Verizon offers to buy notes from eight series for up to $2.5 billion

By Marisa Wong

Morgantown, W.Va., Sept. 5 – Verizon Communications Inc. announced it began eight separate offers to purchase for cash outstanding notes from eight series for an aggregate purchase price of up to $2.5 billion.

Verizon is offering to accept for purchase tendered notes using a “waterfall” method. The notes will be accepted in the order of their respective acceptance priority levels, subject to the cap.

The offers will each expire at 11:59 p.m. ET on Oct. 2.

Holders who tender their notes at or prior to 5 p.m. ET on Sept. 18, the early participation date, will be eligible to receive the total consideration, which includes an early participation payment of $50 per $1,000 principal amount.

The total consideration for each series of notes will be based on that series’ applicable fixed spread plus the yield of the 3.125% U.S. Treasury due May 15, 2048. Pricing will be set at 11 a.m. ET on Sept. 19.

Holders tendering after the early participation date will only be eligible to receive the tender offer consideration, which is the total consideration less the early participation payment.

The company will also pay accrued interest to but excluding the applicable settlement date. Interest is excluded from the $2.5 billion cap on the total cash that Verizon pays to purchase the tendered notes.

Verizon is offering to purchase the following outstanding securities, listed in order of acceptance priority level:

• $5,058,023,000 of 4.672% notes due 2055, with pricing to be based on a fixed spread of 195 basis points;

• $3,916,232,000 of 5.012% notes due 2049, with pricing to be based on a fixed spread of 180 bps;

•$5,195,586,000 of 5.012% notes due 2054, with pricing to be based on a fixed spread of 200 bps;

• $4,481,503,000 4.862% notes due 2046, with pricing to be based on a fixed spread of 180 bps;

• $1,652,920,000 4.812% notes due 2039, with pricing to be based on a fixed spread of 170 bps;

• $4,692,468,000 4.522% notes due 2048, with pricing to be based on a fixed spread of 180 bps;

• $1,479,579,000 of 4.125% notes due 2046, with pricing to be based on a fixed spread of 180 bps; and

• $1.25 billion of 3.85% notes due 2042, with pricing to be based on a fixed spread of 175 bps.

If the aggregate cash purchase price (excluding coupon payments) of all notes tendered at or prior to the early participation date does not exceed the waterfall cap, then Verizon will accept all of those notes.

However, if the aggregate purchase price exceeds the cap, then Verizon will (a) accept notes starting with the highest acceptance priority level and moving sequentially to each lower acceptance priority level until the aggregate cash purchase price equals the waterfall cap, (b) prorate the series with the lowest acceptance priority level accepted for purchase and (c) not accept for purchase any notes of a series with an acceptance priority level below the prorated series or any notes tendered after the early deadline.

If the waterfall cap is not exceeded by the early deadline, Verizon will accept notes tendered after that time according to priority levels. All notes, regardless of priority level, that are tendered by the early deadline will have priority over notes tendered after that time.

Verizon will settle all early tendered notes that are accepted for purchase on an early settlement date. The final settlement date for any remaining tenders accepted for purchase is expected to be Oct. 4.

Tenders may be withdrawn at any time at or prior to 5 p.m. ET on Sept. 18.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106), J.P. Morgan Securities LLC (866 834-4666 or 212 834-4811), RBC Capital Markets, LLC (877 381-2099 or 212 618-7822) and Wells Fargo Securities, LLC (866 309-6316 or 704 410-4756) are lead dealer managers for the offers. ICBC Standard Bank plc, Loop Capital Markets LLC, Blaylock Van, LLC and C.L. King & Associates, Inc. are co-dealer managers.

Global Bondholder Services Corp. (866 470-4300 or 212 430-3774) is tender agent and information agent.

Verizon is a New York-based telecommunications company.

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