Frontier Communications concludes tender offers for three note series

By Toni Weeks

San Luis Obispo, Calif., April 24 - Frontier Communications Corp. announced that it accepted another $700,000 principal amount of its 6 5/8% senior notes due 2015 and $800,000 of its 7 7/8% senior notes due 2015 after the early tender deadline for the two note series, according to a press release.

Frontier previously accepted $194.2 million of the outstanding $300 million of 6 5/8% notes and $277.1 million of its $374,803,000 of 7 7/8% senior notes, with settlement occurring for the early-tendered notes on April 10, according to the release.

For each $1,000 principal amount, the company offered $1,112.37 for the 6 5/8% notes and $1,141.91 for the 7 7/8% notes, both including a $30.00 early tender premium for notes tendered prior to 5 p.m. ET on April 9, the early deadline. Frontier also is paying accrued interest.

As noted before, there was no minimum tender condition, but there was a financing condition.

Dutch auction offer

Frontier also accepted $225 million of the company's $1.04 billion of outstanding 8¼% senior notes due 2017 by the expiration date. The company conducted the tender offer for these notes as a modified Dutch auction, limiting the amount of notes accepted for purchase to $225 million, which included $208.8 million of notes that the company agreed to repurchase in an unconditional and binding privately negotiated transaction.

According to the release, the amount of 8¼% notes validly tendered exceeded the $225 million cap, so the tendered notes will be prorated with a proration factor of about 0.118 for all holders that tendered at the clearing price.

The total consideration for 8¼% notes tendered by the early tender deadline, 5 p.m. ET on April 11, pushed out from the original early tender deadline of April 9, was calculated at $1,190 per each $1,000 principal amount of notes. The amount included a $30.00 early tender premium. The clearing premium was calculated at $30.00, the release said.

Pricing for each $1,000 principal amount was set using a modified Dutch auction procedure where holders submitted bids ranging from $1,160 to $1,200 per $1,000 of notes.

The company also paid accrued interest.

All offers ended at 9 a.m. ET on April 24 and began on March 27.

According to the release, the tender offers are expected to result in an after-tax charge of about $63.60 for the quarter ended June 30, or $0.06 per share.

Following settlement, $105 million of the 6 5/8% notes, $96.9 million of the 7 7/8% notes and $606.9 million of the 8¼% notes remain outstanding.

J.P. Morgan Securities LLC (800 245-8812 or collect 212 270-1200), Barclays (800 438-3242 or collect 212 528-7581), BofA Merrill Lynch (888 292-0070 or collect 646 855-3401), Citigroup Global Markets Inc. (800 558-3745 or collect 212 723-6106), Credit Suisse Securities (USA) LLC (800 820-1653 or 212 538-0083), Deutsche Bank Securities Inc. (866 627-0391 or collect 212 250-7527), Morgan Stanley & Co. LLC (800 624-1808 or collect 212 761-1057) and RBS Securities Inc. (877 297-9832 or collect 203 897-4825) were the dealer managers. MacKenzie Partners, Inc. (800 322-2885 or collect 212 929-5500) is the depositary and information agent.

As noted before, all three offers were funded with proceeds of a $750 million issue of non-callable 11-year senior notes and cash on hand, as reported by Prospect News. The senior notes deal was upsized from $500 million.

The Stamford, Conn., wireline telecommunications provider plans to use the proceeds to tender for its notes maturing in 2015 at their make-whole price, Prospect News reported.

© 2015 Prospect News.
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