DENVER, Nov. 2, 2005 - Qwest Communications International Inc. (?QCII?) (NYSE: Q) today announced that it has priced its $1.1 billion aggregate principal amount convertible senior notes due 2025, which was upsized from the previously announced amount of $1 billion. The notes will bear an interest rate of 3.50 percent per annum, payable semi-annually on May 15 and November 15, commencing on May 15, 2006. The notes are convertible, on or after November 15, 2024, and also under certain circumstances before November 15, 2024, into common stock at an initial conversion rate of 169.4341 shares of common stock for each $1,000 principal amount (which represents a conversion price of $5.90 per share). The initial conversion price represents a premium of 30% over today?s closing price of $4.54. Upon conversion of the notes a holder will receive an amount in cash equal to the principal amount of his note plus shares of QCII stock (or cash in lieu of stock at QCII's option) to the extent the conversion value of the notes exceeds the principal amount. QCII has also granted the underwriters an option to purchase up to an additional $165 million aggregate principal amount of the notes solely to cover over-allotments, if any. The closing of the offering is expected to occur on November 8, 2005, subject to the satisfaction of customary closing conditions.
QCII may redeem some or all of the notes at any time on or after November 20, 2008 and before November 20, 2010, if the closing price of its common stock exceeds the conversion price by 130% for a period of 20 trading days in a consecutive 30 day trading period. The redemption price will be 100% of the principal amount of the notes being redeemed together with a make-whole premium based on the present value of the remaining payments through November 20, 2010. At any time on or after November 20, 2010, QCII has the right to redeem some or all of the notes at a redemption price equal to 100% of the principal amount of the notes being redeemed together with accrued and unpaid interest.
Holders of the notes have the right to require QCII to repurchase their notes at 100% of the principal amount thereof plus accrued and unpaid interest on November 15, 2010, November, 15, 2015 and November 15, 2020 or in the event of certain fundamental changes, including change in control transactions.
"We're pleased with the strong demand from fundamental investors that enabled us to upsize the convertible offer above our expectations to $1.1 billion from $1 billion," said Oren G. Shaffer, Qwest vice chairman and CFO. "This transaction is a step function in the company's transformation. It accelerates our operational momentum by significantly reducing interest expense and moving us closer to profitability."
QCII intends to use the net proceeds from this offering, together with existing cash and cash equivalents, to fund a tender offer for the 13.00% Senior Subordinated Secured Notes due 2007, 13.50% Senior Subordinated Secured Notes due 2010 and 14.00% Senior Subordinated Secured Notes due 2014 issued by its wholly-owned subsidiary, Qwest Services Corporation. Any remaining net proceeds will be used for other general corporate purposes and potential future refinancing of indebtedness.
Goldman, Sachs & Co. is acting as sole bookrunner for the offering. Co-lead managers are Credit Suisse First Boston and Morgan Stanley. Citigroup, Lehman Brothers and Wachovia Securities are co-managers.
Copies of the prospectus for the offering may be obtained by contacting Goldman, Sachs & Co., 85 Broad Street, New York, NY 10004, Attn: Prospectus Department, telephone: 1 212-902-1171.
This release shall not constitute an offer to sell or a solicitation of an offer to buy, nor shall there be any sale of the notes in any state or jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or jurisdiction.
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.