Summary
Verizon Communications Inc. (VZ), through its subsidiary Cellco Partnership d/b/a Verizon Wireless, has entered into a significant $17.0 billion 364-day Credit Agreement. This facility is specifically designed to finance the concurrent closing of the acquisition of Alltel Corporation, as well as to refinance certain Alltel debt and related expenses. The availability of the loan is contingent upon the successful completion of the Alltel acquisition and the absence of material adverse changes in Alltel's business, among other conditions. This move signals Verizon's strong commitment to the Alltel acquisition, which is expected to reshape its wireless market presence.
Key Highlights
- 1Verizon Wireless entered into a $17.0 billion 364-day Credit Agreement on December 19, 2008.
- 2The primary purpose of the credit facility is to fund the acquisition of Alltel Corporation.
- 3Proceeds can also be used to refinance Alltel's existing debt and cover related transaction costs.
- 4Borrowing is subject to the concurrent closing of the Alltel acquisition and other conditions, including the absence of a material adverse change in Alltel's business.
- 5The credit agreement was subsequently reduced to $14.5 billion in commitments on December 24, 2008.
- 6Interest rates are based on either the base rate or LIBOR, plus a margin determined by credit ratings, with initial margins at +2.00% for base rate and +3.00% for LIBOR.
- 7The agreement includes covenants such as a negative pledge and a requirement to maintain a Leverage Ratio not exceeding 3.25:1.00.
Frequently Asked Questions
The primary purpose of the $17.0 billion 364-day Credit Agreement is to finance Verizon Wireless's acquisition of Alltel Corporation. It can also be used to refinance certain existing debt of Alltel and cover related transaction expenses.
Verizon Wireless can only draw on this credit facility if the acquisition of Alltel Corporation closes concurrently, there is no material adverse change in Alltel's business, and certain other conditions specified in the agreement are met.
Yes, Verizon Wireless reduced the lenders' commitments under the Credit Agreement from $17.0 billion to $14.5 billion on December 24, 2008.
Interest on the loans will be based on either the base rate or LIBOR, plus a margin that varies with Verizon Wireless's credit ratings. Initially, the margin is 2.00% for base rate loans and 3.00% for LIBOR loans. Verizon Wireless will also pay duration fees and, if borrowing doesn't occur by a certain date, a commitment fee on unused portions.