Verizon Wireless 2013 Annual Report Download - page 55

53
2013
During March 2013, we issued $0.5 billion aggregate principal amount of
oating rate Notes due 2015 in a private placement resulting in cash pro-
ceeds of approximately $0.5 billion, net of discounts and issuance costs.
The proceeds were used for the repayment of commercial paper.
During April 2013, $1.25 billion of 5.25% Verizon Communications Notes
matured and were repaid. In addition, during June 2013, $0.5 billion of
4.375% Verizon Communications Notes matured and were repaid.
During September 2013, in connection with the Wireless Transaction,
we issued $49.0 billion aggregate principal amount of xed and oating
rate notes resulting in cash proceeds of approximately $48.7 billion,
net of discounts and issuance costs. The issuances consisted of the fol-
lowing: $2.25 billion aggregate principal amount of oating rate Notes
due 2016 that bear interest at a rate equal to three-month LIBOR plus
1.53% which rate will be reset quarterly, $1.75 billion aggregate prin-
cipal amount of oating rate Notes due 2018 that bear interest at a rate
equal to three-month LIBOR plus 1.75% which rate will be reset quar-
terly, $4.25 billion aggregate principal amount of 2.50% Notes due 2016,
$4.75 billion aggregate principal amount of 3.65% Notes due 2018, $4.0
billion aggregate principal amount of 4.50% Notes due 2020, $11.0 bil-
lion aggregate principal amount of 5.15% Notes due 2023, $6.0 billion
aggregate principal amount of 6.40% Notes due 2033 and $15.0 billion
aggregate principal amount of 6.55% Notes due 2043 (collectively, the
new notes). The proceeds of the new notes were used to nance, in part,
the Wireless Transaction and to pay related fees and expenses. As a result
of the issuance of the new notes, we incurred interest expense related to
the Wireless Transaction of $0.7 billion during 2013.
In addition, during 2013 we utilized $0.2 billion under xed rate vendor
nancing facilities.
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 pro-
ceeds of approximately $5.4 billion, net of discounts and issuance costs.
The net proceeds were used, in part, to nance the Wireless Transaction.
Any net proceeds not used to nance the Wireless Transaction will be
used for general corporate purposes. Also, during February 2014, we
issued $0.5 billion aggregate principal amount of 5.9% Retail Notes
due 2054 resulting in cash proceeds of approximately $0.5 billion, net
of discounts and issuance costs. The proceeds will be used for general
corporate purposes.
Verizon Notes
During February 2014, in connection with the Wireless Transaction, we
issued $5.0 billion aggregate principal amount of oating rate notes. The
Verizon Notes were issued in two separate series, with $2.5 billion due
February 21, 2022 and $2.5 billion due February 21, 2025. The Verizon
Notes bear interest at a oating rate, which will be reset quarterly, with
interest payable quarterly in arrears, beginning May 21, 2014 (see Note
2). The eight-year Verizon notes bear interest at a oating rate equal to
three-month LIBOR, plus 1.222%, and the eleven-year Verizon notes bear
interest at a oating rate equal to three-month LIBOR, plus 1.372%.
Term Loan Agreement
During October 2013, we entered into a term loan agreement with a
group of major nancial institutions pursuant to which we drew $6.6 bil-
lion to nance, in part, the Wireless Transaction and to pay transaction
costs. Half of any loans under the term loan agreement have a maturity
of three years and the other half have a maturity of ve years (the 5-Year
Loans). The 5-Year Loans provide for the partial amortization of principal
during the last two years that they are outstanding. Loans under the
term loan agreement bear interest at oating rates. The term loan agree-
ment contains certain negative covenants, including a negative pledge
covenant, a merger or similar transaction covenant and an accounting
changes covenant, armative covenants and events of default that are
customary for companies maintaining an investment grade credit rating.
In addition, the term loan agreement requires us to maintain a leverage
ratio (as dened in the term loan agreement) not in excess of 3.50:1.00,
until our credit ratings reach a certain level.
Bridge Credit Agreement
During September 2013, we entered into a $61.0 billion bridge credit
agreement with a group of major nancial institutions. The credit agree-
ment provided us with the ability to borrow up to $61.0 billion to
nance, in part, the Wireless Transaction and to pay related transaction
costs. Following the September 2013 issuance of notes, borrowing avail-
ability under the bridge credit agreement was reduced to $12.0 billion.
Following the eectiveness of the term loan agreement in October 2013,
the bridge credit agreement was terminated in accordance with its terms
and as such, the related fees of $0.2 billion were recognized in Other
income and (expense), net during the fourth quarter of 2013.
2012
On November 2, 2012, we announced the commencement of a tender
offer (the Tender Offer) to purchase for cash any and all of the out-
standing $1.25 billion aggregate principal amount of 8.95% Verizon
Communications Notes due 2039. In the Tender Oer that was completed
November 9, 2012, $0.9 billion aggregate principal amount of the notes
was purchased at a price of 186.5% of the principal amount of the notes
(see “Early Debt Redemption and Other Costs”) and $0.35 billion principal
amount of the notes remained outstanding. Any accrued and unpaid
interest on the principal purchased was paid to the date of purchase.
During November 2012, we issued $4.5 billion aggregate principal
amount of xed rate notes resulting in cash proceeds of approximately
$4.47 billion, net of discounts and issuance costs. The issuances consisted
of the following: $1.0 billion of 0.70% Notes due 2015, $0.5 billion of 1.10%
Notes due 2017, $1.75 billion of 2.45% Notes due 2022 and $1.25 bil-
lion of 3.85% Notes due 2042. During December 2012, the net proceeds
were used to redeem: $0.7 billion of the $2.0 billion of 8.75% Notes due
November 2018 at a redemption price of 140.2% of the principal amount
of the notes (see “Early Debt Redemption and Other Costs”), $0.75 billion
of 4.35% Notes due February 2013 at a redemption price of 100.7% of the
principal amount of the notes and certain telephone subsidiary debt (see
“Telephone and Other Subsidiary Debt”), as well as for the Tender Oer
and other general corporate purposes. Any accrued and unpaid interest
was paid to the date of redemption.
In addition, during 2012 we utilized $0.2 billion under xed rate vendor
nancing facilities.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS continued