America Online 2015 Annual Report Download - page 59

2015
February Exchange Offers
On February11, 2015, we announced the commencement of seven
separate private offers to exchange (the February Exchange Offers)
specified series of outstanding notes and debentures issued by
Verizon and GTE Corporation (collectively, the Old Notes) for new
Notes to be issued by Verizon (the New Notes) and, in the case of the
6.94% debentures due 2028 of GTE Corporation, cash. The February
Exchange Offers have been accounted for as a modification of debt.
On March13, 2015, Verizon issued $2.9billion aggregate principal
amount of 4.272% Notes due 2036 (the 2036 New Notes), $5.0billion
aggregate principal amount of 4.522% Notes due 2048 (the 2048
New Notes) and $5.5billion aggregate principal amount of 4.672%
Notes due 2055 (the 2055 New Notes) in satisfaction of the exchange
offer consideration on tendered Old Notes (not including accrued and
unpaid interest on the Old Notes). The following tables list the series of
Old Notes included in the February Exchange Offers and the principal
amount of each such series accepted by Verizon for exchange.
The table below lists the series of Old Notes included in the February Exchange Offers for the 2036 New Notes:
(dollars in millions)
Interest
Rate Maturity
Principal Amount
Outstanding
Principal Amount
Accepted For
Exchange
Verizon Communications Inc. 5.15% 2023 $ 11,000 $ 2,483
The table below lists the series of Old Notes included in the February Exchange Offers for the 2048 New Notes:
(dollars in millions)
Interest
Rate Maturity
Principal Amount
Outstanding
Principal Amount
Accepted For
Exchange
Verizon Communications Inc. 6.90% 2038 $ 1,250 $ 773
6.40% 2038 1,750 884
6.40% 2033 4,355 2,159
6.25% 2037 750 –
GTE Corporation 6.94% 2028 800 –
$ 3,816
The table below lists the series of Old Notes included in the February Exchange Offers for the 2055 New Notes:
(dollars in millions)
Interest
Rate Maturity
Principal Amount
Outstanding
Principal Amount
Accepted For
Exchange
Verizon Communications Inc. 6.55% 2043 $ 10,670 $ 4,084
Term Loan Agreement
During the first quarter of 2015, we entered into a term loan agreement
with a major financial institution, pursuant to which we borrowed
$6.5billion for general corporate purposes, including the acquisition of
spectrum licenses. Borrowings under the term loan agreement were
to mature in March 2016, with a $4.0billion mandatory prepayment
required in June 2015. The term loan agreement contained certain
negative covenants, including a negative pledge covenant, a merger
or similar transaction covenant and an accounting changes covenant,
affirmative covenants and events of default that are customary for
companies maintaining an investment grade credit rating. In addition,
the term loan agreement required us to maintain a leverage ratio
(as defined in the term loan agreement) not in excess of 3.50:1.00,
until our credit ratings were equal to or higher than A3 and A- at
Moody’s Investors Service and Standard & Poor’s Ratings Services,
respectively.
During March 2015, we prepaid approximately $5.0billion of the term
loan agreement, which satisfied the mandatory prepayment. During the
third and fourth quarters of 2015, respectively, we made repayments of
approximately $1.0billion and $0.5billion. As of December31, 2015, no
amounts remained outstanding under the term loan agreement.
Other
During June 2015, as part of the Merger Agreement with AOL, we
assumed approximately $0.6billion of debt and capital lease obli-
gations. As of December31, 2015, approximately $0.4billion of the
assumed debt and capital lease obligations were repaid.
During October 2015, we executed a $0.2billion, 1.5% loan due
2018. Also, during March 2015, $0.5billion of floating rate Verizon
Communications Notes matured and were repaid. During November
2015, $1.0billion of 0.7% Verizon Communications Notes matured and
were repaid.
2014
During February 2014, we issued €1.75billion aggregate principal
amount of 2.375% Notes due 2022, €1.25billion aggregate principal
amount of 3.25% Notes due 2026 and £0.85billion aggregate
principal amount of 4.75% Notes due 2034. The issuance of these
Notes resulted in cash proceeds of approximately $5.4billion, net
of discounts and issuance costs. The net proceeds were used, in
part, to finance the Wireless Transaction. Net proceeds not used to
finance the Wireless Transaction were used for general corporate
purposes. Also, during February 2014, we issued $0.5billion aggregate
principal amount of 5.90% Notes due 2054 resulting in cash proceeds
of approximately $0.5billion, net of discounts and issuance costs.
Thenet proceeds were used for general corporate purposes.
57Verizon Communications Inc. and Subsidiaries
Notes to Consolidated Financial Statements continued