New York, Dec. 5 - Qwest Communications International Inc. (Caa1/B-) said that it had increased the overall size of its previously announced offers to buy specific debt notes to slightly over $3 billion from $2.25 billion originally, citing strong investor response to the buyback.
Qwest and its affiliates are offering to buy up to $625 million of notes maturing from 2005 to 2007, unchanged from the originally announced figure for that category; are offering to buy up to $1.8 billion of notes maturing in 2008 to 2011, up from $1.3 billion originally; and are offering to purchase $620 million worth of notes maturing from 2014 to 2031, up from $325 million.
As of the previously announced early tender deadline, which expired as scheduled at 5 p.m. ET on Dec. 4 without extension, investors had tendered some $571 million aggregate principal amount of their notes maturing in 2005 through 2007; about $1.804 billion of their notes maturing in 2008 through 2011; and around $736 million of their notes maturing in 2014 through 2031. Holders who tendered prior to the early tender deadline and whose notes are accepted for purchase will receive a $20 per $1,000 principal amount early tender premium as part of their total consideration, while holders tending subsequent to the deadline will not be eligible to receive the premium and will only receive the regular tender offer consideration for their notes. (See table 1 for full details on amounts of specific series of notes being tendered for and amounts already tendered by holders, as well as consideration to be paid).
Qwest also announced that requisite consents to adopt the proposed indenture amendments relating to two series of notes being tendered for, its 7¼% senior notes due 2008 and 7½% senior notes due 2008 have been received, and that supplemental indentures incorporating the amendments have been executed by the company and the indenture trustee.
It also said that in view of the fact that the securities within each of the three maturity-based classes it has established are ranked in terms of Qwest's priority for accepting them and over-subscription of higher-priority notes will preclude the acceptance of the lowest- priority notes within that same class, none of the tendered Qwest Services Corp. 14 % notes due 2014 will be accepted, and all of these notes will be returned to their holders as soon as practicable.
Notes tendered under the terms of the tender offer may no longer be withdrawn. Settlement of the offers is expected to occur promptly after expiration deadline of midnight ET on Dec. 19, subject to possible extension.
Qwest said that it has received an amendment on the Qwest Services Corp. credit facility in order to facilitate the tender offer. As part of the amendment, Qwest has also received a waiver extending the financial reporting requirements of its subsidiaries from Dec. 31, to no later than Jan. 31, 2004.
The company said that the $3 billion repurchase will cut its interest expense by $200 million a year. Quest and its affiliates will have retired nearly $8 billion in debt with this round of purchases.
As previously announced, Qwest, a Denver-based telecommunications company, said on Nov. 19 that it would purchase to $2.25 billion face amount of its own outstanding bonds and those of its wholly owned subsidiaries Qwest Capital Funding, Inc. and Qwest Services Corp (this total amount was subsequently increased).
Qwest said it was offering to purchase, in cash, up to $625 million aggregate principal amount of notes issued by the three companies that mature in 2005 through 2007, up to $1.3 billion of notes maturing in 2008 through 2011, and up to $325 million of notes maturing in 2014 through 2031 (the total principal amounts for the latter two categories were subsequently increased).
Qwest set a now-expired early participation payment deadline of 5 p.m. ET on Dec. 4, so that holders tendering their notes by that deadline would receive the $20 per $1,000 principal amount early participation payment as part of the total consideration, should their notes be accepted for purchase. The offers will expire at midnight ET on Dec. 19, with both deadlines subject to possible extension. Holders tendering their notes after the early participation payment deadline but before the expiration deadline will receive the tender offer consideration, but not the early participation payment.
All noteholders whose validly tendered notes which are accepted for purchase under the tender offer will also receive accrued interest up to, but not including, the settlement date.
Quest said that the tender offers for the respective series of notes are subject to the satisfaction or waiver of certain conditions, but are not subject to the receipt of any minimum amount of tenders.
The maximum amount of notes which Qwest is willing to purchase in each of the three classes of maturities into which it has divided its tender offers is in each case less than the total amount of outstanding notes in the respective grouping.
In the event that the offers for any of the three classes of maturities are oversubscribed, tenders of notes within that class will be subject to pro ration. Qwest and the subsidiaries will accept tendered notes of each series within the applicable class of maturities according to the order of priority specified for that series in the attached table. Therefore, all tendered notes of a higher priority within a class will be accepted before any tendered notes of a lower priority within that same class are accepted. For a particular series of notes that has some, but not all, tendered notes accepted, all tenders of notes of that series will be accepted on a pro-rata basis, according to the principal amount tendered.
In connection with the notes issued by parent Qwest Communications International or by Qwest Services Corp. (although not on any notes issued by Qwest Capital Funding), the company is soliciting consents to eliminate substantially all of the restrictive covenants in the notes' indentures. Holders may not tender those notes without also delivering consents, and may not deliver consents without also tendering the notes. No additional consent payment will be made under the offers.
None of the tender offers are conditioned on obtaining any minimum amount of consents. The consents with respect to any series of Qwest Communications International or Qwest Services Corp. notes will be effective only if tenders for notes representing a majority in principal amount of that series are accepted for purchase and no pro ration occurs with respect to that series.
Qwest said that assuming the tender offers are completed successfully, it will save more than $100 million annually in net interest expense, and will have reduced its total debt by over $7 billion since the end of the third quarter of 2002 (Qwest subsequently raised the estimates for anticipated interest savings and total debt reduction after it raised the total amount of notes for which it is tendering).
Banc of America Securities LLC (call High Yield Special Products at 888 292-0070 or collect at 704 388-4813) and Goldman, Sachs & Co. (call Credit Liability Management Group at 212 902-4419 or 800 828-3182) are the joint lead dealer-managers for the offers, while Lehman Brothers Inc. is the co-dealer-manager. The information agent is Global Bondholder Services Corp. (866 873-6300 or collect at 212 430-3774.
Table 1: Details of Qwest's tender offer
| Issuer | Security | Amount | Priority | Tender | Amount | Percent
|
| outstanding | level | payment | tendered | tendered
|
|
|
| Offer for notes maturing in 2005 through 2007. Maximum tender amount: $625 million
|
|
|
| QCF | 6¼% notes due 2005 | $358.86 million | 1 | $990.00 | $177.805 million | 49.5%
|
| QCF | 7¾% notes due 2006 | $829.613 million | 2 | $1,007.50 | $343.933 million | 41.5% |
|
| QSC | 13% notes due 2007 | $558.559 million | 3 | $1,142.50 | $49.428 million | 8.8% |
|
|
|
| Offer for notes maturing in 2008 through 2011. Maximum tender amount: $1.8 billion
|
|
|
| QCF | 6 | 3/8% notes due 2008 | $245.378 million | 1 | $925.00 | $73.609 million | 30.0%
|
| QCII | 7¼% senior notes due 2008 | $300 million | 2 | $1,000.00 | $257.185 million | 85.7%
|
| QCII | 7½% senior notes due 2008 | $750 million | 3 | $1,010.00 | $687.822 million | 91.7%
|
| QCF | 7% notes due 2009 | $733.796 million | 4 | $935.00 | $163.784 million | 22.3%
|
| QCF | 7.90% notes due 2010 | $667.447 million | 5 | $960.00 | $252.612 million | 37.8%
|
| QCF | 7¼% notes due 2011 | $922.796 million | 6 | $935.00 | $98.750 million | 10.7%
|
| QSC | 13½% notes due 2010 | $2.504456 billion | 7 | $1,165.00 | $270.125 million | 10.8%
|
|
|
| Offer for notes maturing in 2014 through 2031. Maximum tender amount: $620 million
|
|
|
| QCF | 6½% debentures due 2018 | $250.373 million | 1 | $795.00 | $39.008 million | 15.6%
|
| QCF | 7 | 5/8% notes due 2021 | $230.678 million | 2 | $860.00 | $105.413 million | 45.7%
|
| QCF | 6 | 7/8% debentures due 2028 | $765.85 million | 3 | $795.00 | $175.956 million | 23.0%
|
| QCF | 7¾% notes due 2031 | $718.694 million | 4 | $860.00 | $73.638 million | 52.0%
|
| QSC | 14% notes due 2014 | $640.879 million | 5 | $1,215.00 | $42.043 million | 6.6%
|
|
|
| QCF is Qwest Capital Funding
|
| QSC is Qwest Services Corp.
|
| QCII is Qwest Communications International Inc.
|
| Prices are per $1,000 principal amount
|
|
|
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