Telecom Italia to buy $564.23 million 6.999%, 7.175% notes in tender

By Susanna Moon

Chicago, July 16 – Telecom Italia SpA investors had tendered a total of $564,226,000 of the $1 billion 6.999% guaranteed senior notes due 2018 and the $1 billion 7.175% guaranteed senior notes due 2019 issued by Telecom Italia Capital SA.

The tendered amount includes $66,000 principal amount of 6.999% notes and $820,000 principal amount of 7.175% notes that remain subject to the guaranteed delivery procedures, according to a 6-K filing with the Securities and Exchange Commission.

The company expects to accept for purchase all of the tendered $323,356,000 of 6.999% notes and $240.87 million of 7.175% notes, with settlement set for July 20.

The tender offer ended at 5 p.m. ET on July 15.

As previously announced, the payment for each $1,000 principal amount will be $1,117.21 for the 6.999% notes and $1,141.88 for the 7.175% notes.

Pricing was set using the sum of the yield to maturity for a reference Treasury security, based on the bid-side price as of 11 a.m. ET on July 15, plus a fixed spread.

For the 6.999% notes, the reference security was the 1.125% Treasury due June 15, 2018, which had a reference yield of 1.027%, and the fixed spread was 170 basis points.

For the 7.175% notes, the reference security was the 1.625% Treasury due June 30, 2020, which had a reference yield of 1.679%, and the fixed spread was 160 bps.

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

The global coordinator and structuring adviser is Citigroup Global Markets Ltd. (+44 20 79868969, 800 558-3745, 212 723-6106 or liabilitymanagement.europe@citi.com).

The dealer managers are Banco Bilbao Vizcaya Argentaria, SA (+44 207 648 7516, 212 728-1705 or liabilitymanagement@bbva.com), BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com), Citigroup Global Markets Ltd. (+44 20 79868969, 800 558-3745, 212 723-6106 or liabilitymanagement.europe@citi.com), Credit Agricole Securities (USA) Inc. (866 807-6030, +44 0 20 7214 7440 or liability.management@ca-cib.com), J.P. Morgan Securities LLC (866 834-4666 or 212 834-3424) and Societe Generale (+44 20 7676 7579 or liability.management@sgcib.com).

The depositary and information agent is Global Bondholder Services Corp. (212 430-3774).

Euro notes

Concurrently, the company is offering to repurchase an amount of its euro-denominated securities equal to €1.5 billion less the euro equivalent of the amount repurchased in the first offer.

In the euro offer, the company is tendering for the following notes:

• €1 billion (€625,692,000 outstanding) 7% notes due Jan. 20, 2017;

• €1 billion (€736,026,000 outstanding) 4½% notes due Sept. 20, 2017;

• €750 million (€714,121,000 outstanding) 4¾% notes due May 25, 2018;

• €750 million (€628,986,000 outstanding) 6 1/8% notes due Dec. 14, 2018; and

• €1.25 billion (€942.4 million outstanding) 5 3/8% notes due Jan. 29, 2019.

The company said it reserves the right to increase or decrease the maximum purchase amount.

Pricing will be set at 8 a.m. ET on July 16 using the January 2017 notes interpolated mid-swap rate plus 60 bps for the 7% notes, the September 2017 notes interpolated mid-swap rate plus 90 bps for the 4½% notes, the May 2018 notes interpolated mid-swap rate plus 115 bps for the 4¾% notes, the December 2018 notes interpolated mid-swap rate plus 120 bps for the 6 1/8% notes and the January 2019 notes interpolated mid-swap rate plus 130 bps for the 5 3/8% notes.

The euro tender offer was scheduled to end at 11 a.m. ET on July 15. The settlement date will be July 20.

Tender instructions must be submitted for a minimum nominal amount of notes of at least €100,000 and in integral multiples of €1,000 after that, except for the 5 3/8% notes, which must be submitted in multiples of €100,000.

The global coordinator and structuring adviser is Citigroup Global Markets Ltd. (+44 20 7986 8969 or liabilitymanagement.europe@citi.com).

The dealer managers are Banco Bilbao Vizcaya Argentaria, SA (+44 207 648 7516 or liabilitymanagement@bbva.com), BNP Paribas (+44 20 7595 8668 or liability.management@bnpparibas.com), Citigroup Global Markets Ltd. (+44 20 79868969 or liabilitymanagement.europe@citi.com), Credit Agricole Securities (USA) Inc. (+44 207 214 7440 or liability.management@ca-cib.com), J.P. Morgan Securities LLC (+44 0 207 134 3438 or emea_lm@jpmorgan.com) and Societe Generale (+44 20 7676 7579 or liability.management@sgcib.com).

The tender agent is Lucid Issuer Services Ltd. (+44 0 20 7704 0880 or telecomitalia@lucid-is.com).

Telecom Italia is a Milan-based telecommunications company.

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