Telefonica wraps tender for 4.2% notes, capped amount of 5% notes

By Sarah Lizee

Olympia, Wash., March 13 – Telefonica SA said it will accept tenders for €586.5 million of its outstanding €850 million undated five-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 4.2% and €348.2 million of its €750 million undated six-year non-call deeply subordinated guaranteed fixed-rate reset securities with a current coupon of 5%.

The tender offers ended at 11 a.m. ET on March 12.

As previously reported, the issuer was tendering for any and all of the notes due 2019 and for a maximum amount of the notes due 2020.

The purchase price is €103,038 per €100,000 of the notes due 2019 and €104,923 per €100,000 of the notes due 2020. Holders will also receive accrued interest up to but excluding the settlement date.

Following settlement, which is expected to occur on March 15, €586.5 million of the notes due 2019 will remain outstanding and €348.2 million of notes due 2020 will remain outstanding.

Because more than 80% of the notes due 2019 will have been purchased and cancelled following settlement, the issuer will have the option to redeem all of the remaining outstanding notes due 2019 in whole but not in part at par plus any interest accrued to but excluding the early redemption date.

The tender offers were contingent on an issue of new euro-denominated undated six-year non-call deeply subordinated guaranteed fixed-rate reset securities.

The issuer proposed to accept notes up to a maximum principal amount equal to the principal amount of new notes issued.

The amount of 2020 notes accepted for purchase was set so that it would not exceed the difference between the principal amount of new notes and the principal amount outstanding of notes due 2019 prior to the offers.

Telefonica said it was holding the offers “to proactively manage the issuer’s layer of hybrid capital” as well as to provide holders “with the opportunity to switch into the new notes ahead of upcoming first call dates,” according to the news release.

The first reset date is April 12, 2019 for the 2019 notes and March 31, 2020 for the 2020 notes.

The telecommunications group is based in Madrid.

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