Qwest in huge debt-for-debt exchange

Qwest Communications International Inc. (Ba3/C) said Wednesday that it will exchange new debt for up to $12,902,653,000 aggregate principal amount of the existing debt of its Qwest Capital Funding Inc. subsidiary via a private placement transaction involving qualified institutional holders.

Qwest, a Denver, Colo.-based telecommunications company, said that the new debt being exchanged for the existing paper will include up to $4 billion of new senior subordinated secured notes of Qwest Services Corp., a wholly-owned subsidiary of parent Qwest Communications. Those new notes will be secured by a junior lien on Qwest Services assets that secure its bank debt, principally the capital stock of Qwest Corporation.

To the extent that the offer of new Qwest Services notes is oversubscribed, tendering eligible holders of the existing Qwest Capital Funding notes will receive new Qwest Services notes on a pro-rated basis; the remaining portion of tendering eligible holders' existing Qwest Capital Funding notes will be exchanged for newly issued Qwest Communications notes that will have the same principal amount, coupon and maturity date as their existing QCF notes. In addition, those new Qwest Communications notes will be secured by a first lien on the stock of Qwest Services Corp.

Qwest said that the purpose of the exchange offer is to reduce outstanding indebtedness and extend some near-term debt maturities. The exchange offer will expire at 11:59 p.m. ET on Dec. 20, subject to possible extension.

Qwest said that it is offering to exchange $825 face amount of its new Qwest Services Corp. 13% notes due 2007 per $1,000 principal amount of the existing $1.25 billion of Qwest Capital Funding 5 7/8% notes due 2004.

It is offering to exchange $750 face amount of the Qwest Services 13% notes per $1,000 principal amount of the existing $500 million of Qwest Capital Funding 6¼% notes due 2005.

It is offering to exchange $680 face amount of the Qwest Services 13% notes per $1,000 principal amount of the existing $1.25 billion of Qwest Capital Funding 7¾% notes due 2006.

It is offering to exchange $625 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $583.839 million of Qwest Capital Funding 6 3/8% notes due 2008.

It is offering to exchange $635 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $1,984,990,000 of Qwest Capital Funding 7% notes due 2009.

It is offering to exchange $640 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $1,745,885,000 of Qwest Capital Funding 7.9% notes due 2010.

It is offering to exchange $635 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $2.25 billion of Qwest Capital Funding 7¼% notes due 2011.

It is offering to exchange $525 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $393.37 million of Qwest Capital Funding 6½% debentures due 2018.

It is offering to exchange $540 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $477.85 million of Qwest Capital Funding 7 5/8% notes due 2021.

It is offering to exchange $545 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $1,476,889,000 of Qwest Capital Funding 6 7/8% debentures due 2028.

It is offering to exchange $545 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $989.83 million of Qwest Capital Funding 7¾% debentures due 2031.

In addition to the aforementioned exchange compensation, Qwest will pay, in cash, accrued interest up to, but not including, the settlement date on all validly tendered and accepted Qwest Capital Funding notes.

Neither the new Qwest Services Corp. notes nor the new Qwest Communications International notes that are being exchange for the existing notes have been registered with the Securities and Exchange Commission for unrestricted public trading, although the company said that both entities will enter into a registration rights agreement under which they will agree to file an exchange offer registration statement with the SEC with respect to the new notes.

Mellon Investor Services (call toll-free at 866 293-6625) will be the information agent for the exchange offer.

AES waives early tender deadline in exchange offer for '02, '03 notes

The AES Corp. (B3/B+) said on Tuesday (Nov. 19) that it had waived the early tender deadline (5 p.m. ET on Monday (Nov. 18) in connection with its previously announced offer to exchange a combination of cash and new senior secured securities for up to $500 million of senior notes scheduled to come due in 2002 and 2003.

The company said that holders tendering their notes by the scheduled tender offer expiration deadline (5 p.m. ET on Dec. 3) and not withdrawing such securities would all be eligible to receive the previously announced early tender bonus payment of $15 per $1,000 principal amount of its 8¾% senior notes due 2002 and $5 per $1,000 principal amount of its 7 3/8% remarketable and redeemable securities - ROARS - due 2013, assuming the exchange offer is consummated.

AS PREVIOUSLY ANNOUNCED, AES, an Arlington, Va.-based global independent power producer said on Oct. 3 that it had begun an offer to exchange the cash and new debt for its $300 million of outstanding 8¾% notes and its $200 million of outstanding 7 3/8% ROARS, which are putable in 2003.

AES said it would exchange $500 in cash and $500 principal amo unt of a new issue of 10% senior secured notes due 2005 per $1,000 principal amount of the existing 2002 notes( this mix was subsequently altered), and would exchange $1,000 principal amount of the new 10% notes per $1,000 principal amount of the ROARS. It additionally said it would pay an early tender bonus payment of $15 per $1,000 principal amount of the 2002 notes tendered and $5 per $1,000 principal amount of the ROARS tendered to holders who tender their notes prior to the early tender deadline (originally 5 p.m. ET on Oct. 25, which was subsequently first extended, then waived, then restored, then waived again) and who do not subsequently withdraw such securities, assuming the exchange offer is consummated.

It said the exchange offer would expire at 5 p.m. ET on Nov. 8 (this deadline was subsequently extended). Tenders of the 2002 notes and the ROARs could be withdrawn at any time prior to the later of the early tender deadline and the time that AES announces that it has received valid and unwithdrawn tenders representing at least 75% in aggregate principal amount of the 2002 notes and the ROARS on a combined basis (the minimum participation percentages were later changed). In no event shall the latter time be later than the announced expiration date.

The company said that consummation of the exchange offer would be subject to a number of significant conditions, including (but not limited to) that valid and unwithdrawn tenders are received representing at least 75% in aggregate outstanding principal amount of the 2002 Notes and the ROARs on a combined basis; AES' concurrent entry into a new senior secured credit facility; the valid amendment of certain documentation executed in connection with the issuance of the ROARS in order to permit the completion of the exchange offer; and the absence of certain adverse legal and market developments.

AES said that the new senior secured notes being offered to the holders of the 2002 notes and the ROARS would be secured equally and ratably with all debt outstanding under the new senior secured credit facilities, by first-priority liens, subject to certain exceptions and permitted liens, on all of the capital stock of domestic subsidiaries owned directly by AES and 65% of the capital stock of certain foreign subsidiaries owned directly by AES and on certain inter-company receivables, inter-company notes and inter-company tax sharing agreements owed to AES by its subsidiaries. In addition, the new senior secured notes will be subject to a mandatory offer to repurchase with a portion of the net cash proceeds received from certain asset sales by AES.

The offering of the new senior secured notes in the exchange offer is being made only to "qualified institutional buyers" and "persons other than a U.S. person" located outside the United States under the definitions contained in Rule 144A and Regulation S of the Securities Act of 1933, as amended.

AES further said that concurrently, it was also launching a new multi-tranche $1.6 billion senior secured credit facility, which would be secured equally and ratably with the new senior secured notes. Consummation of the new senior secured facility would be subject to a number of conditions, including the completion of the exchange offer for the bonds and participation of all of its existing lenders.

On Oct. 28, AES said that it was extending the early tender deadline on its offer to 5 p.m. ET on Oct. 30, subject to possible further extension, from the original Oct. 25 deadline. On Oct. 31, AES said that it had again extended the early tender deadline to 5 p.m. ET on Nov. 1, subject to possible further extension, from the prior Oct. 30 deadline. On Nov. 4, AES said that it had waived the early tender deadline on the exchange offer, so that all holders validly tendering their notes by the Nov. 8 expiration deadline for the offer (which was subsequently extended) would be eligible for the applicable early tender bonus cash payment.

On Nov. 11, AES said that it had extended the exchange offer to 5 p.m. ET on Dec. 3, subject to possible further extension, from the previous Nov. 8 deadline, and had amended certain other terms of the exchange.

AES said that it had been informed by the exchange agent for the offer that, as of the old expiration deadline, approximately $16.863 million of its 2002 notes and $44.494 million of the ROARs had been tendered in the exchange offer, representing approximately 5.6% and 22.2% of the outstanding 2002 notes and ROARs, respectively.

The company modified the consideration it will pay to the holders of its 8 ¾% senior notes due 2002 to a mixture of $650 in cash and $350 in new securities per $1,000 principal amount of the old notes tendered (from $500 in cash and $500 in new notes previously).

The company had originally announced an early tender bonus to be paid in addition to the actual exchange consideration, with a separate, earlier deadline, for holders of the 8 ¾% notes and the 7 3/8% remarketable and redeemable securities ("ROARS") due 2013 that it is tendering for, but subsequently eliminated the earlier deadline, offering the bonus to all tendering holders. The Nov. 11 announcement restored the early tender deadline, setting it at 5 p.m. ET on Nov. 18; AES said that holders could withdraw their note tenders any time until that early deadline.

The previously announced respective early tender bonuses for the 8 ¾% notes and for the ROARS remained the same; however, AES said that holders tendering on or prior to the expiration date and not withdrawing such securities would still receive an incremental cash payment in the amount of $5 for each $1,000 principal amount 8 ¾% notes tendered and $5 for each $1,000 principal amount of ROARs tendered.

AES further said the consummation of the exchange offer would now be subject to the condition that 80% of the aggregate principal amount of the 8¾% notes and 80% of the aggregate principal amount of the ROARs be received and not withdrawn, a change from its original condition that 75% of the 8¾% notes and the ROARs on a combined aggregate basis be tendered.

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