DENVER, Nov. 1, 2005 - Qwest Communications International Inc. ("QCII") (NYSE: Q) announced today that its wholly owned subsidiary, Qwest Services Corporation ("QSC"), has commenced a $3 billion cash offer to purchase the outstanding notes listed in the table below, which were issued by QSC and guaranteed by QCII.
|Earliest Redemption Date||Reference Security||Fixed Spread (bps)|
Notes due 2010
|$2,232 million||12/15/2006||UST 2.875% due 11/30/2006||50|
Notes due 2014
|$641 million||12/15/2007||UST 3% due 11/15/2007||50|
Notes due 2007
|$52 million||12/15/2005||UST 1.875% due 11/30/2005||50|
Under the offer, QSC will purchase notes in an aggregate principal amount that results in the payment of not more than $3 billion in total, excluding accrued but unpaid interest, for all notes purchased in the offer (the "Maximum Tender Amount"). QSC will conduct the offer in accordance with the terms and conditions described in the Offer to Purchase and Consent Solicitation Statement, dated November 1, 2005.
In the event that the offer is oversubscribed (i.e., the amount of notes tendered would result in the Maximum Tender Amount being exceeded if all such notes were purchased), QSC will accept tenders in the following order of priority: first, QSC will purchase all tendered 13.5% notes due 2010 until all such tendered notes are purchased; second, tendered 14% notes due 2014 will be purchased until either all such tendered notes are purchased or the Maximum Tender Amount is reached; and third, to the extent that a portion of the Maximum Tender Amount still remains unused, tendered 13% notes due 2007 will be purchased. In the event that a particular series of notes has some, but not all, tendered notes accepted, all tenders of notes of that series will be accepted on a pro rata basis according to the principal amount tendered.
The consideration (the "Tender Offer Consideration") for each $1,000 principal amount of notes of each series tendered and accepted for payment pursuant to the offer shall be (1) a price, calculated in accordance with standard market practice and with the settlement date being the date notes of such series are first accepted for purchase, intended to result in a yield to the earliest redemption date of the notes of such series equal to the sum of (i) the yield to maturity of the applicable reference security shown in the table above, as calculated by the dealer managers in accordance with standard market practice based on the bid-side price for such reference security as of 2:00 p.m., New York City time, on November 15, 2005, and (ii) the applicable fixed spread for the notes of such series shown in the table above, minus (2) accrued and unpaid interest from the last date on which interest has been paid up to, but not including, the date notes of such series are first accepted for purchase, minus (3) an amount equal to the Early Participation Payment of $50.00 per $1,000 principal amount of notes. Holders will also be paid accrued interest to, but not including, the applicable settlement date.
Holders who validly tender their notes at or prior to 5:00 p.m., New York City time, on Tuesday, November 15, 2005, (the "Early Participation Payment Deadline") will receive an additional payment of $50.00 per $1,000 principal amount of notes (the "Early Participation Payment") in addition to the Tender Offer Consideration and accrued interest to, but not including, the applicable settlement date. Holders who validly tender their notes after the Early Participation Payment Deadline will receive only the Tender Offer Consideration and accrued interest to, but not including, the applicable settlement date.
The offer is scheduled to expire at midnight, New York City time, on Wednesday, November 30, 2005 (the "Expiration Time"), unless extended or earlier terminated.
The initial settlement date for all QSC 13.5% Notes that are validly tendered and not validly withdrawn on or prior to the Early Participation Payment Deadline is expected to be on or about Wednesday, November 16, 2005. The initial settlement date for each other series of notes is expected to be no later than the first business day after the Expiration Date (but may be prior to such time).
In connection with the offer, QSC is soliciting consents to certain proposed amendments to the indenture governing the notes. Holders may not tender notes without delivering consents and may not deliver consents without tendering such notes. The offer is not conditioned on obtaining any minimum amount of consents. The proposed amendments would eliminate substantially all of the existing restrictive covenants contained in the indenture and would release the collateral that secures the notes, including the collateral that secures QCII's guaranty of the notes. The proposed amendments require either the consent of holders of a majority (or with respect to release of the collateral, 66?%) in principal amount of all three series, treated as one class, or the consent of a majority (or with respect to release of the collateral, 66?%) in principal amount of each affected series. In the event that the proposed amendments become effective with respect to any series of notes and the offer is oversubscribed, with the result that tendered notes of such series are returned to holders, then QSC and QCII will agree, for the benefit of holders of such series of notes, to comply with the restrictive covenants contained in the indenture for the 7-1/2% Senior Notes due 2014 issued by QCII and guaranteed by QSC.
The offer is subject to the satisfaction or waiver of certain conditions, including obtaining $1 billion of new financing in the senior convertible note offering QCII announced today on terms satisfactory to QCII. The offer is not subject to the receipt of any minimum amount of tenders.
The offer will expire at 12:00 midnight, New York City time, on Wednesday, November 30, 2005, unless extended or earlier terminated.
The complete terms and conditions of the offer are set forth in the Offer to Purchase and Consent Solicitation Statement, dated November 1, 2005, that is being sent to holders of notes. Copies of the Offer to Purchase and Consent Solicitation Statement and the related Letter of Transmittal and Consent may be obtained from the Information Agent for the offer, Global Bondholder Services Corporation, toll free at (866) 873-7700.
Banc of America Securities LLC, Goldman, Sachs & Co., Lehman Brothers Inc. and UBS Securities LLC are acting as Dealer Managers and Solicitation Agents for the offer. Questions regarding the offer may be directed to Banc of America Securities at (704) 388-4813 (collect) or (888) 292-0070 (toll-free), Goldman, Sachs & Co. at (212) 357-8664 or (800) 828-3182.
Qwest Communications International Inc. (NYSE: Q) is a leading provider of high-speed Internet, data, video and voice services. With approximately 40,000 employees, Qwest is committed to the "Spirit of Service" and providing world-class services that exceed customers' expectations for quality, value and reliability. For more information, please visit the Qwest Web site at www.qwest.com.