AT&T to issue up to $5 billion notes in exchange for 21 note series

By Angela McDaniels

Tacoma, Wash., Aug. 5 – AT&T Inc. began private exchange offers for 21 series of notes, according to a company news release.

In the pool 1 offer, the company is offering a new series of senior notes due 2048 in exchange for nine series of outstanding notes. AT&T will accept an amount of notes that results in the issuance of no more than $2.5 billion of new 2048 notes.

In the pool 2 offer, the company is offering a new series of senior notes due 2049 and cash, as applicable, in exchange for 12 series of outstanding notes. AT&T will accept an amount of notes that results in the issuance of no more than $2.5 billion of new 2049 notes.

The exchange offers will expire at 11:59 p.m. ET on Sept. 1.

Pool 1 offer

The following notes are eligible for the pool 1 offer:

• AT&T’s $406 million of 6.45% global notes due June 15, 2034;

• AT&T’s $175.2 million of 6.8% notes due 2036;

• AT&T’s $326.9 million of 6.4% global notes due 2038;

• AT&T’s $586.3 million of 6.15% global notes due 2034;

• AT&T’s $1,815,300,000 of 6.3% global notes due 2038;

• AT&T’s $1,154,200,000 of 6.5% global notes due 2037;

• AT&T’s $1,437,300,000 of 6.55% global notes due 2039;

• AT&T’s $2 billion of 5.55% global notes due 2041; and

• AT&T Corp.’s $770.5 million of 8.25% senior notes due Nov. 15, 2031.

The notes are listed in order of acceptance priority level

Pricing for the 8.25% notes will be determined by reference to the 1.625% Treasury due May 15, 2026 (the “10-year Treasury”) plus 205 basis points.

Pricing for the remaining notes will determined by reference to the 2.5% Treasury due May 15, 2046 (the “30-year Treasury”) plus a spread of 200 bps for the 6.45% notes and 6.8% notes, 210 bps for the 6.4% notes, 195 bps for the 6.15% notes, 205 bps for the 6.3% notes, 200 bps for the 6.5% notes, 205 bps for the 6.55% notes and 207 bps for the 5.55% notes.

Pool 2 offer

The following notes are eligible for the pool 2 offer:

• BellSouth Telecommunications, LLC’s $145.6 million of 6.65% zero-to-full debentures due Dec. 15, 2095;

• BellSouth, LLC’s $289.1 million of 7.12% debentures due July 15, 2097;

• BellSouth Telecommunications’ $185.5 million of 7% debentures due Dec. 1, 2095;

• BellSouth’s $366.2 million of 6.55% notes due 2034;

• BellSouth’s $360.6 million of 6% notes due 2034;

• BellSouth’s $505.7 million of 7.875% debentures due 2030;

• BellSouth’s $403.7 million of 6.875% notes due 2031;

• AT&T’s $3.5 billion of 5.35% global notes due 2040;

• BellSouth Telecommunications’ $333.6 million of 6.375% debentures due June 1, 2028;

• Ameritech Capital Funding Corp.’s $257.6 million of 6.55% debentures due Jan. 15, 2028;

• New Cingular Wireless Services, Inc.’s $822.1 million of 8.75% senior notes due 2031; and

• AT&T Mobility LLC’s $509.9 million of 7.125% senior notes due 2031.

The notes are listed in order of acceptance priority level

Pricing will be set by reference to the 30-year Treasury plus a spread of 290 bps for the 7.12% debentures, 7% debentures and 6.55% notes; the 30-year Treasury and 240 bps for the 6.55% notes and 6% notes; the 10-year Treasury and 245 bps for the 7.875% debentures; the 10-year Treasury and 250 bps for the 6.875% notes; the 30-year Treasury and 205 bps for the 5.35% global notes; the 10-year Treasury and 215 bps for the 6.375% debentures; the 10-year Treasury and 210 bps for the 6.55% debentures and the 10-year Treasury plus 195 bps for the 8.75% notes and 7.125% notes.

For the 6.55% notes and the 6% notes, the cash payment percent of premium will be 25% and 15%, respectively. It will be zero for the remaining series of notes.

Eligible noteholders who tender their notes by 5 p.m. ET on Aug. 18 and whose notes are accepted for exchange will receive an early participation payment.

All holders whose notes are accepted for exchange will also receive accrued interest up to but excluding the settlement date.

Each exchange offer is subject to conditions that include the condition that a minimum $500 million principal amount of new 2048 notes are issued and that a minimum $500 million principal amount of new 2049 notes are issued in the exchange offers.

The information agent is Global Bondholders Services Corp. (866 470-3900, or 212 430-3774 or contact@gbsc-usa.com).

AT&T, formerly known as SBC Communications Inc., is a telecommunications services provider based in Dallas.

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