Verizon to pay $285 million in tender for 31 issues, wraps exchange

By Susanna Moon

Chicago, Dec. 14 – Verizon Communications Inc. said it will pay an aggregate purchase price of $285,119,571.31 to settle the 31 separate tender offers for its notes and notes of its subsidiaries.

As announced Nov. 16 the issuer was holding 31 tenders to spend up to $1 billion by way of a waterfall offer as well as separate offers and consent solicitations to exchange 18 series of the notes issued by its wholly owned subsidiaries for new notes issued by Verizon.

The tender offers and consent solicitations ended at 11:59 p.m. ET on Dec. 13.

The early deadline was extended until 11:59 p.m. ET on Dec. 13 in the waterfall offers as well as in the separate exchange offers and consent solicitations.

The GTE LLC 6.84% debentures due 2018 are excluded in the separate exchange offers and consent solicitations, as previously noted.

In the waterfall offers, Verizon was offering to accept for purchase with the offers capped at $1 billion.

The tender results are as follows, with the notes listed in order of priority acceptance levels, and pricing for each $1,000 principal set using a reference security plus a fixed spread:

• $7,298,000, or 2.31%, of GTE LLC’s $315,309,000 6.94% debentures due 2028 based on the 2.25% Treasury note due Nov. 15, 2027 plus 150 basis points for a total purchase price of $1,257.23, compared with original early tenders for $6,867,000, or 2.18%;

• $13,062,000, or 6.77%, of GTE LLC’s $192,879,000 8.75% debentures due 2021 based on the 2% Treasury note due Oct. 31, 2022 plus 60 bps for a total purchase price of $1,221.03, compared with original early tenders for $12,847,000, or 6.66%;

• $1,221,000, or 0.61%, of Verizon New York Inc.’s $201,579,000 7.375% debentures due 2032 based on the 2.25% Treasury note due Nov. 15, 2027 plus 180 bps for a total purchase price of $1,339.58, compared with original early tenders for $1,183,000, or 0.59%;

• $16,129,000, or 9.28%, of Alltel Corp.’s $173,779,000 7.875% senior notes due 2032 based on the 2.25% Treasury note due Nov. 15, 2027 plus 165 bps for a total purchase price of $1,418.39, compared with original early tenders for $15,978,000, or 9.19%;

• $4,964,000, or 3.41%, of Verizon New England Inc.’s $145,697,000 7.875% debentures due 2029 based on the 2.25% Treasury note due Nov. 15, 2027 plus 160 bps for a total purchase price of $1,365.33, compared with original early tenders for $4,835,000, or 3.32%;

• $451,000, or 0.33%, of Alltel’s $138,677,000 6.8% debentures due 2029 based on the 2.25% Treasury note due Nov. 15, 2027 plus 145 bps for a total purchase price of $1,270.51, compared with original early tenders for $406,000, or 0.29%;

• $788,000, or 0.71%, of Verizon New Jersey Inc.’s $111,392,000 8% debentures due 2022 based on the 2% Treasury note due Oct. 31, 2022 plus 65 bps for a total purchase price of $1,218.70, compared with original early tenders for $479,000, or 0.43%;

• $593,000, or 1.16%, of Verizon New Jersey Inc.’s $51,335,000 7.85% debentures due 2029 based on the 2.25% Treasury note due Nov. 15, 2027 plus 160 bps for a total purchase price of $1,362.98, compared with original early tenders for $382,000, or 0.74%;

• $768,000, or 1.11%, of Verizon New York Inc.’s $69,404,000 6.5% debentures due 2028 based on the 2.25% Treasury note due Nov. 15, 2027 plus 150 bps for a total purchase price of $1,220.09, compared with original early tenders for $570,000, or 0.82%;

• $6.04 million, or 3.95%, of Verizon Maryland LLC’s $152,911,000 5.125% debentures due 2033 based on the 2.75% Treasury note due Aug. 15, 2047 plus 145 bps for a total purchase price of $1,094.66, compared with original early tenders for $5,567,000, or 3.64%;

• $87,159,000, or 7.61%, of Verizon Communications Inc.’s $1,145,489,000 6.55% notes due 2043 based on the 2.75% Treasury note due Aug. 15, 2047 plus 175 bps for a l total purchase price of $1,295.47, unchanged as of the original early deadline;

• $619,000, or 0.11%, of Verizon Communications Inc.’s $563.18 million 7.75% notes due 2030 based on the 2.25% Treasury note due Nov. 15, 2027 plus 165 bps for a total purchase price of $1,371.22, compared with original early tenders for $579,000, or 0.10%;

• $5,389,000, or 1.48%, of Verizon Communications Inc.’s $363,554,000 6.4% notes due 2038 based on the 2.75% Treasury note due Aug. 15, 2047 plus 175 bps for a total purchase price of $1,237.40, compared with original early tenders for $5,344,000, or 1.47%;

• $2,887,000, or 0.65%, of Verizon Communications Inc.’s $444.5 million 6.4% notes due 2033 based on the 2.75% Treasury note due Aug. 15, 2047 plus 135 bps for a total purchase price of $1,253.79, compared with original early tenders for $1,696,000, or 0.38%;

• $182,000, or 0.09%, of Verizon Communications Inc.’s $206,855,000 6.9% notes due 2038 based on the 2.75% Treasury note due Aug. 15, 2047 plus 175 bps for a total purchase price of $1,304.27, unchanged as of the original early deadline;

• $40,000, or 0.04%, of Verizon Communications Inc.’s $108,862,000 8.95% notes due 2039 based on the 2.75% Treasury note due Aug. 15, 2047 plus 185 bps for a total purchase price of $1,569.71, unchanged as of the original early deadline;

• $1.3 million, or 0.26%, of Verizon Communications Inc.’s $502,452,000 5.85% notes due 2035 based on the 2.75% Treasury note due Aug. 15, 2047 plus 155 bps for a total purchase price of $1,179.59, compared with original early tenders for $1,077,000, or 0.21%;

• $1,256,000, or 0.5%, of Verizon Communications Inc.’s $253,267,000 6% notes due 2041 based on the 2.75% Treasury note due Aug. 15, 2047 plus 185 bps for a total purchase price of $1,185.48, compared with original early tenders for $1,253,000, or 0.49%;

• $419,000, or 0.27%, of Verizon Communications Inc.’s $153,447,000 7.35% notes due 2039 based on the 2.75% Treasury note due Aug. 15, 2047 plus 185 bps for a total purchase price of $1,356.88, unchanged as of the original early deadline;

• $346,000, or 0.22%, of Verizon Communications Inc.’s $159,514,000 7.75% notes due 2032 based on the 2.25% Treasury note due Nov. 15, 2027 plus 185 bps for a total purchase price of $1,377.03, compared with original early tenders for $328,000, or 0.21%;

• $12,193,000, or 3.99%, of Verizon Communications Inc.’s $305,309,000 6.25% notes due 2037 based on the 2.75% Treasury note due Aug. 15, 2047 plus 170 bps for a total purchase price of $1,219.18, unchanged since the original early deadline;

• $58,404,000, or 22.22%, of Verizon Communications Inc.’s $262,895,000 5.05% notes due 2034 based on the 2.75% Treasury note due Aug. 15, 2047 plus 145 bps for a total purchase price of $1,088.14, compared with original early tenders for $57,657,000, or 21.93%;

• $8,554,000, or 3.13%, of GTE LLC’s $273,441,000 6.84% debentures due 2018 based on the 1.5% Treasury note due Oct. 31, 2019 plus 10 bps for a total purchase price of $1,016.38, compared with original early tenders for $7,849,000, or 2.87%;

• $1,283,000, or 2.29%, of Verizon Virginia LLC’s $56,009,000 7.875% debentures due 2022 based on the 2% Treasury note due Oct. 31, 2022 plus 70 bps for a total purchase price of $1,194.24, compared with original early tenders for $1,283,000, or 2.29%;

• $86,000, or 0.24%, of Verizon Pennsylvania LLC’s $36,009,000 8.75% debentures due 2031 based on the 2.25% Treasury note due Nov. 15, 2027 plus 175 bps for a total purchase price of $1,477.12, compared with original early tenders for $57,000, or 0.16%;

• $167,000, or 0.53%, of Verizon Pennsylvania LLC’s $31,343,000 8.35% debentures due 2030 based on the 2.25% Treasury note due Nov. 15, 2027 plus 170 bps for a total purchase price of $1,425.99, compared with original early tenders for $92,000, or 0.29%;

• $196,000, or 0.72%, of Verizon Maryland LLC’s $27,358,000 8% debentures due 2029 based on the 2.25% Treasury note due Nov. 15, 2027 plus 160 bps for a total purchase price of $1,374.99, compared with original early tenders for $171,000, or 0.63%;

• $93,000, or 0.44%, of Verizon Maryland LLC’s $21,314,000 8.3% debentures due 2031 based on the 2.25% Treasury note due Nov. 15, 2027 plus 175 bps for a total purchase price of $1,429.62, compared with original early tenders for $58,000, or 0.27%;

• $790,000, or 1.41%, of Verizon Pennsylvania LLC’s $55,875,000 6% debentures due 2028 based on the 2.25% Treasury note due Nov. 15, 2027 plus 155 bps for a total purchase price of $1,181.72, compared with original early tenders for $529,000, or 0.95%;

• $38,000, or 0.42%, of Verizon Virginia LLC’s $9,031,000 8.375% debentures due 2029 based on the 2.25% Treasury note due Nov. 15, 2027 plus 160 bps for a total purchase price of $1,409.01, unchanged since the original early deadline; and

• None of the Verizon Delaware LLC’s $2,381,000 8.625% debentures due 2031 based on the 2.25% Treasury note due Nov. 15, 2027 plus 175 bps for a total purchase price of $1,468.38, unchanged since the original early deadline.

Pricing was set at 11 a.m. ET on Nov. 30.

The total payment included an early premium of $50.00 for each $1,000 principal amount of notes tendered before the early deadline, which was originally 5 p.m. ET on Nov. 29.

Holders also will receive accrued interest to but excluding the settlement date.

There is no separate consent payment for the consent solicitations.

Goldman Sachs & Co. LLC (800 828-3182 or 212 357-1452) and J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811) are the lead dealer managers and lead solicitation agents. Loop Capital Markets LLC and Samuel A. Ramirez & Co., Inc. are the co-dealer managers and co-solicitation agents. Global Bondholder Services Corp. (866 470-3800 or 212 430-3774) is the tender agent and the information agent.

Exchange offers

In the exchange, Verizon Communications Inc. was offering to issue new 8% notes due June 1, 2022, new 6.8% notes due May 1, 2029 and new 7.875% notes due July 1, 2032.

The exchange offers and consent solicitations ended at 11:59 p.m. ET on Dec. 13.

Verizon accepted all of the notes tendered for exchange, according to a separate company update on Thursday.

The total exchange value includes an early premium of $50.00 principal amount of new notes for each $1,000 principal amount of notes, which was originally set for 5 p.m. ET on Nov. 29.

Holders also will receive accrued interest to but excluding the settlement date.

The offers contained a minimum issue condition that requires that at least $75 million principal amount of new notes due 2022 be issued or at least $100 million of the new notes due 2029 and new notes due 2032.

The company accepted for exchange the following amount of notes with a cash amount for each $1,000 principal amount in lieu of 8% notes with pricing set using the 2% Treasury note due Oct. 31, 2022 plus a fixed spread:

• Verizon New Jersey Inc.’s $111,392,000 8% debentures due 2022 for $1,000 principal amount of new notes and a cash amount of $1,218.70 based on an offer yield of 2.756% using a spread of 65 basis points;

• GTE LLC’s $192,879,000 8.75% debentures due 2021 for $1,002 new notes and a cash amount of $1,221.03 based on an offer yield of 2.706% using a spread of 60 bps; and

• Verizon Virginia LLC’s $56,009,000 7.875% debentures due 2022 for $980 new notes and a cash amount of $1,194.24 based on an offer yield of 2.806% using a spread of 70 bps.

The company accepted tenders for none of the 8% debentures; $2.05 million, or 1.06%, of the 8.75% debentures; and $18 million, or 32.14%, of the 7.875% debentures.

As of the original early deadline, holders had tendered for exchange $4,275,000, or 3.84%, of the 8% debentures; $4.12 million, or 2.14%, of the 8.75% debentures; and $28 million, or 49.99%, of the 7.875% debentures.

In exchange for new 6.8% notes due 2029, holders had tendered the following amount of notes:

• $22.26 million, or 16.05%, of Alltel Corp.’s $138,677,000 6.8% debentures due 2029 for $1,000 new notes;

• $41,945,000, or 13.3%, of GTE LLC’s $315,309,000 6.94% debentures due 2028 for $826 new notes and $208 cash;

• $33,863,000, or 48.79%, of Verizon New York Inc.’s $69,404,000 6.5% debentures due 2028 for $960 new notes;

• $11,006,000, or 19.7%, of Verizon Pennsylvania LLC’s $55,875,000 6% debentures due 2028 for $777 new notes and $195 cash, compared with $10,981,000, or 19.65%, tendered for exchange as of the original early deadline;

• None of the Verizon Virginia LLC’s $9,031,000 8.375% debentures due 2029 for $984 new notes and $159 cash;

• $7,181,000, or 26.25%, of Verizon Maryland LLC’s $27,358,000 8% debentures due 2029 for $962 new notes and $153 cash;

• $36,000, or 0.11%, of Verizon Pennsylvania LLC’s $31,343,000 8.35% debentures due 2030 for $1,029 new notes and $119 cash, compared with $26,000, or 0.08%, tendered for exchange as of the original early deadline;

• $110,000, or 0.52%, of Verizon Maryland LLC’s $21,314,000 8.3% debentures due 2031 for $1,047 new notes and $99 cash;

• $1 million, or 2.78%, of Verizon Pennsylvania LLC’s $36,009,000 8.75% debentures due 2031 for $1,085 new notes and $99 cash; and

• None of the Verizon Delaware LLC’s $2,381,000 8.625% debentures due 2031 for $1,086 new notes and $89 cash.

Finally, holders had tendered in exchange for new 7.875% notes due 2032 the following amounts:

• $39,921,000, or 22.97%, of Alltel Corp.’s $173,779,000 7.875% senior notes due 2032 for $1,000 new notes;

• $6,038,000, or 11.76%, of Verizon New Jersey Inc.’s $51,335,000 7.85% debentures due 2029 for $962 new notes;

• $4,795,000, or 3.29%, of Verizon New England Inc.’s $145,697,000 7.875% debentures due 2029 for $964 new notes;

• $76,266,000, or 37.83%, of Verizon New York Inc.’s $201,579,000 7.375% debentures due 2032 for $946 new notes; and

• $10,000, or 0.01%, of Verizon Maryland LLC’s $152,911,000 5.125% debentures due 2033 for $568 new notes and $289 cash.

The exchange value is per $1,000 principal amount.

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

Verizon is a New York City-based telecommunications company.

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