Verizon to issue $9 billion notes in five-day exchange for 18 series

By Susanna Moon

Chicago, Feb. 1 – Verizon Communications Inc. announced the results of its exchange for 18 series of notes that ran until 5 p.m. ET on Jan. 31.

The issuer began two related offers on Jan. 25 to repurchase the 18 series of notes, one set consisting of any-and-all exchange offers and the other cash tender offers.

The first component consists of 18 separate private offers to exchange the notes for a combination of newly issued Verizon notes and, for some of the note series, cash.

In the exchange component, Verizon expects to issue about $3.2 billion principal amount of new notes due 2022, about $1.7 billion principal amount of new notes due 2039 and about $4.1 billion principal amount of new notes due 2049, according to a company update.

The second part comprises 18 separate cash tender offers organized in three groups, as previously reported. The cash tenders also ended at 5 p.m. ET on Jan. 31. Under the maximum total payment condition, Verizon will pay up to $400 million for the group 1 offers, up to $240 million for the 5.15% notes due 2023 and up to $125 million for the group 3 offers.

Verizon said it has met the conditions to the offers as of Wednesday.

Settlement has been set for Feb. 3.

2022 notes exchange

In the exchange, Verizon is offering to issue new notes due 2022 for the following notes, with pricing per $1,000 principal amount:

• $737,058,000 5.5% notes due 2018 with pricing set at $1,044.17 using the 1% Treasury note due Feb. 15, 2018 plus 30 basis points;

• $752,516,000 6.1% notes due 2018 with pricing at $1,056.49 based on the 0.75% Treasury note due April 15, 2018 plus 40 bps;

• $2,698,070,000 3.65% notes due 2018 with pricing at $1,035.31 based on the 1% Treasury note due Sept. 15, 2018 plus 35 bps;

• $500 million 2.55% notes due 2019 with pricing at $1,022.46 based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps;

• $1 billion 1.375% notes due 2019 with pricing at $994.90 based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps; and

• $3,304,145,000 2.625% notes due 2020 with pricing at $1,023.08 based on the 1.375% Treasury note due Jan. 15, 2020 plus 40 bps.

Holders had tendered $82,642,000 of the 5.5% notes, $76.93 million of 6.1% notes, $507,629,000 of 3.65% notes, $156,284,000 of 2.55% notes, $374.66 million of 1.375% notes and $1,906,273,000 of 2.625% notes.

2039 notes exchange

The company is offering new notes due 2039 in exchange for the following issues, listed with pricing per $1,000 principal amount:

• $8,516,519,000 5.15% notes due 2023 with pricing at $1,118.83 based on the 2% Treasury note due Dec. 31, 2021 plus 125 bps;

• $930.26 million 7.75% notes due 2030 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 95 bps for a total exchange price of $1,393.68, with $1,153.68 as new notes and $240.00 in cash;

• $217,822,000 7.75% notes due 2032 with pricing at $1,376.42 based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps; and

• $1,729,489,000 6.4% notes due 2033 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps for a total exchange price of $1,239.06, with $1,079.06 as new notes and $160.00 in cash.

Investors had tendered $708,185,000 of the 5.15% notes, $184,199,000 of the 7.75% notes, $2,204,000 of the 7.75% notes and $639,549,000 of the 6.4% notes.

2049 notes exchange

In exchange for the following notes, listed with pricing per $1,000 principal amount, the issuer is offering new notes due 2049:

• $1,250,414,000 5.85% notes due 2035 with pricing at $1,167.26 based on the 2.25% Treasury note due Aug. 15, 2046 plus 145 bps;

• $636,164,000 6.25% notes due 2037 with pricing at $1,206.03 based on the 2.25% Treasury note due Aug. 15, 2046 plus 160 bps;

• $750,121,000 6.4% notes due 2038 with pricing at $1,223.71 based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps;

• $384,147,000 6.9% notes due 2038 with pricing at $1,291.25 based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps;

• $290,083,000 8.95% notes due 2039 with pricing at $1,568.24 based on 2.25% Treasury note due Aug. 15, 2046 plus 170 bps;

• $412,283,000 7.35% notes due 2039 with pricing at $1,351.85 based on the 2.25% Treasury note due Aug. 15, 2046 plus 170 bps;

• $1 billion 6% notes due 2041 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a total exchange price of $1,168.54, with $948.54 as new notes and $220.00 in cash; and

• $4,245,055,000 6.55% notes due 2043 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a total exchange price of $1,259.24, with $1,069.24 as new notes and $190.00 in cash.

Holders tendered $445,777,000 of the 5.85% notes, $188,682,000 of the 6.25% notes, $228,276,000 of the 6.4% notes, $110,676,000 of the 6.9% notes, $47,654,000 of the 8.95% notes, $224,568,000 of the 7.35% notes, $479,964,000 of the 6% notes due 2041 and $1,932,813,000 of the 6.55% notes due 2043.

More exchange terms

The total exchange price for each series was set at 11 a.m. ET on Jan. 31 using the reference yield based on the bid-side price of the reference U.S. Treasury security.

The new notes due 2022 will mature on March 15, 2022 and carry a coupon of 2.946%. Interest is equal to the sum of the yield of the 2% U.S. Treasury security due Dec. 31, 2021 plus 105 bps.

The new notes due 2039 will mature on March 15, 2039 and carry a coupon of 4.812%. Interest is equal to the sum of the yield of the 2.25% U.S. Treasury security due Aug. 15, 2046 plus 175 bps.

The new notes due 2049 will mature on April 15, 2049 and carry a coupon of 5.012%. Interest is equal to the sum of the yield of the 2.25% U.S. Treasury security due 2046 plus 195 bps.

The minimum issue condition requires that at least $1 billion of new notes be issued for each of the three new series of notes.

The exchange offers are being made to qualified institutional buyers under Rule 144A or to non-U.S. persons under Rule 902.

Global Bondholder Services Corp. (866 470-3800, 212 430-3774 or http://gbsc-usa.com/eligibility/verizon-xo) is the information agent and the tender agent.

Cash tender offers

In the cash tenders, the group 1 offers consist of the following series of notes, listed with pricing per $1,000 principal amount:

• $737,058,000 5.5% notes due 2018 with pricing based on the 1% Treasury note due Feb. 15, 2018 plus 30 bps for a purchase price of $1,044.17;

• $752,516,000 6.1% notes due 2018 with pricing based on the 0.75% Treasury note due April 15, 2018 plus 40 bps for a purchase price of $1,056.49;

• $2,698,070,000 3.65% notes due 2018 with pricing based on the 1% Treasury note due Sept. 15, 2018 plus 35 bps for a purchase price of $1,035.31;

• $500 million 2.55% notes due 2019 with pricing based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps for a purchase price of $1,022.46;

• $1 billion 1.375% notes due 2019 with pricing based on the 1.25% Treasury note due Dec. 31, 2018 plus 40 bps for a purchase price of $994.90; and

• $3,304,145,000 2.625% notes due 2020 with pricing based on the 1.375% Treasury note due Jan. 15, 2020 plus 40 bps for a purchase price of $1,023,08.

Group 2 cash offers

The group 2 notes are as follows, with pricing per $1,000 principal amount:

• $8,516,519,000 5.15% notes due 2023 with pricing based on the 2% Treasury note due Dec. 31, 2021 plus 125 bps for a purchase price of $1,118.83;

• $930.26 million 7.75% notes due 2030 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 95 bps for a purchase price of $1,393.68;

• $217,822,000 7.75% notes due 2032 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps for a purchase price of $1,376.42; and

• $1,729,489,000 6.4% notes due 2033 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 130 bps for a purchase price of $1,239.06.

Group 3 cash offers

The group 3 notes are as follows, with pricing per $1,000 principal amount:

• $1,250,414,000 5.85% notes due 2035 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 145 bps for a purchase price of $1,167.26;

• $636,164,000 6.25% notes due 2037 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 160 bps for a purchase price of $1,206.03;

• $750,121,000 6.4% notes due 2038 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps for a purchase price of $1,223.71;

• $384,147,000 6.9% notes due 2038 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 165 bps for a purchase price of $1,291.25;

• $290,083,000 8.95% notes due 2039 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 170 bps for a purchase price of $1,568.24;

• $412,283,000 7.35% notes due 2039 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 170 bps for a purchase price of $1,351.85;

• $1 billion 6% notes due 2041 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a purchase price of $1,168.54; and

• $4,245,055,000 6.55% notes due 2043 with pricing based on the 2.25% Treasury note due Aug. 15, 2046 plus 175 bps for a purchase price of $1,259.24.

More tender details

Pricing was set using the fixed spread to the yield of the reference U.S. Treasury security at 11 a.m. ET on Jan. 31.

Global Bondholder Services Corp. (866 470-3800, 212 430-3774 or gbsc-usa.com/verizon-tender/) is the information agent and the tender agent.

Verizon is a New York City-based telecommunications company.

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