Published on 3/22/2016 in the Prospect News Investment Grade Daily and Prospect News Liability Management Daily.
Verizon lifts cap for waterfall notes; offer oversubscribed so far
By Susanna Moon
Chicago, March 22 – Verizon Communications Inc. announced the early tender results of its offer to purchase up to a maximum amount of waterfall notes.
Verizon also increased the cap in the waterfall offers to $5.5 billion from $4 billion, according to a company press release.
The company also is offering to purchase any and all of the group 1 notes and any and all of the group 2 notes.
The notes covered by the offers are listed in the tables below, along with the results for the tenders offers for the group 1 notes and the group 2 notes as of the early participation time, 5 p.m. ET on March 17, and pricing for the notes, which was set at 11 a.m. ET on March 18. These offers will end at 5 p.m. ET on April 1.
For the waterfall notes, the early participation time was 5 p.m. ET on March 18, with pricing calculated at 11 a.m. ET on March 21 and the expiration set for 11:59 p.m. ET on April 1.
The amount of waterfall notes tendered as of the early tender date is noted in a table below. The notes are listed in order of priority acceptance level.
The waterfall offer has been oversubscribed as of the early tender deadline.
As a result, the company will purchase all of the waterfall notes tendered by the early deadline with priority levels higher than 14, waterfall notes with an acceptance priority level of 14 using a proration factor of 70.9% and none of those with a priority level lower than 14, meaning it accepted $249,586,000 of its 5.85% notes due 2035 (priority level 14) and none of its 6% notes due 2041 (priority level 15) or 5.15% notes due 2023 (priority level 16).
No waterfall notes tendered after the early deadline will be accepted for purchase.
Investors had tendered $679,121,000 principal amount of the waterfall notes as of 2 p.m. ET on March 14.
The total payment for each series of notes results in a yield to maturity equal to the yield to maturity of the reference Treasury security specified in the tables below, based on the bid-side price of the Treasury security at pricing plus the fixed spread.
The total amount includes an early tender premium for notes tendered by the early deadline. The early tender premium is $30 per $1,000 principal amount of group 1 notes and $50 per $1,000 principal amount of group 2 or waterfall notes.
Verizon also will pay accrued interest up to but excluding the settlement date, which is expected to be April 4.
Verizon plans to redeem any group 1 notes not tendered in the offer at par plus the make-whole premium.
Consent solicitation
Verizon is also soliciting consents from holders of the group 1 notes to shorten the minimum period for giving notice of a redemption to three business days from 30 days.
Holders who tender group 1 notes are deemed to have delivered their consents to the proposed amendment.
Enough consents have been received to make the amendment.
The adoption of the proposed amendment for a series of group 1 notes required the consent of the holders of more than a majority of the outstanding principal amount of that series, excluding any notes owned by Verizon or its affiliates.
The tender offers and the consent solicitation are conditioned on the closing of the sale of Verizon's local exchange and related business assets in California, Florida and Texas and Verizon's receipt of at least $9.5 billion of purchase price cash at closing.
The lead dealer managers and lead solicitation agents are Goldman Sachs & Co. (800 828-3182 or 212 357-1039), RBC Capital Markets, LLC (877 381-2099 or 212 618-7822) and Santander Investment Securities Inc. (855 404-3636 or 212 940-1442). The co-dealer managers are MUFG, CastleOak Securities, LP, Drexel Hamilton, LLC, Samuel A. Ramirez & Co., Inc. and Siebert Brandford Shank & Co., LLC. The information agent and depositary is Global Bondholder Services Corp. (866 470-3800 or 212 430-3774).
Verizon is a New York City-based telecommunications company.
Waterfall offer early results
| Issuer | Notes | Amount outstanding | Amount tendered as of early deadline
|
| Verizon Communications Inc. | 8.95% notes due 2039 | $353,376,000 | $63,293,000
|
| Alltel Corp. | 7.875% debentures due 2032 | $451,801,000 | $114,752,000
|
| Verizon Communications Inc. | 7.75% notes due 2032 | $250,785,000 | $32,963,000
|
| Verizon Communications Inc. | 7.35% notes due 2039 | $480.33 million | $68,047,000
|
| GTE Corp. | 6.94% debentures due 2028 | $800 million | $236,524,000
|
| GTE Corp. | 8.75% debentures due 2021 | $300 million | $93,176,000
|
| Verizon Communications Inc. | 7.75% notes due 2030 | $1,206,196,000 | $275,936,000
|
| Verizon Communications Inc. | 6.55% notes due 2043 | $6,585,304,000 | $2,340,249,000
|
| Verizon Communications Inc. | 6.4% notes due 2033 | $2,195,974,000 | $466,485,000
|
| Alltel Corp. | 6.8% debentures due 2029 | $234,621,000 | $46,732,000
|
| Verizon Communications Inc. | 6.9% notes due 2038 | $476,578,000 | $92,431,000
|
| Verizon Communications Inc. | 6.25% notes due 2037 | $750 million | $113,836,000
|
| Verizon Communications Inc. | 6.4% notes due 2038 | $866,375,000 | $116,254,000
|
| Verizon Communications Inc. | 5.85% notes due 2035 | $1.5 billion | $352,205,000
|
| Verizon Communications Inc. | 6% notes due 2041 | $1 billion | $253,644,00
|
| Verizon Communications Inc. | 5.15% notes due 2023 | $8,516,519,000 | $2,493,020,000
|
|
|
| Waterfall offer pricing
|
| Issuer | Notes | Reference Treasury | Fixed spread | Total consideration
|
| Verizon Communications Inc. | 8.95% notes due 2039 | 3% due Nov. 15, 2045 | 245 bps | $1,506.50
|
| Alltel Corp. | 7.875% debentures due 2032 | 3% due Nov. 15, 2045 | 225 bps | $1,322.92
|
| Verizon Communications Inc. | 7.75% notes due 2032 | 3% due Nov. 15, 2045 | 220 bps | $1,315.19
|
| Verizon Communications Inc. | 7.35% notes due 2039 | 3% due Nov. 15, 2045 | 245 bps | $1,293.50
|
| GTE Corp. | 6.94% debentures due 2028 | 1.625% due Feb. 15, 2026 | 225 bps | $1,261.35
|
| GTE Corp. | 8.75% debentures due 2021 | 1.125% due Feb. 28, 2021 | 140 bps | $1,307.34
|
| Verizon Communications Inc. | 7.75% notes due 2030 | 1.625% due Feb. 15, 2026 | 235 bps | $1,377.92
|
| Verizon Communications Inc. | 6.55% notes due 2043 | 3% due Nov. 15, 2045 | 195 bps | $1,291.74
|
| Verizon Communications Inc. | 6.4% notes due 2033 | 3% due Nov. 15, 2045 | 185 bps | $1,220.28
|
| Alltel Corp. | 6.8% debentures due 2029 | 1.625% due Feb. 15, 2026 | 235 bps | $1,252.93
|
| Verizon Communications Inc. | 6.9% notes due 2038 | 3% due Nov. 15, 2045 | 235 bps | $1,243.29
|
| Verizon Communications Inc. | 6.25% notes due 2037 | 3% due Nov. 15, 2045 | 225 bps | $1,167.66
|
| Verizon Communications Inc. | 6.4% notes due 2038 | 3% due Nov. 15, 2045 | 235 bps | $1,176.52
|
| Verizon Communications Inc. | 5.85% notes due 2035 | 3% due Nov. 15, 2045 | 200 bps | $1,144.68
|
| Verizon Communications Inc. | 6% notes due 2041 | 3% due Nov. 15, 2045 | 215 bps | $1,164.56
|
| Verizon Communications Inc. | 5.15% notes due 2023 | 1.625% due Feb. 15, 2026 | 95 bps | $1,152.83
|
|
|
| Group 1 offer early results
|
| Issuer | Notes | Amount outstanding | Amount accepted as of early deadline
|
| Verizon Communications Inc. | 2.5% notes due 2016 | $2,182,335,000 | $1,271,367,000
|
| Verizon Communications Inc. | 2% notes due 2016 | $1.25 billion | $674,395,000
|
| Verizon Communications Inc. | 6.35% notes due 2019 | $1.7 billion | $969,614,000
|
|
|
| Group 1 offer pricing
|
| Issuer | Notes | Reference Treasury | Fixed spread | Total consideration
|
| Verizon Communications Inc. | 2.5% notes due 2016 | 0.875% due Sept. 15, 2016 | 30 bps | $1,007.60
|
| Verizon Communications Inc. | 2% notes due 2016 | 0.375% due Oct. 31, 2016 | 20 bps | $1,007.20
|
| Verizon Communications Inc. | 6.35% notes due 2019 | 1.5% due March 31, 2019 | 75 bps | $1,133.32
|
|
|
| Group 2 offer early results
|
| Issuer | Notes | Amount outstanding | Amount accepted as of early deadline
|
| Verizon Delaware LLC | 8.375% debentures due 2019 | $15 million | $15 million
|
| Verizon Delaware LLC | 8.625% debentures due 2031 | $15 million | $4,609,000
|
| Verizon Maryland LLC | 8% debentures due 2029 | $50 million | $21,484,000
|
| Verizon Maryland LLC | 8.3% debentures due 2031 | $100 million | $75,792,000
|
| Verizon Maryland LLC | 5.125% debentures due 2033 | $350 million | $169,433,000
|
| Verizon New England Inc. 7.875% debentures due 2029 | $348,965,000 | $175,807,000
|
| Verizon New Jersey Inc. | 8% debentures due 2022 | $200 million | $53,683,000
|
| Verizon New Jersey Inc. | 7.85% debentures due 2029 | $148,935,000 | $62.38 million
|
| Verizon New York Inc. | 6.5% debentures due 2028 | $100 million | $28,288,000
|
| Verizon New York Inc. | 7.375% debentures due 2032 | $500 million | $256,329,000
|
| Verizon Pennsylvania LLC | 6% debentures due 2028 | $125 million | $55,934,000
|
| Verizon Pennsylvania LLC | 8.35% debentures due 2030 | $174,975,000 | $127,203,000
|
| Verizon Pennsylvania LLC | 8.75% debentures due 2031 | $125 million | $71,658,000
|
| Verizon Virginia LLC | 7.875% debentures due 2022 | $100 million | $43,342,000
|
| Verizon Virginia LLC | 8.375% debentures due 2029 | $100 million | $81,369,000
|
|
|
| Group 2 offer pricing
|
| Issuer | Notes | Reference Treasury | Fixed spread | Total consideration
|
| Verizon Delaware LLC | 8.375% debentures due 2019 | 0.75% due Feb. 15, 2019 | 180 bps | $1,182.11
|
| Verizon Delaware LLC | 8.625% debentures due 2031 | 1.625% due Feb. 15, 2026 | 330 bps | $1,365.39
|
| Verizon Maryland LLC | 8% debentures due 2029 | 1.625% due Feb. 15, 2026 | 305 bps | $1,301.32
|
| Verizon Maryland LLC | 8.3% debentures due 2031 | 1.625% due Feb. 15, 2026 | 315 bps | $1,347.26
|
| Verizon Maryland LLC | 5.125% debentures due 2033 | 3% due Nov. 15, 2045 | 235 bps | $1,012.50
|
| Verizon New England Inc. 7.875% debentures due 2029 | 1.625% due Feb. 15, 2026 | 330 bps | $1,261.63
|
| Verizon New Jersey Inc. | 8% debentures due 2022 | 1.125% due Feb. 28, 2021 | 230 bps | $1,238.65
|
| Verizon New Jersey Inc. | 7.85% debentures due 2029 | 1.625% due Feb. 15, 2026 | 285 bps | $1,311.32
|
| Verizon New York Inc. | 6.5% debentures due 2028 | 1.625% due Feb. 15, 2026 | 295 bps | $1,151.71
|
| Verizon New York Inc. | 7.375% debentures due 2032 | 3% due Nov. 15, 2045 | 280 bps | $1,201.92
|
| Verizon Pennsylvania LLC | 6% debentures due 2028 | 1.625% due Feb. 15, 2026 | 295 bps | $1,110.47
|
| Verizon Pennsylvania LLC | 8.35% debentures due 2030 | 1.625% due Feb. 15, 2026 | 330 bps | $1,324.10
|
| Verizon Pennsylvania LLC | 8.75% debentures due 2031 | 1.625% due Feb. 15, 2026 | 345 bps | $1,356.47
|
| Verizon Virginia LLC | 7.875% debentures due 2022 | 1.125% due Feb. 28, 2021 | 215 bps | $1,227.79
|
| Verizon Virginia LLC | 8.375% debentures due 2029 | 1.625% due Feb. 15, 2026 | 320 bps | $1,319.78
|
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