AT&T ups maximum tender amount in exchange offer for 8.75%, 8% notes

By Angela McDaniels

Tacoma, Wash., Aug. 18 - AT&T Inc. increased the amount of notes it will accept in the private exchange offer for the $2.5 billion of 8.75% senior notes due 2031 issued by New Cingular Wireless Services, Inc. and the $2,532,611,000 of 8% senior notes due 2031 issued by AT&T Corp., according to a company news release.

The company will accept for exchange any and all 8.75% notes tendered and a principal amount of 8% notes equal to the maximum tender amount minus the principal amount of 8.75% notes exchanged.

Holders are being offered new 5.35% notes due 2040 issued by AT&T and cash in exchange for their existing notes. The maximum tender amount will be an amount of existing notes that will result in no more than $3.5 billion principal amount of new notes being issued.

Previously, the company planned to accept up to $2.5 billion of notes for exchange.

As of 5 p.m. ET on Aug. 17, holders had tendered $1,355,176,000 principal amount of the 8.75% notes and $1,589,904,000 principal amount of the 8% notes.

For each $1,000 principal amount, the total exchange price is $1,231.77 principal amount of new notes and $229.22 in cash for the 8.75% notes and $1,185.83 principal amount of new notes plus $183.38 in cash for the 8% notes.

Holders who tender after 5 p.m. ET on Aug. 17, the early participation date, will receive the total exchange prices noted above minus the early participation payment of $30.00 per $1,000 principal amount of notes.

The company will also pay accrued interest up to but excluding the settlement date.

The new issue price of the new notes will be $997.93, and the yield will be 5.364%. This was determined by reference to the bid-side yield on the designated benchmark security as of the pricing time, which was 3.764%.

The payments total $1,458.44 per 8.75% note and $1,366.75 per 8% note and use an exchange offer yield of 5.114% for the 8.75% notes and 5.139% for the 8% notes.

The offer will end at 11:59 p.m. ET on Aug. 31.

The condition that at least $500 million principal amount of notes be tendered has been met.

The exchange offer is being made to qualified institutional buyers under Rule 144A of the Securities Act of 1933 and non-U.S. residents under Regulation S of the Securities Act.

Global Bondholder Services Corp. (866 387-1500 or 212 925-1630) is the information agent.

AT&T is a phone and internet services provider based in Dallas.

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