New York, Dec. 22 - Qwest Communications International Inc. (Caa1/B-) said that along with wholly owned subsidiaries Qwest Capital Funding, Inc. and Qwest Services Corp., it had successfully completed the purchase of $3 billion of the companies' outstanding notes under previously announced cash tender offers, which expired as scheduled at midnight ET on Dec. 19 without extension.
The company said that as of that deadline, holders had tendered a total of some $3.2 billion principal amount of notes, consisting of about $578 million principal amount of notes maturing in 2005 through 2007 (all of which were accepted for purchase, as the company had sought to repurchase up to $625 million of notes in that maturity class); about $1.8 billion principal amount of notes maturing in 2008 through 2011 (all of which were accepted for purchase, as the company had sought to repurchase up to $1.8 billion of notes in that maturity class); and some $736 million principal amount of notes maturing in 2014 through 2031 (of which $620 million was accepted for purchase, the maximum amount of notes from that maturity class which the company had been willing to purchase).
Qwest said that with the offers for the notes maturing in 2014 through 2031 having been oversubscribed, under the previously announced rules established in the offer, some 80% of the tendered 7.75% notes due 2031 were accepted for purchase on a pro rata basis according to the principal amount tendered, while none of the tendered Qwest Services Corp. 14% notes due 2014 were accepted for purchase, other than those accepted under a separate asset sale repurchase offer.
The settlement for all series of notes being purchased was Monday and interest was paid up to, but not including Monday.
Qwest released a detailed series-by-series breakdown of how may of each series of notes being tendered for was tendered under the offers, was repurchased, and remains outstanding following completion of the offers (see table 1).
Qwest also said that Qwest Service Corp.'s senior credit facility has been paid down by $500 million to $750 million. As a result of the tender completion and facility reduction, Qwest will realize total interest savings of over $250 million annually. The company estimates that including the notes purchased under the tender offers and other efforts to reduce debt, it has cut borrowings by $8.5 billion to a level of about $17.6 billion in a little over a year.
As previously announced, Qwest, a Denver-based telecommunications company, said on Nov. 19 that it would purchase to $2.25 billion face amount of its own outstanding bonds and those of its wholly owned subsidiaries Qwest Capital Funding, Inc. and Qwest Services Corp. This total amount was subsequently increased; on Dec. 5, Qwest said that it had raised the amount of securities to be bought back to $3 billion.
Qwest initially said it was offering to purchase, in cash, up to $625 million aggregate principal amount of notes issued by the three companies that mature in 2005 through 2007, up to $1.3 billion of notes maturing in 2008 through 2011, and up to $325 million of notes maturing in 2014 through 2031. It subsequently on Dec. 5 raised the amount of 2008-2011 notes its was offering to buy back to $1.8 billion and raised the amount of 2014-2031 notes it would buy back to $620 million, while keeping the amount of 2005-2007 notes it was seeking at the originally announced $625 million.
Qwest set an early participation payment deadline of 5 p.m. ET on Dec. 4, so that holders tendering their notes by that deadline would receive the $20 per $1,000 principal amount early participation payment as part of the total consideration, should their notes be accepted for purchase, and said that the offers would expire at midnight ET on Dec. 19, subject to possible extension. The company said that holders tendering their notes after the early participation payment deadline but before the expiration deadline would receive the tender offer consideration, but not the early participation payment.
It announced on Dec. 5 that as of the early tender deadline, which expired as scheduled without extension, investors had tendered some $571 million aggregate principal amount of their notes maturing in 2005 through 2007; about $1.804 billion of their notes maturing in 2008 through 2011; and around $736 million of their notes maturing in 2014 through 2031. The company at that time provided a detailed series-by-series breakdown of how many of which notes had been tendered by the deadline.
Qwest said that all holders of validly tendered notes accepted for purchase under the tender offer would also receive accrued interest up to, but not including, the settlement date.
Quest said that the tender offers for the respective series of notes would be subject to the satisfaction or waiver of certain conditions, but would not be subject to the receipt of any minimum amount of tenders.
Qwest said that the maximum amount of notes which it was willing to purchase in each of the three classes of maturities into which divided its tender offers was in each case less than the total amount of outstanding notes in the respective grouping. It said that in the event that the offers for any of the three classes of maturities were oversubscribed, tenders of notes within that class would be subject to pro ration.
Qwest said that it and the subsidiaries would accept tendered notes of each series within the applicable class of maturities according to the order of priority specified for that series which the company outlined in a table attached to its announcement, and that therefore, all tendered notes of a higher priority within a class would be accepted before any tendered notes of a lower priority within that same class. For a particular series of notes in which some, but not all, tendered notes would be accepted, all tenders of notes of that series would be accepted on a pro-rata basis, according to the principal amount tendered. On Dec. 5, Qwest announced that accordingly, none of the tendered Qwest Services Corp. 14 % notes due 2014 would be accepted for purchase, and all such notes would be returned to their holders as soon as practicable.
In connection with the notes issued by parent Qwest Communications International or by Qwest Services Corp. (although not on any notes issued by Qwest Capital Funding), the company said it was soliciting consents to eliminate substantially all of the restrictive covenants in the notes' indentures. It said that holders could not tender those notes without also delivering consents, and could not deliver consents without also tendering the notes. No additional consent payment would be made under the offers.
Qwest said on Dec. 5 that the necessary consents to adopt the proposed indenture amendments had been received from the holders of its 7¼% senior notes due 2008 and 7½% senior notes due 2008, and that supplemental indentures incorporating the amendments had been executed by the company and the indenture trustee.
Qwest said that none of the tender offers would be conditioned upon obtaining any minimum amount of consents, and said that the consents with respect to any series of Qwest Communications International or Qwest Services Corp. notes would be effective only if tenders for notes representing a majority in principal amount of that series were are accepted for purchase and no pro ration were to occur with respect to that series.
Banc of America Securities LLC (call High Yield Special Products at 888 292-0070 or collect at 704 388-4813) and Goldman, Sachs & Co. (call Credit Liability Management Group at 212 902-4419 or at 800 828-3182) were the joint lead dealer-managers for the offers, while Lehman Brothers Inc. was the co-dealer-manager. The information agent was Global Bondholder Services Corp. (866 873-6300 or collect at 212 430-3774).
Table 1. Results of Qwest's tender offer
| Issuer | Security | Amount | Amount | Amount
|
| tendered | repurchased | remaining
|
|
|
| Offer for notes maturing in 2005 through 2007. Maximum tender amount: $625 million
|
|
|
| QCF | 6¼% notes due 2005 | $179.655 million | $179.655 million | $179.205 million
|
| QCF | 7¾% notes due 2006 | $344.142 million | $344.142 million | $485.471 million |
|
| QSC | 13% notes due 2007 | $54.456 million | $54.456 million | $504.103 million |
|
|
|
| Offer for notes maturing in 2008 through 2011. Maximum tender amount: $1.8 billion
|
|
|
| QCF | 6 | 3/8% notes due 2008 | $74.199 million | $74.199 million | $171.179 million |
|
| QCII | 7¼% senior notes due 2008 | $292.466 million | $292.466 million | $7.534 million |
|
| QCII | 7½% senior notes due 2008 | $688.183 million | $688.183 million | $61.817 million
|
| QCF | 7% notes due 2009 | $163.804 million | $163.804 million | $569.992 million |
|
| QCF | 7.90% notes due 2010 | $254.524 million | $254.524 million | $412.923 million |
|
| QCF | 7¼% notes due 2011 | $98.829 million | $98.829 million | $823.967 million |
|
| QSC | 13½% notes due 2010 | $272.117 million | $272.117 million | $2.232339 billion |
|
|
|
| Offer for notes maturing in 2014 through 2031. Maximum tender amount: $620 million
|
|
|
| QCF | 6½% debentures due 2018 | $39.053 million | $39.053 million | $211.32 million |
|
| QCF | 7 | 5/8% notes due 2021 | $105.503 million | $105.503 million | $125.175 million |
|
| QCF | 6 | 7/8% debentures due 2028 | $176.199 million | $176.199 million | $589.651 million |
|
| QCF | 7¾% notes due 2031 | $373.649 million | $299.245 million | $419.449 million
|
| QSC | 14% notes due 2014 | $42.045 million | $2,000 | $640.877 million |
|
|
|
| QCF is Qwest Capital Funding
|
| QSC is Qwest Services Corp.
|
| QCII is Qwest Communications International Inc.
|
| Prices are per $1,000 principal amount
|
|
|
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