Summary
Verizon Communications Inc. (VZ) filed an 8-K on June 24, 2011, to disclose a significant update regarding its debt structure and financial reporting for its domestic operating telephone company subsidiaries. The company announced that it has guaranteed the principal, interest, and premium on all outstanding debentures and first mortgage bonds issued by ten of its U.S. operating subsidiaries. This move consolidates the credit risk of these legacy debts under the parent company, Verizon Communications Inc. This guarantee impacts over $8 billion in outstanding debt across 31 series. As a result of this guarantee, Verizon will cease providing separate financial information for these subsidiaries on its investor relations website, starting with the first quarter of 2011 financial statements. Investors should note that these subsidiaries have not issued public long-term debt since 2003, indicating a move towards centralized financing and financial disclosure.
Key Highlights
- 1Verizon Communications Inc. has issued guarantees for over $8 billion in outstanding debt across 31 series of debentures and first mortgage bonds from 10 domestic operating telephone company subsidiaries.
- 2The guarantees cover principal, interest, and premium payments for the specified debt instruments.
- 3This action consolidates the credit risk of these legacy subsidiary debts under the Verizon Communications Inc. parent entity.
- 4Verizon will discontinue providing separate financial information for these 10 subsidiaries on its investor relations website, commencing with Q1 2011 financial statements.
- 5The affected subsidiaries have not issued public long-term debt since 2003.
- 6Each guarantee is subject to specific termination conditions, including full debt payment, indenture satisfaction, mutual agreement, or the subsidiary ceasing to be wholly-owned.
- 7Any amendment to these guarantees requires the consent of all holders of the applicable debt series.