Qwest completes debt-for-debt exchange with $5.2 billion tendered

Qwest Communications International Inc. (Ba3/C) said on Monday (Dec. 23) that it had successfully completed its previously announced offer to exchange new debt for up to $12,902,653,000 aggregate principal amount of the then-existing debt of its Qwest Capital Funding Inc. subsidiary via a private placement transaction involving qualified institutional holders.

Qwest, said that the offer expired as scheduled at 5 p.m. ET on Friday Dec. 20 without extension. As of that deadline, approximately $5.2 billion in total principal amount of its Qwest Capital Funding had been tendered under the exchange offer and accepted for payment. All tendered QCF notes were accepted without pro ration. In return, Qwest plans to issue $3.3 billion of new Qwest Services Corp. notes, for a total net debt take-out from the offer of about $1.9 billion, cutting its overall debt load to $22.6 billion from $24.5 billion originally. Qwest will be issuing $547 million of its new Qwest Services 13% notes due 2007; will issue $2.111 billion of new Qwest Services 13.50% notes due 2010 and $642 million of new Qwest Services 14% notes due 2014

Holders of the existing $1.25 billion of Qwest Capital Funding 5 7/8% notes due 2004 tendered $287 million of them, or 23% of the outstanding amount, in the offer, and will be issued $237 million of the new Qwest Services Corp. 13% notes due 2007.

Holders of the existing $500 million of QCF 6¼% notes due 2005 tendered $79 million of them, or 16%, and will be issued $59 million of the new QSC 2007 notes.

Holders of the existing $1.25 billion of QCF 7¾% notes due 2006 tendered $369 million of them, or 30%, and will be issued $251 million of the new QSC 2007 notes.

Holders of the existing $584 million of QCF 6 3/8% notes due 2008 tendered $280 million of them, or 48%, and will be issued $175 million of the new QSC 13.5% notes due 2010.

Holders of the existing $1.985 billion of QCF 7% notes due 2009 tendered $1.047 billion of them, or 53%, and will be issued $665 million of the new QSC 2010 notes.

Holders of the existing $1.746 billion of QCF 7.9% notes due 2010 tendered $1.001 billion of them, or 57%, and will be issued $641 million of the new QSC 2010 notes.

Holders of the existing $2.250 billion of QCF 7¼% notes due 2011 tendered $992 million of them, or 44%, and will be issued $630 million of the new QSC 2010 notes.

Holders of the existing $393 million of QCF 6½% debentures due 2018 tendered $121 million of them, or 31%, and will be issued $64 million of the new QSC 14% notes due 2014.

Holders of the existing $478 million of QCF 7 5/8% notes due 2021 tendered $230 million of them, or 48% and will be issued $124 million of the new QSC 2014 notes.

Holders of the existing $1.477 billion of QCF 6 7/8% debentures due 2028 tendered $590 million of them, or 40%, and will be issued $322 million of the new QSC 2014 notes.

Holders of the existing $990 million of QCF 7¾% debentures due 2031 tendered $242 million of them, or 24%, and will be issued $132 million of the new QSC 2014 notes.

Settlement date for the issuance of the new notes will be Thursday (Dec. 26).

Mellon Investor Services (call toll-free at 866 293-6625) will be the information agent for the exchange offer.

AS PREVIOUSLY ANNOUNCED: Qwest, a Denver, Colo.-based telecommunications company, said on Nov. 20 that it would exchange new debt for up to $12,902,653,000 aggregate principal amount of the existing debt of its Qwest Capital Funding Inc. subsidiary via a private placement transaction involving qualified institutional holders.

Qwest said that the new debt being exchanged for the existing paper would include up to $4 billion of new senior subordinated secured notes of Qwest Services Corp., a wholly owned subsidiary of parent Qwest Communications. It said those new notes would be secured by a junior lien on Qwest Services assets that secure its bank debt, principally the capital stock of Qwest Corporation.

The company said that to the extent that the offer of new Qwest Services notes was oversubscribed, tendering eligible holders of the existing Qwest Capital Funding notes would receive new Qwest Services notes on a pro-rated basis; the remaining portion of tendering eligible holders' existing Qwest Capital Funding notes would be exchanged for newly issued Qwest Communications notes that will have the same principal amount, coupon and maturity date as their existing QCF notes. In addition, those new Qwest Communications notes would be secured by a first lien on the stock of Qwest Services Corp.

Qwest said that the purpose of the exchange offer was to reduce outstanding indebtedness and extend some near-term debt maturities. It set an expiration deadline of 11:59 p.m. ET on Friday Dec. 20, subject to possible extension.

Qwest said that would offer to exchange $825 face amount of its new Qwest Services Corp. 13% notes due 2007 per $1,000 principal amount of the existing $1.25 billion of Qwest Capital Funding 5 7/8% notes due 2004.

It offered to exchange $750 face amount of the Qwest Services 13% notes per $1,000 principal amount of the existing $500 million of Qwest Capital Funding 6¼% notes due 2005.

It offered to exchange $680 face amount of the Qwest Services 13% notes per $1,000 principal amount of the existing $1.25 billion of Qwest Capital Funding 7¾% notes due 2006.

It offered to exchange $625 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $583.839 million of Qwest Capital Funding 6 3/8% notes due 2008.

It offered to exchange $635 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $1,984,990,000 of Qwest Capital Funding 7% notes due 2009.

It offered to exchange $640 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $1,745,885,000 of Qwest Capital Funding 7.9% notes due 2010.

It offered to exchange $635 face amount of Qwest Services' 13½% notes due 2010 per $1,000 principal amount of the existing $2.25 billion of Qwest Capital Funding 7¼% notes due 2011.

It offered to exchange $525 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $393.37 million of Qwest Capital Funding 6½% debentures due 2018.

It offered to exchange $540 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $477.85 million of Qwest Capital Funding 7 5/8% notes due 2021.

It offered to exchange $545 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $1,476,889,000 of Qwest Capital Funding 6 7/8% debentures due 2028.

And it offered to exchange $545 face amount of Qwest Services' 14% notes due 2014 per $1,000 principal amount of the existing $989.83 million of Qwest Capital Funding 7¾% debentures due 2031.

In addition to the aforementioned exchange compensation, Qwest said it would pay, in cash, accrued interest up to, but not including, the settlement date on all validly tendered and accepted Qwest Capital Funding notes.

The company said that neither the new Qwest Services Corp. notes nor the new Qwest Communications International notes that it was offering to exchange for the existing notes have been registered with the Securities and Exchange Commission for unrestricted public trading, although the company said that both entities will enter into a registration rights agreement under which they will agree to file an exchange offer registration statement with the SEC with respect to the new notes.

After the company announced the exchange offer, bondholders unhappy with the terms of the exchange banded together, retained an attorney, and filed suit on Dec. 5 in U.S. District Court for the Southern District of New York, seeking to block the exchange offer, calling it inadequate and coercive.

Qwest said on Dec. 6 that it would contest the legal action. On Wednesday Dec. 18, the judge hearing the case ruled that the exchange offer could proceed. On Thursday Dec. 19, the dissident bondholders withdrew their suit, but stated that they reserved the right to seek damages related to the offer after its expiration.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.