Verizon raises cash cap to $3 billion in private tender, exchange

New York, Aug. 7 – Verizon Communications Inc. raised the cash cap to $3 billion from $2 billion in its private tender and exchange offers for 17 series of its and subsidiary GTE LLC’s notes.

The company also announced in a news release that the financing condition for the offer has been satisfied through the issuance of new debt securities that raised $3.94 billion.

By selling the new bonds, Verizon also satisfied the financing condition for the concurrent public tender offer.

All other terms and conditions are unchanged.

Verizon announced the private tender offer on July 31, setting the expiration at 11:59 p.m. ET on Aug. 25.

Only holders who are eligible under Rule 144A may participate in the offers.

As previously announced, Verizon is using a waterfall method to accept notes. There is a $2 billion cap – now raised to $3 billion – on the total cash Verizon will pay to purchase old notes, excluding accrued interest. There is also a $4 billion cap on the principal amount of new notes it will issue in exchange for old notes.

When submitting a tender of old notes, a holder must elect to participate in either the cash offer or the exchange offer for each series of notes they are tendering by electing (i) to receive only cash in the cash offer, (ii) to receive only new notes in the exchange offer, or (iii) a hybrid option to receive cash and, to the extent cash is unavailable due to the operation of the acceptance priority procedures in the cash offer, to receive the remainder of their consideration in new notes.

The total consideration for each $1,000 principal amount of fixed rated notes will be set using a fixed spread over the bid-side price of the reference U.S. Treasury security at 11 a.m. ET on Aug. 14, listed as follows when relevant, with the notes listed in order of priority acceptance levels from 1 to 17:

• Verizon Communications Inc.’s $1.75 billion floating-rate notes due 2018 for $1,020;

• Verizon Communications Inc.’s $500 million floating-rate notes due 2019 for $1,012.50;

• Verizon Communications Inc.’s $400 million floating-rate notes due 2019 for $1,002.50;

• GTE LLC’s $294,121,000 6.84% debentures due 2018 based on 0.75% Treasury notes due April 15, 2018 plus 25 basis points;

• Verizon Communications Inc.’s $2,093,214,000 3.65% notes due 2018 using the 1% Treasury notes due Sept. 15, 2018 plus 35 bps;

• Verizon Communications Inc.’s $310,701,000 2.55% notes due 2019 using the 0.875% Treasury notes due June 15, 2019 plus 15 bps;

• Verizon Communications Inc.’s $586,742,000 1.375% notes due 2019 using the 1.375% Treasury notes due July 31, 2019 plus 15 bps;

• Verizon Communications Inc.’s $1,323,711,000 2.625% notes due 2020 using the 1.5% Treasury notes due July 15, 2020 plus 20 bps;

• Verizon Communications Inc.’s $1 billion 3.45% notes due 2021 using the 1.875% Treasury notes due July 31, 2022 plus 25 bps;

• Verizon Communications Inc.’s $1 billion 1.75% notes due 2021 using the 1.875% Treasury notes due July 31, 2022 plus 35 bps;

• GTE LLC’s $193,079,000 8.75% debentures due 2021 based on 1.875% Treasury notes due July 31, 2022 plus 85 bps;

• Verizon Communications Inc.’s $1.85 billion 3.5% notes due 2021 using the 1.875% Treasury notes due July 31, 2022 plus 50 bps;

• Verizon Communications Inc.’s $1.5 billion 3% notes due 2021 using the 1.875% Treasury notes due July 31, 2022 plus 50 bps;

• Verizon Communications Inc.’s $1.75 billion 2.45% notes due 2022 using the 1.875% Treasury notes due July 31, 2022 plus 75 bps;

• Verizon Communications Inc.’s $4 billion 4.5% notes due 2020 using the 1.5% Treasury notes due July 15, 2020 plus 45 bps;

• Verizon Communications Inc.’s $4.6 billion 4.6% notes due 2021 using the 1.875% Treasury notes due July 31, 2022 plus 35 bps; and

• Verizon Communications Inc.’s $7,584,189,000 5.15% notes due 2023 using the 2.125% Treasury notes due July 31, 2024 plus 85 bps.

In each case the total consideration includes an early participation payment for notes tendered by 5 p.m. ET on Aug. 11.

The early payment per $1,000 principal amount is $30 for each series, except the Verizon Communications Inc. 3.5% notes due 2021 for which it is $20 and the Verizon Communications Inc. 4.6% notes due 2021 and the Verizon Communications Inc. 5.15% notes due 2023 for which it is $50.

Holders will also receive accrued interest to the settlement date.

Tendered notes may be withdrawn by 5 p.m. ET on Aug. 11.

The acceptance priority procedures will operate as follows:

• First, if the aggregate cash purchase price excluding accrued interest of all old notes validly tendered by the early participation date by eligible holders who have elected the cash option or the hybrid option does not exceed the cash cap, then Verizon will accept all those notes. However, if the aggregate cash purchase price of all notes validly tendered by the early participation date by eligible holders who have elected the cash option or the hybrid option exceeds the cash cap, then Verizon will (i) accept notes for purchase for cash in order of priority until the aggregate cash purchase price meets the cash cap, (ii) prorate the old notes with the lowest acceptance priority level accepted for purchase for cash and (iii) not accept for purchase for cash any notes with a lower priority or tendered after the early participation date by holders who have elected the cash option or the hybrid option;

• Second, if the aggregate principal amount of new notes to be issued in exchange for old notes validly tendered by early participation date by eligible holders who have elected the notes option plus any remaining old notes validly tendered by eligible holders who elected the hybrid option but whose old notes were subject to proration or otherwise were not accepted because of their acceptance priority level in the cash offers does not exceed the new notes cap, then Verizon will accept all those old notes. If the aggregate principal amount of new notes to be issued in exchange for old notes validly tendered by the applicable early participation date by eligible holders who have elected the notes option plus any remaining hybrid notes exceeds the new notes cap, then Verizon will (i) accept old notes for exchange in order of priority up to the new notes cap, (ii) prorate the series of old notes of the lowest acceptance priority level accepted for exchange and (iii) not accept for exchange any old notes with a lower priority or tendered after the early participation date; and

• Third, if one or both of the cash cap and the new notes cap are not exceeded at the applicable early participation date, Verizon will repeat the steps described above with respect to notes validly tendered after the early participation date but before expiration date. In both the cash offers and the exchange offers, all old notes, regardless of acceptance priority level, tendered before the early participation date will have priority over old notes tendered after the early participation date.

The new notes will mature on Feb. 15, 2025 and will bear interest equal to the yield of the 2.125% U.S. Treasury security due July 31, 2024 plus 135 bps.

The offer is contingent on Verizon pricing by the early participation date debt securities expected to provide proceeds of at least $3 billion.

Alongside the private tender and exchange, Verizon is also offering to buy back its own notes and notes of several subsidiaries in 29 public cash tender offers with a cap of $1.5 billion.

Global Bondholder Services Corp. (866 470-3800 or 212 430-3774) is the information agent and the tender agent.

Verizon is a New York City-based telecommunications company.

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