Verizon starts private exchange offers involving seven series of notes

By Jennifer Chiou

New York, Feb. 11 – Verizon Communications Inc. announced the launch of private offers to exchange certain series of debt securities issued by Verizon and by subsidiary GTE Corp.

According to a news release, Verizon will issue new notes due 2036 in exchange for its $11 million of outstanding 5.15% notes due 2023. The company stated that it will not issue more than $3 billion of the new notes due 2036 in this exchange offer.

Verizon is offering up to $4.5 billion of new notes due 2048 for the following securities:

• $1.25 billion of 6.9% notes due 2038;

• $1.75 billion of 6.4% notes due 2038;

• $4,355,455,000 of 6.4% notes due 2033;

• $750 million of 6.25% notes due 2037; and

• $800 million of 6.94% debentures due 2028.

Of the five series above, which are listed in acceptance priority level order, Verizon is the issuer of the first four listed, while GTE issued the 6.94% debentures.

Finally, Verizon is offering up to $5 billion of new notes due 2055 in exchange for its $10,669,606,000 of 6.55% notes due 2043.

The exchange offers will expire at 11:59 p.m. ET on March 11.

Exchange price

Pricing will be calculated on Feb. 25, which is also the early participation date.

The hypothetical total exchange prices below include $50.00 principal amount of the applicable series of new notes to be issued for each series for those who tender prior to the early participation deadline.

Calculated as of Feb. 10, the hypothetical total exchange price is $1,155.47 per $1,000 principal amount of 5.15% notes. The actual payment will be calculated using the 2.25% Treasury due Nov. 15, 2024 plus 108 basis points.

For each $1,000 principal amount as of the same date, the hypothetical total exchange price is $1,370.92 for the 6.9% notes, $1,297.21 for the 6.4% notes due 2038, $1,297.80 for the 6.4% notes due 2033, $1,287.77 for the 6.25% notes and $1,311.69 for the 6.94% debentures, the last of which includes a $100 cash amount, which would result in a $1,211.69 new notes amount. The other four series do not involve a cash component.

Each of the five series of securities in the offer for the new notes due 2048 will have payouts calculated using the 3.125% Treasury due Aug. 15, 2044. In order, the respective fixed spreads are 178 bps, 178 bps, 153 bps, 167 bps and 132 bps.

And, the hypothetical total exchange price is $1,349.33 per $1,000 principal amount of 6.55% notes. The payment will also be calculated using the 3.125% Treasury due Aug. 15, 2044. The spread is 183 bps.

Offer details

The company said that the purpose of the exchange offers is to, among other things, extend the maturity of the debt obligations associated with existing old notes during a time of favorable market conditions and to move the GTE debt obligations to Verizon.

If the company receives tenders that would result in excess of the maximum amount of new notes to be issued, those tenders will be accepted on a pro rata basis.

Settlement is slated for March 13.

Global Bondholder Services Corp. is the information agent (866 470-3800 or 212 430-3774 for banks and brokerage firms.

The telecommunications company is based in New York.

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