Alcatel sets completes exchange offer for 7% notes

New York, March 30 - Alcatel (B1/BB-) said it has successfully completed its previously announced offer to exchange new debt for its outstanding 7% notes due 2006. The offer expired at 9 a.m. ET on March 29, without extension.

The company said that as of the deadline, €365.76 million of the existing 7% notes had been validly submitted and accepted for exchange, corresponding to 36.7% of the total outstanding amount.

By application of the exchange ratio of 1.1266, €412.013 million of new 6 3/8% notes due 2014 will be issued on April 7. Due to the market's strong demand, Alcatel will also issue €50 million of additional notes on the same date. The total principal amount of new 2014 notes to be issued on April 7 will therefore be €462.013 million.

The company said the final exchange price for the new notes was 111.728% of €1,000 principal amount of existing notes. The new-issue price was 99.173% of €1,000 principal amount of new notes.

As previously announced, Alcatel, a Paris-based telecommunications equipment company, said on March 17 that it had begun its offer to exchange new fixed-rate notes due 2014 for its €995 million of outstanding 7% notes.

The exchange will expire at 9 a.m. ET on March 29, subject to possible extension, with the exchange price for the existing notes and the issue price and coupon of the new bonds to be set at 7 a.m. ET on March 24, subject to possible extension.

The company said the exchange price for the existing notes would be fixed at a margin over the mid-market quote on the 4½% OBL bond due Aug. 18, 2006. The margin would be between 145 and 155 basis points, with the precise level to be fixed at the pricing deadline.

Alcatel said the issue price and coupon of the new bonds would be based on a spread over the 4¼% Bund due Jan. 4, 2014. It said the spread would be between 225 and 265 basis points, with the precise level to be fixed at the pricing deadline.

Alcatel said the price for the new bonds would be set as close to par as is possible to achieve a coupon that is a multiple of 1/8%. The exchange ratio, to be fixed on March 30, would be set as the ratio of the exchange price and the issue price of the new bonds. Holders would also receive accrued interest.

On March 24, Alcatel said that it set the exchange spread on the existing notes at 150 basis points over the 4½% OBL. The new-issue spread was set at 255 basis points over the 4¼% Bund.

Alcatel said at that time that it might also issue up to an additional €100 million of the new notes, and that any decision to do so would be announced at the pricing deadline (the company ultimately did decide to issue an additional €50 of the notes.

Alcatel said it reserved the right to terminate the exchange offer were less than €300 million of the existing notes tendered, although it could waive this condition provided the total principal amount of the new notes and the additional new notes were to be a minimum of €300 million.

Alcatel said it was carrying out the exchange to extend the maturity of its debt.

The lead dealer managers and structuring agents for the exchange offer were the London offices of BNP Paribas (contact Frédéric Zorzi or Stéphanie Sfakianos at +44 20 7595 8222) and Merrill Lynch International (contact Jeff Tannenbaum or Asar Mashkoor at + 44 20 7995 3966).

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