Verizon Announces Exchange Offers for Certain Outstanding Notes
From Eligible Holders
NEW YORK, July 23, 2014 -- Verizon Communications Inc. ("Verizon")
(NYSE, NASDAQ: VZ; LSE: VZC) today announced the commencement of eleven
separate private offers to exchange (the "Exchange Offers") specified series of
debt securities issued by Verizon and by Alltel Corporation (an indirect wholly
owned subsidiary of Verizon) (collectively, the "Old Notes") for new debt
securities to be issued by Verizon (the "New Notes") in accordance with the
terms of the Exchange Offers.
The Exchange Offers consist of the following:
(a) (i) an offer to exchange the 2.500% notes due 2016 of Verizon; and
(ii) an offer to exchange the 3.650% notes due 2018 of Verizon,
in each case, for new notes due 2020 of Verizon (the "New Notes due 2020"),
provided that the principal amount of New Notes due 2020 to be issued in such
Exchange Offers on an aggregate basis shall not exceed $2,000,000,000 (the
"2020 Maximum Exchange Amount") (collectively, the "2020 Exchange Offers");
(b) (i) an offer to exchange the 7.350% notes due 2039 of Verizon;
(ii) an offer to exchange the 7.875% debentures due 2032 of Alltel Corporation;
(iii) an offer to exchange the 7.750% notes due 2032 of Verizon;
(iv) an offer to exchange the 7.750% notes due 2030 of Verizon;
(v) an offer to exchange the 6.800% debentures due 2029 of Alltel
Corporation; and
(vi) an offer to exchange the 6.400% notes due 2033 of Verizon,
in each case, for new notes due 2046 of Verizon (the "New Notes due 2046"),
provided that the principal amount of New Notes due 2046 to be issued in such
Exchange Offers on an aggregate basis shall not exceed $4,500,000,000 (the
"2046 Maximum Exchange Amount") (collectively, the "2046 Exchange Offers"); and
(c) (i) an offer to exchange the 6.550% notes due 2043 of Verizon;
(ii) an offer to exchange the 6.900% notes due 2038 of Verizon; and
(iii) an offer to exchange the 6.400% notes due 2038 of Verizon,
in each case, for new notes due 2054 of Verizon (the "New Notes due 2054"),
provided that the principal amount of New Notes due 2054 to be issued in such
Exchange Offers on an aggregate basis shall not exceed $5,500,000,000 (the
"2054 Maximum Exchange Amount") (collectively, the "2054 Exchange Offers").
Each of the 2020 Maximum Exchange Amount, the 2046 Maximum Exchange Amount and
the 2054 Maximum Exchange Amount is referred to herein as a "Maximum Exchange
Amount."
The Exchange Offers are being conducted by Verizon upon the terms and subject
to the conditions set forth in a confidential offering memorandum, dated July
23, 2014 (the "Offering Memorandum").
The table below lists the series of Old Notes included in the 2020 Exchange
Offers:
CUSIP Title Principal Reference U.S.
Number of Security Amount Treasury Security
Outstanding
92343VBN3 2.500% notes due 2016 $4,250,000,000 0.500% due 6/30/16
92343VBP8 3.650% notes due 2018 $4,750,000,000 1.625% due 6/30/19
Bloomberg Fixed Acceptance Early Participation Hypothetical
Reference Spread Priority Payment(1) Total Exchange
Page (basis points) Level Price(1)(2)
FIT1 +35 1 $50.00 $1,034.02
FIT1 +10 2 $50.00 $1,073.27
The table below lists the series of Old Notes included in the 2046 Exchange Offers:
CUSIP/ISIN
Number Title of Security Principal Reference U.S.
Amount Treasury Security
Outstanding
92343VAU8 7.350% notes due 2039(3) $1,000,000,000 3.625% due 2/15/44
020039DC4 7.875% debentures due 2032(4) $700,000,000 3.625% due 2/15/44
92344GAS5 7.750% notes due 2032(3) $400,000,000 3.625% due 2/15/44
92344GAM8
92344GAC0
U92207AC0/ 7.750% notes due 2030(3) $2,000,000,000 3.625% due 2/15/44
USU92207AC07
020039AJ2 6.800% debentures due 2029(4) $300,000,000 3.625% due 2/15/44
92343VBS2 6.400% notes due 2033(3) $6,000,000,000 3.625% due 2/15/44
Bloomberg Fixed Acceptance Early Hypothetical
Reference Spread Priority Participation Total
Page (basis points) Level Payment(1) Exchange Price(1)(2)
FIT1 +150 1 $50.00 $1,372.00
FIT1 +115 2 $50.00 $1,424.20
FIT1 +115 3 $50.00 $1,408.18
FIT1 +110 4 $50.00 $1,391.25
FIT1 +110 5 $50.00 $1,261.87
FIT1 +115 6 $50.00 $1,253.88
The table below lists the series of Old Notes included in the 2054 Exchange
Offers:
CUSIP Title of Security Principal Reference U.S.
Number Amount Treasury Security
Outstanding
92343VBT0 6.550% notes due 2043 $15,000,000,000 3.625% due 2/15/44
92343VAP9 6.900% notes due 2038 $1,250,000,000 3.625% due 2/15/44
92343VAK0 6.400% notes due 2038 $1,750,000,000 3.625% due 2/15/44
Bloomberg Fixed Acceptance Early Hypothetical
Reference Spread Priority Participation Total
Page (basis points) Level Payment(1) Exchange
Price(1)(2)
FIT1 +150 1 $50.00 $1,279.07
FIT1 +140 2 $50.00 $1,317.86
FIT1 +140 3 $50.00 $1,245.81
(1) Payable in principal amount of the applicable series of New Notes per
each $1,000 principal amount of the specified series of Old Notes validly
tendered and not validly withdrawn at or prior to the Early Participation Date
(as defined below) and accepted for exchange.
(2) Hypothetical Total Exchange Price (as defined below) is based on the
fixed spread for the applicable series of Old Notes to the yield of the
Reference U.S. Treasury Security for that series as of 11:00 a.m. (New York
City time) on July 22, 2014. The information provided in the above tables is
for illustrative purposes only. Verizon makes no representation with respect
to the actual consideration that may be paid, and such amounts may be greater
or less than those shown in the above table depending on the yield of the
applicable Reference U.S. Treasury Security as of the Price Determination Date
(as defined below). Eligible Holders (as defined below) who validly tender Old
Notes of any particular series after the Early Participation Date, but at or
prior to the Expiration Date (as defined below), will receive the Total
Exchange Price for such series minus the applicable Early Participation Payment
set forth above (the "Exchange Price").
(3) Issued by Verizon.
(4) Issued by Alltel Corporation.
Subject to the terms and conditions of the Exchange Offers, we will accept for
exchange the Old Notes of any series validly tendered in the 2020 Exchange
Offers, the 2046 Exchange Offers and the 2054 Exchange Offers, respectively, in
accordance with the applicable "Acceptance Priority Level" (in numerical
priority order) for such series as set forth in the corresponding table for
such group of Exchange Offers above (each, an "Acceptance Priority Level"),
with Acceptance Priority Level 1 being the highest priority level. All Old
Notes validly tendered in the Exchange Offers subject to a particular Maximum
Exchange Amount that have a higher Acceptance Priority Level will be accepted
for exchange before any validly tendered Old Notes in the Exchange Offers
subject to the same Maximum Exchange Amount that have a lower Acceptance
Priority Level are accepted. If the remaining available portion of the
applicable Maximum Exchange Amount is not adequate to permit the acceptance for
exchange of all of the validly tendered Old Notes having a particular
Acceptance Priority Level, we will allocate such available Maximum Exchange
Amount among the aggregate principal amount of such validly tendered Old Notes
having such Acceptance Priority Level on a pro rata basis, and any validly
tendered Old Notes having a lower Acceptance Priority Level will not be
accepted for exchange.
The Exchange Offers will expire at 11:59 p.m. (New York City time) on August
19, 2014, unless extended by Verizon (the "Expiration Date"). The Total
Exchange Price for each series of Old Notes, as well as the coupon rate for
each series of New Notes, will be calculated at 11:00 a.m. (New York City time)
on August 5, 2014, unless extended by Verizon (the "Price Determination
Date").
Eligible Holders that validly tender and do not validly withdraw their Old
Notes at or prior to 5:00 p.m. (New York City time) on August 5, 2014 (unless
extended by Verizon, the "Early Participation Date") will be eligible to
receive the applicable Total Exchange Price, which includes the applicable
early participation payment for the tendered Old Notes as set forth in the
corresponding tables above (the "Early Participation Payment"). Eligible
Holders of Old Notes who validly tender after the Early Participation Date, but
at or prior to the Expiration Date, will be eligible to receive the applicable
Exchange Price, which is the applicable Total Exchange Price minus the
applicable Early Participation Payment. For each series of Old Notes, the Total
Exchange Price and Exchange Price will be paid in a principal amount of
applicable New Notes equal to such Total Exchange Price or Exchange Price,
respectively.
Tenders of Old Notes in the Exchange Offers may be validly withdrawn at any
time at or prior to 5:00 p.m. (New York City time) on August 5, 2014, unless
extended by Verizon (the "Withdrawal Date"), but not thereafter, unless
additional withdrawal rights are required by law. Subject to applicable law,
Verizon, in its sole discretion, may extend the Early Participation Date or the
Expiration Date for any reason, with or without extending the Withdrawal Date.
The "Total Exchange Price" per $1,000 principal amount of each series of Old
Notes will be equal to the price (rounded to the nearest cent per $1,000
principal amount of Old Notes), determined in accordance with standard market
practice, as described in the Offering Memorandum, that equates to the yield to
maturity (the "Exchange Offer Yield") equal to the sum of:
(i) the yield, as calculated by the lead dealer managers for the Exchange
Offers in accordance with standard market practice, that equates to the
bid-side price of the Reference U.S. Treasury Security specified in the
corresponding tables above for such series of Old Notes appearing at the Price
Determination Date on the Bloomberg reference page specified in the
corresponding tables above for such series of Old Notes (or any other
recognized quotation source selected by the lead dealer managers in their sole
discretion if such quotation report is not available or manifestly erroneous)
plus
(ii) the fixed spread specified in the corresponding tables above for such
series of Old Notes.
In addition to the applicable Total Exchange Price or applicable Exchange
Price, Eligible Holders whose Old Notes are accepted for exchange will be paid
accrued and unpaid interest on such Old Notes to, but not including, the
Settlement Date.
Each series of New Notes will bear interest at a rate per annum equal to the
sum of (i) the yield of the applicable Reference U.S. Treasury Security, as
calculated by the lead dealer managers in accordance with standard market
practice, that equates to the bid-side price of such applicable Reference U.S.
Treasury Security appearing at the Price Determination Date on the applicable
Bloomberg reference page, or any other recognized quotation source selected by
the lead dealer managers in their sole discretion if such quotation report is
not available or manifestly erroneous, plus (ii) the applicable spread for such
series of New Notes, such sum rounded to the third decimal place when expressed
as a percentage. The applicable Reference U.S. Treasury Security, applicable
Bloomberg reference page and applicable spread for each series of New Notes are
as follows:
New Notes Reference U.S. Bloomberg Reference Page Spread (basis points)
Treasury Security
New Notes due 2020 1.625% due 6/30/19 FIT1 +95
New Notes due 2046 3.625% due 2/15/44 FIT1 +155
New Notes due 2054 3.625% due 2/15/44 FIT1 +170
Consummation of the Exchange Offers is subject to the satisfaction of certain
conditions, including (1) certain customary conditions, including the absence
of certain adverse legal and market developments, (2) where applicable, the
Yield Condition (as described in the Offering Memorandum) and (3) the
Accounting Treatment Condition (as described in the Offering Memorandum). No
Exchange Offer is conditioned upon any minimum amount of Old Notes being
tendered or the consummation of any other Exchange Offer, and, subject to
applicable law, each Exchange Offer may be amended, extended or terminated
individually.
The "Settlement Date" for the Exchange Offers will be promptly following the
Expiration Date and is expected to be August 21, 2014, which is the second
business day after the Expiration Date. Verizon will not receive any cash
proceeds from the Exchange Offers.
The Exchange Offers are being extended only (1) to holders of Old Notes that
are "Qualified Institutional Buyers" as defined in Rule 144A under the U.S.
Securities Act of 1933, as amended (the "U.S. Securities Act"), in a private
transaction in reliance upon the exemption from the registration requirements
of the U.S. Securities Act provided by Section 4(a)(2) thereof and (2) outside
the United States, to holders of Old Notes other than "U.S. persons" (as
defined in Rule 902 under Regulation S of the U.S. Securities Act) and who are
not acquiring New Notes for the account or benefit of a U.S. person, in
offshore transactions in compliance with Regulation S under the U.S. Securities
Act, and who are "Non-U.S. qualified offerees" (as defined in the Offering
Memorandum) (each of the foregoing, an "Eligible Holder"), and in each case who
have certified in an eligibility letter certain matters to Verizon, including
the above status. Only Eligible Holders who have completed and returned an
eligibility letter are authorized to receive the Offering Memorandum and to
participate in the Exchange Offers. Holders of Old Notes who desire a copy of
the eligibility letter may contact Global Bondholder Services Corporation
toll-free at (866) 470-3800 or at (212) 430-3774 (banks and brokerage firms).
Eligible Holders are advised to check with any bank, securities broker or other
intermediary through which they hold Old Notes as to when such intermediary
needs to receive instructions from an Eligible Holder in order for that
Eligible Holder to be able to participate in, or (in the circumstances in which
revocation is permitted) revoke their instruction to participate in, the
Exchange Offers before the deadlines specified herein and in the Offering
Memorandum. The deadlines set by each clearing system for the submission and
withdrawal of exchange instructions will also be earlier than the relevant
deadlines specified herein and in the Offering Memorandum.
If and when issued, the New Notes will not be registered under the U.S.
Securities Act or any state securities laws. Therefore, the New Notes may not
be offered or sold in the United States absent registration or an applicable
exemption from the registration requirements of the U.S. Securities Act and any
applicable state securities laws. Verizon will enter into a registration rights
agreement with respect to the New Notes.
This press release is not an offer to sell or a solicitation of an offer to buy
any security. The Exchange Offers are being made solely by the Offering
Memorandum and only to such persons and in such jurisdictions as is permitted
under applicable law.
This communication has not been approved by an authorized person for the
purposes of Section 21 of the Financial Services and Markets Act 2000, as
amended (the "FSMA"). Accordingly, this communication is not being directed at
persons within the United Kingdom save in circumstances where section 21(1) of
the FSMA does not apply.
In particular, this communication is only addressed to and directed at: (A) in
any Member State of the European Economic Area that has implemented the
Prospectus Directive (as defined below), qualified investors in that Member
State within the meaning of the Prospectus Directive and (B) (i) persons that
are outside the United Kingdom or (ii) persons in the United Kingdom falling
within the definition of investment professionals (as defined in Article 19(5)
of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005
(the "Financial Promotion Order")) or within Article 43 of the Financial
Promotion Order, or to other persons to whom it may otherwise lawfully be
communicated by virtue of an exemption to Section 21(1) of the FSMA or
otherwise in circumstance where it does not apply (such persons together being
"relevant persons"). The New Notes are only available to, and any invitation,
offer or agreement to subscribe, purchase or otherwise acquire such New Notes
will be engaged in only with, relevant persons. Any person who is not a
relevant person should not act or rely on the Offering Memorandum or any of its
contents. For purposes of the foregoing, the "Prospectus Directive" means the
Prospectus Directive 2003/71/EC, as amended, including pursuant to Directive
2010/73/EU.
Cautionary Statement Regarding Forward-Looking Statements
In this communication we have made forward-looking statements. These
statements are based on our estimates and assumptions and are subject to risks
and uncertainties. Forward-looking statements include the information
concerning our possible or assumed future results of operations.
Forward-looking statements also include those preceded or followed by the words
"anticipates," "believes," "estimates," "hopes" or similar expressions. For
those statements, we claim the protection of the safe harbor for
forward-looking statements contained in the Private Securities Litigation
Reform Act of 1995. The following important factors, along with those discussed
in our filings with the Securities and Exchange Commission (the "SEC"), could
affect future results and could cause those results to differ materially from
those expressed in the forward-looking statements: the ability to realize the
expected benefits of our transaction with Vodafone in the timeframe expected or
at all; an adverse change in the ratings afforded our debt securities by
nationally accredited ratings organizations or adverse conditions in the credit
markets affecting the cost, including interest rates, and/or availability of
further financing; significantly increased levels of indebtedness as a result
of the Vodafone transaction; changes in tax laws or treaties, or in their
interpretation; adverse conditions in the U.S. and international economies;
material adverse changes in labor matters, including labor negotiations, and
any resulting financial and/or operational impact; material changes in
technology or technology substitution; disruption of our key suppliers'
provisioning of products or services; changes in the regulatory environment in
which we operate, including any increase in restrictions on our ability to
operate our networks; breaches of network or information technology security,
natural disasters, terrorist attacks or acts of war or significant litigation
and any resulting financial impact not covered by insurance; the effects of
competition in the markets in which we operate; changes in accounting
assumptions that regulatory agencies, including the SEC, may require or that
result from changes in the accounting rules or their application, which could
result in an impact on earnings; significant increases in benefit plan costs or
lower investment returns on plan assets; and the inability to implement our
business strategies.
SOURCE Verizon Communications Inc.
CONTACT: Bob Varettoni, 908-559-6388, robert.a.varettoni@verizon.com
