AT&T extends early deadline, pricing in exchange offer for 46 series

By Wendy Van Sickle

Columbus, Ohio, Nov. 13 – AT&T Inc. announced some changes to two private exchange offers for 46 series of notes, including modifying the applicable spread for new notes and extending the early participation date and pricing time, according to a company news release on Monday.

The company said the changes are in response to recent changes in Treasury pricing.

The early participation date has been pushed to 5 p.m. ET on Nov. 15 from 5 p.m. ET on Nov. 13.

The pricing time has been extended to 11 a.m. ET on Nov. 16 from 11 a.m. ET on Nov. 14.

The applicable spread over the benchmark security for new 2028 notes being offered under pool 1 of the company’s maturity extension exchange offers is now 175 basis points. The spread for new 2030 notes being offered under pool 2 of the maturity extension offers is now 195 bps.

The spread for new 2046 notes being offered under an OpCo offer and an AT&T offer is now 240 bps.

As previously reported, in the maturity extension exchange offer, under pool 1 the company is offering the new series of senior notes due 2028 in exchange for 11 series of outstanding notes. AT&T will accept an amount of notes that results in the issuance of no more than $4 billion of new 2028 notes.

In pool 2 of the maturity extension exchange offer, the company is offering the new series of senior notes due 2030, in exchange for seven series of outstanding notes. AT&T will accept an amount of notes that results in the issuance of no more than $4 billion of new 2030 notes.

In a second series of offers, the OpCo and AT&T offers, AT&T is offering to exchange 21 series of notes issued by its wholly owned subsidiaries for new notes of the same tenor and interest amount and cash for a new series of notes due 2046 issued by AT&T. Additionally, seven series of notes issued by AT&T are also eligible to be exchanged for the new 2046 notes.

The exchange offers will expire at 11:59 p.m. ET on Nov. 28.

Pool 1 offer

The following notes, listed in acceptance priority level, are eligible for the pool 1 offer:

• AT&T’s $1,430,300,000 of 5% global notes due 2021;

• DirecTV Holdings LLC/DirecTV Financing Co., Inc.’s $69.5 million of 5% senior notes due 2021;

• AT&T’s $928.1 million of 4.6% global notes due 2021;

• DirecTV’s $71.9 million of 4.6% senior notes due 2021;

• AT&T’s $1.25 billion of 4.45% global notes due 2021;

• AT&T’s $1.5 billion of 3.875% global notes due 2021;

• AT&T’s $1,154,200,000 of 5.2% global notes due 2020;

• DirecTV’s $145.7 million of 5.2% senior notes due 2020;

• AT&T’s $2 billion of 2.8% global notes due 2021;

• AT&T’s $3 billion of 2.45% global notes due 2020; and

• AT&T’s $750 million of floating-rate global notes due 2020.

The total consideration for the floating-rate notes due 2020 is $1,020 per $1,000 of notes, including an early participation payment of $50 of new notes.

Pricing for the 5.2% notes and the 4.25% notes will be determined by reference to the 1.625% Treasury due Oct. 15, 2020 (the “three-year Treasury”) plus 15 basis points for the 5.2% notes and 10 bps for the 2.45% notes.

Pricing for the remaining notes will determined by reference to the 2% Treasury due Oct. 31, 2022 (the “five-year Treasury”) plus a spread of 15 bps for the 5% notes, 10 bps for the 4.6% and 2.8% notes, 20 bps for the 4.5% notes and 25 bps for the 3.875% notes.

Pool 2 offer

The following notes, listed in acceptance priority level, are eligible for the pool 2 offer:

• AT&T’s $1,029,000,000 of 0% global notes due 2022;

• AT&T’s $1,414,800,000 of 3.8% global notes due 2022;

• DirecTV’s $85 million of 3.8% senior notes due 2022;

• AT&T’s $2.6 billion of 3.6% global notes due 2023;

• AT&T’s $1.85 billion of 3% global notes due February 2022;

• AT&T’s $2.75 billion of 3% global notes due June 2022; and

• AT&T’s $1.5 billion of 2.625% global notes due 2022.

Pricing for all series of pool 2 notes will be determined by reference to five-year Treasury plus a spread of 80 bps for the 0% notes, 40 bps for the 3.8% notes, 70 bps for the 3.6% notes, 35 bps for the 3% notes due February 2022 and 45 bps for the 3% notes due June 2022 and the 2.625% notes.

In each of the pool 1 and pool 2 offers, an early participation payment of $50 of new notes will be paid per $1,000 of notes tendered by the early participation date.

Each of the pool 1 and pool 2 offers is subject to a condition that $500 million of new notes would have to be issued under the respective offer.

OpCo notes

The following notes are eligible for the OpCo offer:

• BellSouth, LLC’s $262 million of 7.12% debentures due July 15, 2097;

• BellSouth Telecommunications, LLC’s $105 million of 6.65% zero-to-full debentures due Dec. 15, 2095;

• BellSouth Telecommunications’ $142 million of 7% debentures due Dec. 1, 2095;

• BellSouth Telecommunications’ $87 million of 5.85% debentures due Nov. 15, 2045;

• Ameritech Capital Funding Corp.’s $12 million of 5.95% debentures due Jan. 15, 2038;

• BellSouth, LLC’s $316 million of 6% debentures due 2034;

• BellSouth LLC’s $343 million of 6.55% notes due 2034;

• AT&T Mobility LLC’s $510 million of 7.125% senior notes due 2031;

• AT&T Corp.’s $521 million of 8.25% senior notes due Nov. 15, 2031;

• BellSouth LLC’s $325 million of 6.875% notes due 2031;

• New Cingular Wireless Services, Inc.’s $822 million of 8.75% senior notes due 2031;

• BellSouth LLC’s $360 million of 7.875% debentures due 2030;

• AT&T Corp.’s $138 million of 6.5% notes due 2029;

• BellSouth Telecommunications’ $334 million of 6.375% debentures due June 1, 2028;

• Ameritech Capital Funding’s $258 million of 6.55% debentures due Jan. 15, 2028;

• Ameritech Capital Funding’s $67 million of 6.875% debentures due 2027;

• BellSouth LLC’s $4 million of 6.04% debentures due Nov. 15, 2026;

• Indiana Bell Telephone Co., Inc.’s $83 million of 7.3% debentures due Aug. 15, 2026;

• Pacific Bell Telephone Co.’s $625 million of 7.125% debentures due March 15, 2026;

• BellSouth Telecommunications’ $168 million of 7% debentures due Oct. 1, 2025; and

• Michigan Bell Telephone Co.’s $200 million of 7.85% debentures due Jan. 15, 2022.

These series of notes are eligible to be exchanged for notes issued by AT&T with a like coupon and tenor as the existing series for a total consideration of $1,000 of new notes and $1.00 in cash per $1,000 of exchanged notes. In each case the total consideration includes $50 of new notes for each $1,000 principal amount of notes tendered for exchange by the early date.

These notes are also eligible to be exchanged for notes due 2046 issued by AT&T.

Pricing will be determined by reference to the 30-year 3% U.S. Treasury note due May 15, 2047 (the “30-year Treasury”) plus a spread of 90 bps for the 7.12% BellSouth debentures, the 6.65% BellSouth Telecommunications zero-to-full debentures and the BellSouth Telecommunications’ 7% debentures.

The spread atop the 30-year Treasury will be 230 bps for the 5.85% BellSouth Telecommunications debentures, 205 bps for the Ameritech Capital 5.95% debentures and 195 bps for the 6% and 6.55% BellSouth debentures.

Pricing for the Michigan Bell 7.85% debentures will be based on the five-year 2% U.S. Treasury note due Oct. 31, 2022 plus 100 bps.

Pricing for all of the other series will be based on the 10-year 2.25% U.S. Treasury note due Aug. 15, 2027 plus 100 bps.

The spread will be 180 bps for the 7.125% AT&T Mobility notes, the 8.25% and 6.5% AT&T Corp. notes, the 6.375% Bell South Telecom debentures and the 6.55% and 6.875% Ameritech Capital debentures.

The spread will be 200 bps for the 6.875% BellSouth notes.

It will be 185 bps for the New Cingular 9.75% notes, 195 bps for the BellSouth 7.875% debentures, 175 bps for the BellSouth 6.04% debentures, 170 bps for the Indiana Bell 7.3% debentures, 135 bps for the Pacific Bell 7.125% debentures and 140 bps for the BellSouth Telecommunications 7% debentures.

AT&T offer

The following notes issued by AT&T are eligible to be exchanged for 2046 notes:

• $771 million of 6.55% global notes due 2039;

• $261 million of 6.4% global notes due 2038;

• $1,065,000,000 of 6.3% global notes due 2038;

• $658 million of 6.5% global notes due 2037;

• $150 million of 6.8% notes due 2036;

• $420 million of 6.15% global notes due 2034; and

• $313 million of 6.45% global notes due 2034.

These notes may be exchanged for notes due 2046 issued by AT&T with pricing in each case to be based on the 30-year Treasury plus a spread. The spread is 195 bps for the 6.55%, 6.4% and 6.3% notes; 190 bps for the 6.5% notes; 185 bps for the 6.8% notes; and 180 bps for the 6.15% and 6.45% notes.

In connection with the OpCo and AT&T exchange offers, AT&T is also soliciting consents from holders of the OpCo notes to eliminate substantially all of the restrictive covenants in the indentures governing the OpCo notes. If the proposed amendments to the OpCo indentures are adopted, all OpCo notes not tendered or not accepted for exchange will be governed by amended indentures, which will have less restrictive terms.

The consent solicitations will expire at 11:59 p.m. ET on Nov. 28.

The offers for new 2046 notes require that at least $500 million of the new notes would be issued.

The offers are being made under Rule 144A/Regulation S.

The exchange agent and information agent is Global Bondholders Services Corp. (866 470-3900, 212 430-3774 or contact@gbsc-usa.com).

AT&T, formerly known as SBC Communications Inc., is a telecommunications services provider based in Dallas.

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