Summary
Verizon Communications Inc. has filed an 8-K report on October 3, 2013, detailing the entry into a significant $12.0 billion Term Loan Credit Agreement, effective October 1, 2013. This new credit facility is primarily intended to partially finance Verizon's acquisition of Vodafone Group Plc's indirect 45% interest in Cellco Partnership d/b/a Verizon Wireless, a transaction previously announced on September 2, 2013. The agreement provides a crucial funding source for this major strategic move. The Term Loan Credit Agreement allows Verizon to draw up to $12.0 billion, with loans available until September 2, 2014, or shortly after the consummation of the Wireless Transaction. The financing will be structured with 50% of the loans maturing in three years and the remaining 50% in five years, with specific amortization schedules for the five-year loans. This filing also confirms the termination of a previously announced bridge credit agreement, replaced by this new, larger term loan facility.
Key Highlights
- 1Verizon entered into a $12.0 billion Term Loan Credit Agreement on October 1, 2013, to finance its acquisition of Vodafone's stake in Verizon Wireless.
- 2The new credit facility replaces a previously announced bridge loan.
- 3The loan facility has an availability period extending up to September 2, 2014, or consummation of the Wireless Transaction.
- 4The borrowed funds will be split evenly between 3-year and 5-year maturities.
- 5The agreement includes customary covenants for investment-grade companies, such as a Leverage Ratio not to exceed 3.50:1.00 until credit ratings improve.
- 6Interest rates are based on a choice between a base rate or LIBOR, plus a margin determined by Verizon's credit ratings.
- 7A commitment fee of 0.10% per annum is payable on unused commitments.