DENVER, November 16, 2005 - Qwest Communications International Inc. (NYSE: Q) and its Qwest Services Corporation (QSC) subsidiary, collectively the "Companies," announced that, as of 5:00 p.m., New York City time, yesterday, which was the early participation payment deadline (the "Early Participation Payment Deadline") for the cash tender offer to purchase QSC's 13.50% Senior Subordinated Secured Notes due 2010, 14.00% Senior Subordinated Secured Notes due 2014 and 13.00% Senior Subordinated Secured Notes due 2007, a total of approximately $2,904 million in aggregate principal amount of Notes (representing approximately 99.2% of the outstanding principal amount), had been tendered.
"The success of this tender combined with our recent convertible note offering marks a defining step in the company's transformation," said Oren G. Shaffer, Qwest vice chairman and CFO. "This accelerates operating momentum underway while unlocking value through a meaningful increase in cash from operations and advancing our timeframe to profitability."
The Companies said that, as of the Early Participation Payment Deadline, they had received tenders of notes as follows:
- approximately $2,210.9 million of the 13.50% notes, representing approximately 99.0% of the outstanding principal amount of such notes;
- approximately $640.6 million of the 14.00% notes, representing approximately 100.0% of the outstanding principal amount of such notes; and
- approximately $52.1 million of the 13.00% notes, representing approximately 99.3% of the outstanding principal amount of such notes.
The Companies also announced that, due to strong participation, the size of the offer has been increased from the previously-announced $3.0 billion maximum purchase price to an offer for any and all outstanding notes. Accordingly, all validly tendered notes, including all notes previously tendered will be accepted without proration.
"This tender enables us to significantly reduce interest expense by over $300 million annually," said Janet K. Cooper, Qwest senior vice president and treasurer. "This improves the company's leverage and advances our progress toward investment grade."
The pricing information for the offer is set forth in the table below. The initial settlement date for notes of all series tendered by the Early Participation Payment Deadline is expected to be today, Wednesday, November 16, 2005, with a Total Consideration of $3,398 million.
November 30, 2006
|14.00% Notes due 2014||3.000% due November 15, 2007||4.463%||50||4.963%||$1,239.66||$50.00||$1,189.66|
|13.00% Notes due 2007||1.875% due November 30, 2005||4.293%||50||4.793%||$1,071.13||$50.00||$1,021.13|
|* Per $1,000 principal amount of notes accepted for purchase.|
Holders who validly tendered notes by the Early Participation Payment Deadline will receive the Total Consideration indicated in the table above, which includes an Early Participation Payment of $50.00 per $1,000 principal amount of Notes. Holders who validly tender their notes after the Early Participation Payment Deadline, but prior to midnight New York City time, on Wednesday, November 30, 2005 (the "Expiration Time"), will only receive the Tender Offer Consideration indicated in the table above, which is equal to the Total Consideration minus 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. The settlement dates for notes that are tendered after the Early Participation Payment Deadline and prior to the Expiration Time is expected to be promptly after the Expiration Time.
The Companies also announced that requisite consents to adopt the proposed amendments and release the collateral under the indentures relating to the notes have been received and that a supplemental indenture containing such amendments and releases will be executed today, Wednesday, November 16, 2005, by the Companies and the indenture trustee.
The tender offer is scheduled to expire at the Expiration Time. Notes tendered pursuant to the offer may no longer be withdrawn.
Banc of America Securities LLC, Goldman Sachs & Co., Lehman Brothers Inc. and UBS Securities LLC are the 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, Lehman Brothers at (212) 528-7581 or (800) 438-3242 and UBS Securities at (203) 719-4210 or (888) 722-9555 x 4210.
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.
Forward Looking Statement Note
This release may contain projections and other forward-looking statements that involve risks and uncertainties. These statements may differ materially from actual future events or results. Readers are referred to the documents filed by us with the Securities and Exchange Commission, specifically the most recent reports which identify important risk factors that could cause actual results to differ from those contained in the forward-looking statements, including but not limited to: access line losses due to increased competition, including from technology substitution of our access lines with wireless and cable alternatives; our substantial indebtedness, and our inability to complete any efforts to de-lever our balance sheet through asset sales or other transactions; any adverse outcome of the current investigation by the U.S. Attorney's office in Denver into certain matters relating to us; adverse results of increased review and scrutiny by regulatory authorities, media and others (including any internal analyses) of financial reporting issues and practices or otherwise; rapid and significant changes in technology and markets; any adverse developments in commercial disputes or legal proceedings, including any adverse outcome of current or future legal proceedings related to matters that are the subject of governmental investigations, and, to the extent not covered by insurance, if any, our inability to satisfy any resulting obligations from funds available to us, if any; potential fluctuations in quarterly results; volatility of our stock price; intense competition in the markets in which we compete including the likelihood of certain of our competitors consolidating with other providers or otherwise reorganizing their capital structure to more effectively compete against us; changes in demand for our products and services; acceleration of the deployment of advanced new services, such as broadband data, wireless and video services, which could require substantial expenditure of financial and other resources in excess of contemplated levels; higher than anticipated employee levels, capital expenditures and operating expenses; adverse changes in the regulatory or legislative environment affecting our business; changes in the outcome of future events from the assumed outcome included in our significant accounting policies; and our ability to utilize net operating losses in projected amounts.
The information contained in this release is a statement of Qwest's present intention, belief or expectation and is based upon, among other things, the existing regulatory environment, industry conditions, market conditions and prices, the economy in general and Qwest's assumptions. Qwest may change its intention, belief or expectation, at any time and without notice, based upon any changes in such factors, in Qwest's assumptions or otherwise. The cautionary statements contained or referred to in this release should be considered in connection with any subsequent written or oral forward-looking statements that Qwest or persons acting on its behalf may issue. This release may include analysts' estimates and other information prepared by third parties for which Qwest assumes no responsibility.
Qwest undertakes no obligation to review or confirm analysts' expectations or estimates or to release publicly any revisions to any forward-looking statements and other statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
By including any information in this release, Qwest does not necessarily acknowledge that disclosure of such information is required by applicable law or that the information is material.