By Jennifer Chiou
New York, Aug. 20 – Verizon Communications Inc. announced the final results of its exchange offers that ended at 11:59 p.m. ET on Aug. 19.
The exchange offers began on July 23 and were previously amended to increase the maximum amount of new notes Verizon will issue, according to a company news release.
As reported, Verizon offered to issue up to $3.3 billion – increased from $2 billion – of new 2.625% notes due 2020 in exchange for its $4.25 billion 2.5% notes due 2016 and $4.75 billion 3.65% notes due 2018.
The company also offered to issue $4.5 billion of new 4.862% notes due 2046 in exchange for the following notes:
• Verizon’s $1 billion 7.35% notes due 2039;
• Alltel Corp.’s $700 million 7.875% debentures due 2032;
• Verizon’s $400 million 7.75% notes due 2032;
• Verizon’s $2 billion 7.75% notes due 2030;
• Alltel’s $300 million 6.8% debentures due 2029; and
• Verizon’s $6 billion 6.4% notes due 2033.
And, Verizon offered to issue up to $5.5 billion of new 5.012% notes due 2054 in exchange for the following notes:
• Verizon’s $15 billion 6.55% notes due 2043;
• Verizon’s $1.25 billion 6.9% notes due 2038; and
• Verizon’s $1.75 billion 6.4% notes due 2038.
The notes are listed in order of priority within each group.
Final results
The company said it will accept the following:
• All $1,067,665,000 tenders for Verizon’s $4.25 billion 2.5% notes due 2016;
• All $2,051,930,000 tenders for Verizon’s $4.75 billion 3.65% notes due 2018.
• All $519.67 million tenders for Verizon’s $1 billion 7.35% notes due 2039;
• All $248,199,000 tenders for Alltel’s $700 million 7.875% debentures due 2032;
• All $149,216,000 tenders for Verizon’s $400 million 7.75% notes due 2032;
• All $793,804,000 tenders for Verizon’s $2 billion 7.75% notes due 2030;
• All $65,379,000 tenders for Alltel’s $300 million 6.8% debentures due 2029;
• $1,644,545,000 of the $3,616,750,000 tenders for Verizon’s $6 billion 6.4% notes due 2033;
• $4,330,394,000 of the $9,813,058,000 tenders for Verizon’s $15 billion 6.55% notes due 2043;
• None of the $641.77 million tenders for Verizon’s $1.25 billion 6.9% notes due 2038; and
• None of the $615,001,000 tenders for Verizon’s $1.75 billion 6.4% notes due 2038.
At the early deadline of 5 p.m. ET on Aug. 5, because the tenders of the 6.55% notes due 2043 would otherwise result in the issuance of more than $5.5 billion of new 5.012% notes due 2054, Verizon said it would return the 6.9% notes due 2038 and the 6.4% notes due 2038 tendered for exchange and will not accept further tenders of these two series of notes.
Verizon said that it expects to issue $3,304,145,000 aggregate principal amount of the new notes due 2020, $4,500,038,000 of the new notes due 2046 and $5,500,001,000 of the new notes due 2054 on Aug. 21.
Pricing details
As noted, the total exchange price per $1,000 principal amount of notes was set at 11 a.m. ET on Aug. 5 using the sum of the yield on the bid-side price of a reference Treasury security plus a fixed spread as noted in the table below.
Each total exchange price includes a $50.00 early participation payment per $1,000 principal amount of notes tendered by the early tender date.
The company will also pay accrued interest up to, but excluding, the settlement date of Aug. 21.
The coupons for the new notes were set using the sum of the yield based on the bid-side price of a reference Treasury security plus a spread. The reference Treasury was the 1.625% Treasury due June 30, 2019 for the notes due 2020 and the 3.625% Treasury due Feb. 15, 2044 for the notes due 2046 and 2054. The spread was 95 bps for the notes due 2020, 155 bps for the notes due 2046 and 170 bps for the notes due 2054.
The exchange offers were made only to noteholders who are qualified institutional buyers as defined in Rule 144A under the Securities Act and outside the United States to noteholders other than U.S. persons as defined in Rule 902 under Regulation S of the Securities Act and who are not acquiring new notes for the account or benefit of a U.S. person.
Global Bondholder Services Corp. (866 470-3800 or, for banks and brokers, 212 430-3774) is the information agent.
Verizon is a New York City-based telecommunications company.
Verizon exchange offer
| Notes | Total exchange price | Reference Treasury | Spread | Exchange offer yield
|
| 2.5% notes due 2016 | $1,034.77 | 0.5% due June 30, 2016 | 35 bps | 0.8%
|
| 3.65% notes due 2018 | $1,073.19 | 1.625% due June 30, 2019 | 10 bps | 1.775%
|
| 7.35% notes due 2039 | $1,363.70 | 3.625% due Feb. 15, 2044 | 150 bps | 4.812%
|
| 7.875% debentures due 2032 | $1,417.04 | 3.625% due Feb. 15, 2044 | 115 bps | 4.462%
|
| 7.75% notes due 2032 | $1,401.10 | 3.625% due Feb. 15, 2044 | 115 bps | 4.462%
|
| 7.75% notes due 2030 | $1,384.64 | 3.625% due Feb. 15, 2044 | 110 bps | 4.412%
|
| 6.8% debentures due 2029 | $1,256.13 | 3.625% due Feb. 15, 2044 | 110 bps | 4.412%
|
| 6.4% notes due 2033 | $1,247.05 | 3.625% due Feb. 15, 2044 | 115 bps | 4.462%
|
| 6.55% notes due 2043 | $1,270.46 | 3.625% due Feb. 15, 2044 | 150 bps | 4.812%
|
| 6.9% notes due 2038 | $1,309.92 | 3.625% due Feb. 15, 2044 | 140 bps | 4.712%
|
| 6.4% notes due 2038 | $1,238.22 | 3.625% due Feb. 15, 2044 | 140 bps | 4.712%
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