By Susanna Moon
Chicago, Dec. 17 - AT&T Inc. priced the exchange offers for several series of notes under the pool 1 and pool 2 offers.
As previously reported, the company will issue up to $3.5 billion of new AT&T senior notes due 2042 and up to $3.5 billion of new AT&T senior notes due 2045, with a combined maximum amount of new notes of $5 billion, which was upsized from $4 billion on Nov. 30.
Pricing for the pool 1 notes and the pool 2 notes was set using the bid-side yield on the 2.75% U.S. Treasury notes due Aug. 15, 2042 plus a spread of 35 basis points, according to a company press release.
The total exchange price for the pool 1 notes was set for each $1,000 principal amount, with a reference yield of 5.034%, as follows:
• $1,408.14 for the 7.12% debentures due 2097, including $1,235.59 of new notes plus $183.66 in cash;
• $1,384.19 for the 7% notes due 2095, including $1,202.90 of new notes plus $192.10 in cash; and
• $1,133.11 for the 6.65% zero-to-full debentures due 2095, including $1,129.96 of new notes plus $13.31 in cash.
For the pool 2 notes, the total exchange price was set for each $1,000 principal amount using a reference yield of 4.534% as follows:
• $1,395.39 for the 7.875% notes due 2030, including $1,079.83 of new notes plus $316.31 in cash;
• $1,294.25 for the 6.875% notes due 2031, including $1,059.58 of new notes plus $235.40 in cash;
• $1,275.01 for the 6.55% notes due 2034, including $1,097.01 of new notes plus $178.76 in cash; and
• $1,202.22 for the 6.00% notes due 2034, including $1,051.28 of new notes plus $151.67 in cash.
The total payment listed above includes an early participation payment of $50.00 per $1,000 principal amount of notes tendered by 5 p.m. ET on Nov. 29, the early participation deadline.
Settlement of offers
On Dec. 17, AT&T issued $1,956,149,000 of new 2042 notes and $3,043,850,000 of new 2045 notes and paid a total of $690,965,329.25 in cash, including accrued interest to but excluding Dec. 17.
Investors tendered and the company accepted $206,856,000 of the 7.12% notes, $206,856,000 of the 7% notes and $259,101,000 of the 6.65% zero-to-full notes in the pool 1 offer.
In the pool 2 offer, the tender results are as follows:
• Tenders for $314,053,000 of the 7.875% notes, with $309,780,000 notes accepted;
• Tenders for $249,037,000 of the 6.875% notes, with $244,549,000 notes accepted;
• Tenders for $190,602,000 of the 6.55% notes, with $189,541,000 notes accepted; and
• Tenders for $171,852,000 of the 6% notes, with $171,129,000 notes accepted.
In the pool 3 offer for the first seven series of notes, listed in order of order of priority acceptance level, the company received and accepted all of the tendered notes as follows:
• $258,781,000 of the 6.45% notes;
• $413,746,000 of the 6.15% notes;
• $224,827,000 of the 8% notes;
• $241,574,000 of the 8.75% notes;
• $240.11 million of the 7.125% notes;
• $332.13 million of the 6.8% notes; and
• $804.38 million of the 6.4% notes.
In the pool 3 offer for the remaining three series of notes, also listed in order of priority acceptance level, the tender results are as follows:
• Tenders for $1,263,564,000 of the 6.5% notes, with $18,718,000 notes accepted;
• Tenders for $1,719,942,000 of the 6.3% notes, with none of the notes accepted; and
• Tenders for $1,096,337,000 of the 6.55% notes, with none of the notes accepted.
Based on the amount of tendered notes and the terms of the offers, AT&T accepted all of the pool 1 notes tendered in the exchange offers. The company also accepted $915 million principal amount of the pool 2 notes on a prorated basis, with a proration factor applied to the $198,264,000 of the pool 2 notes tendered at a bid spread equal to the clearing spread of about 94.73% of the notes.
In the pool 3 offer, AT&T accepted all of the 6.45% notes, the 6.15% notes, the 8% notes, the 8.75% notes, the 7.125% notes, the 6.8% notes due 2036 and the 6.4% notes. The company accepted $18,718,000 of the 6.5% notes, with a proration factor of about 1.51%.
Pool 3 pricing
As noted before, the reference security for the pool 3 notes is the 2.75% U.S. Treasury due Aug. 15, 2042. As of the pricing time, the bid-side yield was 2.784%.
The interest rate on the new 2042 notes is 4.3%, and the rate on the new 2045 notes is 4.35%. The yield on the 2042 notes is 4.354%, and their new issue price, based on the 2.784% reference yield, is $99.101. The yield on the 2045 notes is 4.354%, and their new issue price, based on the reference yield, is $99.931.
The total payment for the pool 3 offer included a $50.00 early participation payment for each $1,000 principal amount of notes tendered by the early participation date.
Pricing details for the pool 3 notes are listed in tables below.
The 7.12% debentures due 2097 and the 7.875% notes were originally issued by BellSouth Capital Funding Corp., which subsequently merged with and into BellSouth Corp. The 8% notes due 2031 were issued by AT&T Corp. and are guaranteed by AT&T. The 8.75% notes due 2031 were issued by New Cingular Wireless Services, Inc., formerly known as AT&T Wireless Services, Inc. And the 7.125% senior notes due 2031 were issued by AT&T Mobility LLC, which was formerly known as Cingular Wireless LLC.
Caps lifted, early tenders
On Nov. 30 AT&T announced the early results of its exchange offers and also said that it had increased some of the maximum tender amounts in the offers.
The maximum principal amount of pool 1 notes accepted for tender was lifted to $700 million, up from $400 million, and the cap for the pool 2 notes was increased to $915 million from $800 million. The pool 1 offer and the pool 2 offer were conducted under a modified Dutch auction.
The exchange offers expired at 11:59 p.m. ET on Dec. 13.
The exchange offers were only being made to qualified institutional buyers under Rule 144A or non-U.S. persons under Regulation S.
Each offer was conditioned on the issuance of at least $500 million principal amount of new 2042 notes and at least $500 million principal amount of new 2045 notes, and this condition has been met.
D.F. King & Co., Inc. (800 488-8095, collect 212 269-5550 or via email at ATT@dfking.com) is the information agent.
The telecommunications company is based in Dallas.
Pool 1 offer
Notes Issuer Exchange payment
7.12% debentures due 2097 BellSouth New 2042 notes and cash
7% notes due 2095 BellSouth Telecommunications New 2042 notes and cash
6.65% zero-to-full debentures due 2095 BellSouth Telecommunications New 2042 notes and cash
Pool 2 offer (BellSouth notes)
Notes Exchange payment
7.875% notes due 2030 New 2045 notes and cash
6.875% notes due 2031 New 2045 notes and cash
6.55% notes due 2034 New 2045 notes and cash
6% notes due 2034 New 2045 notes and cash
Pool 3 offer (AT&T notes)
Notes listed in order of priority acceptance Exchange payment
6.45% global notes due 2034 New 2045 notes
6.15% global notes due 2034 New 2045 notes
8% notes due 2031 New 2042 notes
8.75% notes due 2031 New 2042 notes
7.125% senior notes due 2031 New 2042 notes
6.8% notes due 2036 New 2045 notes and cash
6.4% global notes due 2038 New 2045 notes and cash
6.5% global notes due 2037 New 2042 notes and cash
6.3% global notes due 2038 New 2042 notes and cash
6.55% global notes due 2039 New 2045 notes and cash
Pricing for pool 3 offer
| Notes | Total payment | Yield | Amount new notes | New notes series | Cash payment
|
| 6.45% notes | $1,314.09 | 4.214% | $1,315.00 | 2045 notes | -
|
| 6.15% notes | $1,273.82 | 4.214% | $1,274.70 | 2045 notes | -
|
| 8% notes | $1,556.68 | 3.834% | $1,570.80 | 2042 notes | -
|
| 8.75% notes | $1,667.55 | 3.684% | $1,682.68 | 2042 notes | -
|
| 7.125% notes | $1,441.12 | 3.834% | $1,454.19 | 2042 notes | -
|
| 6.8% notes | $1,382.45 | 4.214% | $1,058.10 | 2045 notes | $325.08
|
| 6.4% notes | $1,335.11 | 4.234% | $1,051.00 | 2045 notes | $284.84
|
| 6.5% notes | $1,345.02 | 4.234% | $1,078.70 | 2042 notes | $276.02
|
| 6.3% notes | $1,317.28 | 4.234% | $1,057.09 | 2042 notes | $269.69
|
| 6.55% notes | $1,364.13 | 4.234% | $1,091.78 | 2045 notes | $273.10
|
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