Verizon Communications tenders for $8.2 billion of eight note series

By Susanna Moon

Chicago, March 10 - Verizon Communications Inc. said it began a tender offer for $8.2 billion of eight series of notes.

The notes covered by the tender offer are listed by acceptance priority level:

• Cellco Partnership and Verizon Wireless Capital LLC's $1 billion 8.5% notes due 2018;

• Verizon's $1.3 billion outstanding 8.75% notes due 2018;

• Alltel Corp.'s $300 million outstanding oration 7% debentures due 2016;

• Verizon's $1.25 billion outstanding 5.55% notes due 2016;

• Verizon's $750 million outstanding 5.5% notes due 2017;

• GTE Corp.'s $600 million outstanding 6.84% debentures due 2018;

• Verizon's $1.5 billion outstanding 6.1% notes due 2018; and

• Verizon's $1.5 billion outstanding 5.5% notes due 2018.

There is $1 billion of 8.5% notes available under the offer because Cellco Partnership and Verizon Wireless Capital LLC issued a partial redemption for $1.25 billion of the $2.25 billion outstanding amount on Feb. 28, according to a company press release.

The tender offers will end at 5 p.m. ET on March 17. Tendered notes may be withdrawn at any time by the end of the offer.

Pricing details

Pricing for each $1,000 principal amount of notes will be set using the yield to maturity on the bid-side price a U.S. Treasury note reference security at 2 p.m. ET on March 17 plus a fixed spread, as follows:

• 8.5% notes using the 1.5% Treasury note due Feb. 28, 2019 plus 60 basis points;

• 8.75% notes using 1.5% Treasury note due Feb. 28, 2019 plus 60 bps;

• 7% debentures using 0.25% Treasury note due Feb. 29, 2016 plus 30 bps;

• 5.55% notes using 0.25% Treasury note due Feb. 29, 2016 plus 25 bps;

• 5.5% notes due 2017 using 0.625% Treasury note due Feb. 15, 2017 plus 30 bps;

• 6.84% debentures using 1.5% Treasury note due Feb. 28, 2019 plus 25 bps;

• 6.1% notes using 1.5% Treasury note due Feb. 28, 2019 plus 20 bps; and

• 5.5% notes due 2018 using 1.5% Treasury note due Feb. 28, 2019 plus 5 bps.

The hypothetical purchase price for each $1,000 principal amount was set at $1,275.35 for the 8.5% notes, $1,284.08 for the 8.75% notes, $1,124.79 for the 7% debentures, $1,093.18 for the 5.55% notes, $1,131.84 for the 5.5% notes due 2017, $1,193.20 for the 6.84% debentures, $1,166.47 for the 6.1% notes and $1,143.48 for the 5.5% notes.

The hypothetical pricing was set using the yield to maturity of the reference security at 2 p.m. ET on March 7 and assuming a hypothetical settlement date of March 19.

The company also will pay accrued interest up to but excluding the settlement date.

More offer terms

The offers are conditioned on the company obtaining financing.

Verizon was expected to price senior notes in five parts on March 10, as reported by Prospect News.

If the new issue proceeds are insufficient to fund the offer, the company will purchase notes based on the series priority acceptance level.

Citigroup Global Markets Inc. (800 558-3745 or 212 723-6106 collect), Mitsubishi UFJ Securities (USA), Inc. (212 405-7481 collect), RBC Capital Markets, LLC (877 381-2099 or 212 618-7822 collect) and Wells Fargo Securities, LLC (866 309-6316 or 704 410-4760 collect) are the dealer managers. Global Bondholder Services Corp. (866 470-3800 or 212 430-3774 collect) is the information agent and the depositary.

Verizon is a New York City-based telecommunications company.

© 2015 Prospect News.
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