6.55% notes due 2043 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a hypothetical purchase price of $1,257.65.

More tender details

The hypothetical total price was based on the fixed spread to the yield of the reference U.S. Treasury security at 2 p.m. ET on Jan. 24.

Pricing will be set at 11 a.m. ET on Jan. 31.

Global Bondholder Services Corp. (866 470-3800, 212 430-3774 or gbsc-usa.com/verizon-tender/) is the information agent and the tender agent.

Verizon is a New York City-based telecommunications company.

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