01—Abstract
Summary
Summary of the 8-K filed July 22, 2024. Cited figures are marked; the original filing is the authoritative source.
On July 22, 2024, Verizon Communications announced private exchange offers for 10 outstanding note series with maturities from 2025 through 2028, totaling roughly $19.0 billiona in principal outstanding.
Eligible holders (qualified institutional buyers or qualifying non-U.S. persons) can exchange their Old Notes for new Verizon notes due February 15, 2035, subject to a $2.5 billionb cap on new notes issued across all offers. The offer appears to be a liability management transaction that extends the maturity profile of near-term debt. The filing does not state the purpose explicitly, so that characterization is an inference from the structure.
The economics favor early participation. Holders who tender by the August 2, 2024 Early Participation Date receive a $50c per $1,000 principal early participation payment, paid in additional New Notes, on top of the Total Exchange Price. Fixed-rate notes are priced at a fixed spread over a specified Treasury yield, set at 10:00 a.m. on August 5, 2024.
Floating-rate notes are priced at fixed Total Exchange Prices of $1,008.30d (2025 notes) and $1,013.20 (2026 notes), inclusive of the early payment. Accrued coupon is paid in cash. The New Notes coupon will equal the yield on the 4.375% Treasury due May 15, 2034 plus 100 basis points.
Acceptance follows a waterfall by priority level, from level 1 (2025 notes) through level 10 (2028 notes), with proration applied at the cap. Because tendered principal is likely to exceed $2.5 billion, proration is probable, especially for lower-priority series. Verizon may waive or increase the cap at its discretion.
A $500 million minimum issue requirement applies at the early settlement and cannot be waived. The offers expire August 19, 2024, the early settlement date is the fifth business day after the early participation date, and the New Notes will not be registered under the Securities Act.
02—Key points
Key Highlights
- Verizon launched private exchange offers for 10 note series maturing 2025–2028, covering approximately $19.0 billion in aggregate principal outstanding.
- New Notes mature February 15, 2035 and carry a coupon equal to the 4.375% Treasury due May 2034 yield plus 100 bps, set on the Price Determination Date.
- Exchange consideration is capped at $2.5 billion of New Notes, which is well below the amount outstanding, so proration and acceptance priority levels will determine the final amounts accepted.
- Early participants by August 2, 2024 receive a $50 per $1,000 principal Early Participation Payment in addition to the Total Exchange Price; late tenders receive the Exchange Price without it.
- Floating-rate notes have fixed Total Exchange Prices of $1,008.30 (2025 notes) and $1,013.20 (2026 notes) per $1,000, inclusive of the early payment.
- A $500 million minimum issue requirement applies at early settlement and cannot be waived; the offers expire August 19, 2024.
- The New Notes are unregistered and offered only to qualified institutional buyers and eligible non-U.S. holders, with a registration rights agreement to be entered into.
03—Questions
Frequently Asked Questions
What is Verizon proposing to do with these notes?
Verizon is offering to exchange 10 series of outstanding notes maturing 2025–2028 for newly issued notes due February 15, 2035. Holders who tender receive new notes in the amounts set by each series' exchange terms, plus accrued interest in cash. The filing does not state the purpose; the structure suggests an effort to extend the maturity profile of near-term debt.
How much debt is eligible, and how much will Verizon actually issue?
Roughly $19.0 billion of principal across the 10 series is eligible. Verizon will issue no more than $2.5 billion of New Notes across all offers unless it waives or increases that cap. Because eligible debt far exceeds the cap, acceptance will be prorated, and lower-priority series are most likely to receive less than full participation.
Why would an investor tender early?
Tendering by the August 2, 2024 Early Participation Date earns a $50 per $1,000 principal early payment, paid in New Notes. Tenders after that date and before the August 19 expiration receive only the Exchange Price, which excludes this payment. Holders should also check intermediary deadlines, which are typically earlier than the stated ones.
What is the risk of not participating or having notes prorated?
Non-accepted holders keep their existing notes and original maturities. Notes with lower acceptance priority may be only partially exchanged or not exchanged at all, which leaves those holders with their existing claims. The filing does not indicate how the market will price the remaining notes after the exchange.
What is the New Notes coupon and when will it be known?
The New Notes coupon equals the yield on the 4.375% U.S. Treasury due May 15, 2034, plus 100 basis points, rounded to three decimal places. Verizon will announce the coupon and the final results in a press release after the Price Determination Date, which is 10:00 a.m. on August 5, 2024, unless extended.
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