8-KMaterial AgreementsRegulation FDExhibits & Filings

VERIZON COMMUNICATIONS INC 8-K Report, Material Agreement (May 13, 2009)

Filed May 13, 2009For Securities:VZ

Summary

Verizon Communications Inc. (VZ) filed an 8-K on May 13, 2009, announcing a significant agreement to divest its local exchange and related business assets in predominantly rural areas across 14 states to Frontier Communications Corporation (Frontier). This strategic move involves transferring the "West Area" business, which includes approximately 4.8 million local access lines and 1.0 million high-speed data customers, excluding its wireless and Verizon Business operations. The transaction is structured as a spin-off of a Verizon subsidiary (Spinco) to Verizon stockholders, followed by an immediate merger with Frontier. Upon completion, Verizon stockholders are expected to receive approximately 68% of the combined entity (Frontier), with Verizon itself retaining no ownership. The total value Verizon anticipates receiving is approximately $8.6 billion, comprising cash distributions, debt securities, and the value of Frontier stock distributed to its shareholders. This divestiture aims to streamline Verizon's operations and focus on its core growth areas.

Key Highlights

  • 1Verizon to sell its West Area local exchange and related business assets to Frontier Communications.
  • 2The divested assets serve approximately 4.8 million local access lines and 1.0 million high-speed data customers across 14 states.
  • 3The transaction will be structured as a spin-off of a Verizon subsidiary followed by a merger with Frontier.
  • 4Verizon stockholders are expected to receive approximately 68% of Frontier post-merger.
  • 5Verizon anticipates receiving approximately $8.6 billion in total value from the transaction.
  • 6The deal excludes Verizon Wireless, Verizon Business, and other non-local exchange operations.
  • 7The transaction is subject to customary closing conditions, including regulatory approvals and Frontier's stockholder approval.

Frequently Asked Questions

Verizon is selling its local exchange and related business assets in predominantly rural areas across 14 states, referred to as the "West Area." This includes switched and special access lines, fiber-to-the-premises assets, Internet service, and certain long-distance voice accounts served in that region prior to the MCI merger.

Verizon expects to receive a total value of approximately $8.6 billion. This comprises about $5.3 billion in Frontier common stock distributed to Verizon stockholders, and approximately $3.3 billion in cash, debt securities issued to Verizon, and assumption of certain debt by Frontier.

No, the transaction specifically excludes Verizon Wireless, Verizon Business (formerly MCI, Inc.), and any other Verizon businesses in the West Area. Verizon Business will continue to serve its customers in these states by purchasing local exchange services from Frontier.

Upon the completion of the merger, Verizon stockholders are expected to receive approximately 68% of the outstanding shares of Frontier Communications. They will receive one share of Frontier stock for approximately every 4.2 shares of Verizon stock held, effectively giving them ownership in the combined entity.