AT&T prices exchange offers for 46 series after giving early tally

By Wendy Van Sickle

Columbus, Ohio, Nov. 16 – AT&T Inc. announced pricing in the private exchange offers for 46 series of notes on Thursday afternoon, after having earlier in the day given the early results of the offers as of 5 p.m. ET on Nov. 15.

The two private exchange offers for 46 note series will remain open until 11:59 p.m. ET on Nov. 28. The offers began on Oct. 30. The early deadline was extended from 5 p.m. ET on Nov. 13.

Pricing was set at 11 a.m. ET on Nov. 16, after having been extended from 11 a.m. ET on Nov. 14.

In the maturity extension exchange offer, under pool 1 the company is offering a new series of 4.1% senior notes due 2028 in exchange for 11 series of outstanding notes. AT&T will accept an amount of notes that results in the issuance of no more than $4 billion of new 2028 notes.

The yield on the 2028 notes will be 4.117%, and the issue price will be $998.65, set using the bid-side yield on the 2.25% Treasury due Aug. 15, 2027, which was 2.367%, plus 175 basis points.

In pool 2 of the maturity extension exchange offer, the company is offering a new series of 4.3% senior notes due 2030, in exchange for seven series of outstanding notes. AT&T will accept an amount of notes that results in the issuance of no more than $4 billion of new 2030 notes.

The yield on the 2030 notes will be 4.317%, and the issue price will be $998.46, set using the bid-side yield on the 2.25% Treasury due Aug. 15, 2027 plus 195 bps.

In a second series of offers, the OpCo and AT&T offers, AT&T is offering to exchange 21 series of notes issued by its wholly owned subsidiaries for new notes of the same tenor and interest amount and cash or a new series of 5.15% notes due 2046 issued by AT&T. Additionally, seven series of notes issued by AT&T are also eligible to be exchanged for the new 2046 notes.

The yield on the 2046 notes will be 5.192%, and the issue price will be $993.77, set using the bid-side yield on the 3% Treasury due May 15, 2047, which was 2.792%, plus 240 bps.

Pool 1 offer

The early tenders and the considerations per $1,000 of notes for the pool 1 offer are as follows with the notes listed in acceptance priority level, according to a company update on Thursday:

• $310,428,000 of AT&T’s $1,430,300,000 of 5% global notes due 2021 for a total consideration of $1,086.93 paid in $1,088.40 of new notes;

• $29,608,000 of DirecTV Holdings LLC/DirecTV Financing Co., Inc.’s $69.5 million of 5% senior notes due 2021 for a total consideration of $1,086.93 paid in $1,088.40 of new notes;

• $245,334,000 of AT&T’s $928.1 million of 4.6% global notes due 2021 for a total consideration of $1,069.44 paid in $1,070.89 of new notes;

• $34,004,000 of DirecTV’s $71,879,000 of 4.6% senior notes due 2021 for a total consideration of $1,069.44 paid in $1,070.89 of new notes;

• $396,601,000 of AT&T’s $1.25 billion of 4.45% global notes due 2021 for a total consideration of $1,072.33 paid in $1,073.78 of new notes;

• $327,552,000 of AT&T’s $1.5 billion of 3.875% global notes due 2021 for a total consideration of $1,055.17 paid in $1,056.60 of new notes;

• $262,531,000 of AT&T’s $1,154,200,000 of 5.2% global notes due 2020 for a total consideration of $1,071.94 paid in $1,073.39 of new notes;

• $88,741,000 of DirecTV’s $145.7 million of 5.2% senior notes due 2020 for a total consideration of $1,071.94 paid in $1,073.39 of new notes;

• $303,386,000 of AT&T’s $2 billion of 2.8% global notes due 2021 for a total consideration of $1,019.19 paid in $1,020.57 of new notes;

• $245,989,000 of AT&T’s $3 billion of 2.45% global notes due 2020 for a total consideration of $1,012.89 paid in $1,014.26 of new notes; and

• $63,281,000 of AT&T’s $750 million of floating-rate global notes due 2020 for a total consideration of $1,020.00 paid in $1,021.38 of new notes.

The total payment for the floating-rate notes due 2020 was fixed.

Pricing for the 5.2% notes and the 4.25% notes was set using the 1.625% Treasury due Oct. 15, 2020, or the three-year Treasury, for a reference yield of 1.819% plus 15 bps for the 5.2% notes and 10 bps for the 2.45% notes.

Pricing for the remaining notes was set using the 2% Treasury due Oct. 31, 2022, or the five-year Treasury, for a yield of 2,062%, plus a spread of 15 bps for the 5% notes, 10 bps for the 4.6% and 2.8% notes, 20 bps for the 4.5% notes and 25 bps for the 3.875% notes.

Pool 2 offer

The early tenders and the considerations per $1,000 of notes for the pool 2 offer are as follows with the notes listed in acceptance priority level:

• $437 million of AT&T’s $1,029,000,000 of 0% global notes due 2022 for a total consideration of $867.82 paid in $869.16 of new notes;

• $401,475,000 of AT&T’s $1,414,800,000 of 3.8% global notes due 2022 for a total consideration of $1,054.12 paid in $1,055.75 of new notes;

• $19,943,000 of DirecTV’s $85 million of 3.8% senior notes due 2022 for a total consideration of $1,054.12 paid in $1,055.75 of new notes;

• $709,784,000 of AT&T’s $2.6 billion of 3.6% global notes due 2023 for a total consideration of $1,039.20 paid in $1,040.80 of new notes;

• $390,872,000 of AT&T’s $1.85 billion of 3% global notes due February 2022 for a total consideration of $1,023.36 paid in $1,024.94 of new notes;

• $788.33 million of AT&T’s $2.75 billion of 3% global notes due June 2022 for a total consideration of $1,021.84 paid in $1,006.60 of new notes; and

• $379,794,000 of AT&T’s $1.5 billion of 2.625% global notes due 2022 for a total consideration of $1,005.05 paid in $1,006.60 of new notes.

Pricing for all series of pool 2 notes was set using the five-year Treasury plus a spread of 80 bps for the 0% notes, 40 bps for the 3.8% notes, 70 bps for the 3.6% notes, 35 bps for the 3% notes due February 2022 and 45 bps for the 3% notes due June 2022 and the 2.625% notes.

In each of the pool 1 and pool 2 offers, the total consideration includes an early participation payment of $50 of new notes that will be paid per $1,000 of notes tendered by the early participation date.

Each of the pool 1 and pool 2 offers is subject to a condition that $500 million of new notes would have to be issued under the respective offer.

OpCo notes

In the OpCo offers, the notes may be exchanged for notes issued by AT&T with a like coupon and tenor as the existing series for a total value of $1,000 of new notes and $1.00 in cash per $1,000 of exchanged notes. In each case the total amount includes $50 of new notes for each $1,000 principal amount of notes tendered for exchange by the early date.

These notes are also may be exchanged for notes due 2046 issued by AT&T.

The early tenders for the OpCo notes in exchange for new senior notes to be issued by AT&T are as follows:

• $85,856,000 of BellSouth, LLC’s $262 million of 7.12% debentures due July 15, 2097;

• $32.05 million of BellSouth Telecommunications, LLC’s $105 million of 6.65% zero-to-full debentures due Dec. 15, 2095;

• $45,534,000 of BellSouth Telecommunications’ $142 million of 7% debentures due Dec. 1, 2095;

• $379,000 of BellSouth Telecommunications’ $87 million of 5.85% debentures due Nov. 15, 2045;

• $8.04 million of Ameritech Capital Funding Corp.’s $11,589,000 of 5.95% debentures due Jan. 15, 2038;

• $71,342,000 of BellSouth, LLC’s $316,485,000 of 6% debentures due 2034;

• $143,801,000 of BellSouth LLC’s $343,356,000 of 6.55% notes due 2034;

• $148.73 million of AT&T Mobility LLC’s $509,890,000 of 7.125% senior notes due 2031;

• $217,786,000 of AT&T Corp.’s $520.57 million of 8.25% senior notes due Nov. 15, 2031;

• $169,287,000 of BellSouth LLC’s $324,797,000 of 6.875% notes due 2031;

• $216,393,000 of New Cingular Wireless Services, Inc.’s $822,103,000 of 8.75% senior notes due 2031;

• $201,852,000 of BellSouth LLC’s $359,881,000 of 7.875% debentures due 2030;

• $6.82 million of AT&T Corp.’s $137,634,000 of 6.5% notes due 2029;

• $95,418,000 of BellSouth Telecommunications’ $333.55 million of 6.375% debentures due June 1, 2028;

• $114,586,000 of Ameritech Capital Funding’s $257,612,000 of 6.55% debentures due Jan. 15, 2028;

• $11,001,000 of Ameritech Capital Funding’s $67,413,000 of 6.875% debentures due 2027;

• $15,000 of BellSouth LLC’s $4,295,000 of 6.04% debentures due Nov. 15, 2026;

• $21.27 million of Indiana Bell Telephone Co., Inc.’s $83,316,000 of 7.3% debentures due Aug. 15, 2026;

• $257.2 million of Pacific Bell Telephone Co.’s $625 million of 7.125% debentures due March 15, 2026;

• $55,006,000 of BellSouth Telecommunications’ $167,718,000 of 7% debentures due Oct. 1, 2025; and

• $83,184,000 of Michigan Bell Telephone Co.’s $200 million of 7.85% debentures due Jan. 15, 2022.

More OpCo results

The early tenders and the total considerations per $1,000 for the OpCo notes in exchange for new senior notes due 2046 to be issued by AT&T are as follows, with $1,006.27 of new notes to be issued in each case and the amount over par to be paid in cash:

• $86,501,000 of BellSouth, LLC’s $262,288,000 of 7.12% debentures due July 15, 2097 for $1,247.91;

• $31,375,000 of BellSouth Telecommunications, LLC’s $105,009,000 of 6.65% zero-to-full debentures due Dec. 15, 2095 for $1,166.16;

• $19,516,000 of BellSouth Telecommunications’ $142.32 million of 7% debentures due Dec. 1, 2095 for $1,122.691;

• $34,134,000 of BellSouth Telecommunications’ $86,995,000 of 5.85% debentures due Nov. 15, 2045 for $1,112.33;

• None of Ameritech Capital Funding Corp.’s $11,589,000 of 5.95% debentures due Jan. 15, 2038 for $1,141.38;

• $17,749,000 of BellSouth, LLC’s $316,485,000 of 6% debentures due 2034 for $1,145.42;

• $42,545,000 of BellSouth LLC’s $343,356,000 of 6.55% notes due 2034 for $1,205.61;

• $70,045,000 of AT&T Mobility LLC’s $509.89 million of 7.125% senior notes due 2031 for $1,311.98;

• $98.8 million of AT&T Corp.’s $520.57 million of 8.25% senior notes due Nov. 15, 2031 for $1,428.75;

• $29,678,000 of BellSouth LLC’s $324,797,000 of 6.875% notes due 2031 for $1,258.82;

• $146,211,000 of New Cingular Wireless Services, Inc.’s $822,103,000 of 8.75% senior notes due 2031 for $1,456.46;

• $36.55 million of BellSouth LLC’s $359,881,000 of 7.875% debentures due 2030 for $1,334.73;

• $9,875,000 of AT&T Corp.’s $137,634,000 of 6.5% notes due 2029 for $1,208.32;

• $22,334,000 of BellSouth Telecommunications’ $333.55 million of 6.375% debentures due June 1, 2028 for $1,186.23;

• $38,821,000 of Ameritech Capital Funding’s $257,612,000 of 6.55% debentures due Jan. 15, 2028 for $1,195.11;

• $13,033,000 of Ameritech Capital Funding’s $67,413,000 of 6.875% debentures due 2027 for $1,217.28;

• None of BellSouth LLC’s $4,295,000 of 6.04% debentures due Nov. 15, 2026 for $1,142.80;

• $33,983,000 of Indiana Bell Telephone Co., Inc.’s $83,316,000 of 7.3% debentures due Aug. 15, 2026 for $1,234.95;

• $87,983,000 of Pacific Bell Telephone Co.’s $625 million of 7.125% debentures due March 15, 2026 for $1,241.13;

• $7,145,000 of BellSouth Telecommunications’ $167,718,000 of 7% debentures due Oct. 1, 2025 for $1,217.48; and

• $14,016,000 of Michigan Bell Telephone Co.’s $200 million of 7.85% debentures due Jan. 15, 2022 for $1,184.05.

Pricing was set using the 30-year 3% U.S. Treasury note due May 15, 2047, the 30-year Treasury, for a reference yield of 2.792% plus a spread of 90 bps for the 7.12% BellSouth debentures, the 6.65% BellSouth Telecommunications zero-to-full debentures and the BellSouth Telecommunications’ 7% debentures.

The spread atop the 30-year Treasury was 230 bps for the 5.85% BellSouth Telecommunications debentures, 205 bps for the Ameritech Capital 5.95% debentures and 195 bps for the 6% and 6.55% BellSouth debentures.

Pricing for the Michigan Bell 7.85% debentures was based on the five-year 2% U.S. Treasury note due Oct. 31, 2022 plus 100 bps.

Pricing for all other series was based on the 10-year 2.25% U.S. Treasury note due Aug. 15, 2027 plus 100 bps.

The spread was 180 bps for the 7.125% AT&T Mobility notes, the 8.25% and 6.5% AT&T Corp. notes, the 6.375% Bell South Telecom debentures and the 6.55% and 6.875% Ameritech Capital debentures.

The spread was 200 bps for the 6.875% BellSouth notes.

It was 185 bps for the New Cingular 9.75% notes, 195 bps for the BellSouth 7.875% debentures, 175 bps for the BellSouth 6.04% debentures, 170 bps for the Indiana Bell 7.3% debentures, 135 bps for the Pacific Bell 7.125% debentures and 140 bps for the BellSouth Telecommunications 7% debentures.

AT&T offer

The following notes issued by AT&T are eligible to be exchanged for 2046 notes for the following total considerations, with $1,006.27 of new notes to be issued in each case and the amount over par to be paid in cash:

• $260,481,000 of the $770,544,000 of 6.55% global notes due 2039 for $1,240.05;

• $32,316,000 of the $261,352,000 of 6.4% global notes due 2038 for $1,215.56;

• $215,284,000 of the $1,064,659,000 of 6.3% global notes due 2038 for $1,200.54;

• $245,667,000 of the $657,765,000 of 6.5% global notes due 2037 for $1,231.06;

• $21,645,000 of the $149,975,000 of 6.8% notes due 2036 for $1,265.54;

• $63,958,000 of the $420,058,000 of 6.15% global notes due 2034 for $1,180.88; and

• $60,621,000 of the $313,177,000 of 6.45% global notes due 2034 for $1,213.63.

Pricing for each of these notes was based on the 30-year Treasury plus a spread. The spread was 195 bps for the 6.55%, 6.4% and 6.3% notes; 190 bps for the 6.5% notes; 185 bps for the 6.8% notes; and 180 bps for the 6.15% and 6.45% notes.

In connection with the OpCo and AT&T exchange offers, AT&T is also soliciting consents from holders of the OpCo notes to eliminate substantially all of the restrictive covenants in the indentures governing the OpCo notes. If the proposed amendments to the OpCo indentures are adopted, all OpCo notes not tendered or not accepted for exchange will be governed by amended indentures, which will have less restrictive terms.

The consent solicitations will expire at 11:59 p.m. ET on Nov. 28.

The offers for new 2046 notes require that at least $500 million of the new notes would be issued.

The offers are being made under Rule 144A and Regulation S.

The exchange agent and information agent is Global Bondholders Services Corp. (866 470-3900, 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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