AT&T swaps $1.36 billion 8.75% notes, $1.59 billion 8% notes for $3.5 billion in new notes

By Devika Patel

Knoxville, Tenn., Sept. 2 - AT&T Inc. said it settled a private exchange offer for its $2.5 billion of 8.75% senior notes due 2031, issued by New Cingular Wireless Services, Inc., and its $2,532,611,000 of 8% senior notes due 2031, issued by AT&T Corp.

The offer expired at 11:59 p.m. ET on Aug. 31. It launched on Aug. 4 and was amended Aug. 19.

Under the offer, the company delivered $3.5 billion in new 5.35% notes due 2040, issued by AT&T, and $631,280,054 in cash in exchange for the exchanged notes.

The company accepted $1,361,929,000 in 8.75% notes for exchange and a $1,591,459,000 in 8% notes.

For each $1,000 principal amount, the total exchange price was $1,231.77 principal amount of new notes and $229.22 in cash for the 8.75% notes and $1,185.83 principal amount of new notes plus $183.38 in cash for the 8% notes.

Holders who tendered after 5 p.m. ET on Aug. 17, the early participation date, received the total exchange prices noted above minus the early participation payment of $30.00 per $1,000 principal amount of notes.

The company also paid accrued interest up to, but excluding, the settlement date.

The issue price of the new notes will be $997.93, and the yield will be 5.364%. This was determined by reference to the bid-side yield on the designated benchmark security as of the pricing time, which was 3.764%.

The payments total $1,458.44 per 8.75% note and $1,366.75 per 8% note and use an exchange offer yield of 5.114% for the 8.75% notes and 5.139% for the 8% notes.

AT&T is a phone and internet services provider based in Dallas.

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