Verizon Communications: Entry Into A Material Definitive Agreement
The following excerpt is from the company's SEC filing
On October 1, 2013 (the Effective Date), Verizon Communications Inc. (Verizon) entered into a $12.0 billion Term
Loan Credit Agreement (the Term Loan Credit Agreement) with JPMorgan Chase Bank, N.A., as administrative agent (JPM), and the lenders named therein. The Term Loan Credit Agreement provides Verizon with the ability to borrow
up to $12.0 billion to finance, in part, Verizons previously announced acquisition of the indirect 45% interest of Vodafone Group Plc (Vodafone) in Cellco Partnership d/b/a Verizon Wireless (the Partnership) pursuant to
the stock purchase agreement (as amended from time to time, the Stock Purchase Agreement) entered into on September 2, 2013 among Verizon, Vodafone and Vodafone 4 Limited (the Wireless Transaction) and to pay related
fees and expenses. The loans under the Term Loan Credit Agreement are available during the period (the Availability Period) beginning on the Effective Date and ending on the earliest of (i) September 2, 2014, (ii) the date
immediately following the consummation of the Wireless Transaction, (iii) the termination of the Stock Purchase Agreement and (iv) the termination in full of the commitments pursuant to the Term Loan Credit Agreement. The availability of
the loans under the Term Loan Credit Agreement, which have not yet been funded, is subject to the satisfaction (or waiver) of the conditions set forth therein. The date on which such conditions are satisfied (or waived in accordance with the Term
Loan Credit Agreement) is the Funding Date. The loans under the Term Loan Credit Agreement are to be made in a single borrowing on the Funding Date. 50% of the loans under the Term Loan Credit Agreement have a maturity of three years
(the 3-Year Loans), and 50% of the loans under the Term Loan Credit Agreement have a maturity of five years (the 5-Year Loans). The 5-Year Loans will amortize in an amount equal to (i) 5.0% of the original principal
amount of the 5-Year Loans on each of the dates that are three, six, nine and twelve months after the third anniversary of the Funding Date and (ii) 12.5% of the original principal amount of the 5-Year Loans on each of the dates that are three,
six and nine months after the fourth anniversary of the Funding Date. Any borrowing under the Term Loan Credit Agreement will be allocated on a pro rata basis between the 3-Year Loans and the 5-Year Loans.
Certain of the lenders under the Term Loan Credit Agreement and their affiliates have performed commercial banking, investment banking or
advisory services for Verizon from time to time for which they have received customary fees and reimbursement of expenses. These lenders and their affiliates may, from time to time, engage in transactions with and perform services for Verizon in the
ordinary course of its business for which they may receive customary fees and reimbursement of expenses. In addition, some of the lenders under the Term Loan Credit Agreement are lenders, and in some cases agents or managers for the lenders, under
other debt facilities through which Verizon may obtain funding.
The loans under the Term Loan Credit Agreement will bear interest at a rate equal to, at the option of Verizon, (i) the base rate (defined
as the greater of the rate JPM announces publicly as its prime rate or the federal funds rate plus 0.50%, subject to a floor of LIBOR plus 1.00%) or (ii) LIBOR, in each case plus a margin to be determined by reference to
Verizons credit ratings. For 3-Year Loans, the margin ranges from 0.125% to 0.875% in the case of base rate loans and 1.125% to 1.875% in the case of LIBOR loans. For 5-Year Loans, the margin ranges from 0.25% to 1.00% in the case of base rate
loans and 1.25% to 2.00% in the case of LIBOR loans.
Verizon will pay a commitment fee on the daily actual unused commitment of each lender for the
period from and including the Effective Date through the date on which the commitments are terminated. This fee accrues at a rate equal to 0.10% per annum.
Loan Credit Agreement contains certain negative covenants, including a negative pledge covenant, a merger or similar transaction covenant and an accounting changes covenant, and affirmative covenants and events of default that are customary for
companies maintaining an investment grade credit rating. An event of default may result in the acceleration of any outstanding loans under the Term Loan Credit Agreement, as applicable. In addition, the Term Loan Credit Agreement requires Verizon to
maintain a Leverage Ratio (as such term is defined in the Term Loan Credit Agreement) not in excess of 3.50:1.00, until Verizons credit ratings reach a certain level.
The foregoing description of the Term Loan Credit Agreement does not purport to be complete and is subject to, and qualified in its entirety
by, the full text of the Term Loan Credit Agreement, which is attached hereto as Exhibit 10.1 and which is incorporated herein by reference.
The Term Loan Credit Agreement has been included to provide investors and security holders with information regarding its terms. It is not
intended to be a source of financial, business or operational information, or provide any other factual information, about Verizon or the Partnership or their respective subsidiaries or affiliates. The representations, warranties and covenants
contained in the Term Loan Credit Agreement are made only for purposes of such agreement and are as of specific dates; are solely for the benefit of the parties thereto (except as specifically set forth therein); may be subject to limitations agreed
upon by the parties thereto, instead of establishing these matters as facts; and may be subject to standards of materiality and knowledge applicable to the contracting parties that differ from those applicable to investors. Investors should not rely
on the representations, warranties and covenants or any descriptions thereof as characterizations of the actual state of facts or condition of Verizon or the Partnership or any of their respective subsidiaries or affiliates. Moreover, information
concerning the subject matter of the representations, warranties and covenants may change after the date of the Term Loan Credit Agreement, which subsequent information may or may not be fully reflected in Verizons public disclosures or public
disclosures concerning the Partnership.
Upon the entry into the Term Loan
Credit Agreement, the previously disclosed Bridge Credit Agreement that Verizon entered into on September 2, 2013 with JPM, as administrative agent, and the lenders named therein was terminated in accordance with its terms.
Term Loan Credit Agreement, dated as of October 1, 2013, among Verizon Communications Inc., JPMorgan Chase Bank, N.A., as administrative agent, and the lenders party thereto.
This communication is deemed an advertisement for the purposes of the U.K. prospectus rules and is not a prospectus or a prospectus equivalent document. Any
decision to subscribe for, purchase, otherwise acquire, sell or otherwise dispose of any Verizon Communications Inc. shares must be made only on the basis of the information contained in and incorporated by reference into the prospectus expected to
be published by Verizon in connection with the proposed transaction with Vodafone Group Plc. Copies of the prospectus will be available from Verizons registered offices and on Verizons website at www.verizon.com/investor.
This communication does not
constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval nor shall there be any offer or sale of securities in any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration
or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended, or pursuant to an exemption from the registration requirements thereof.
Verizon Communications Inc. will file with the SEC a registration statement on Form S-4 containing a prospectus with respect to the
Verizon securities to be offered in the proposed transaction with Vodafone (the prospectus) and a proxy statement (the proxy statement) with respect to the special meeting of the Verizon shareholders in connection with the
proposed transaction. VODAFONE SHAREHOLDERS ARE URGED TO READ CAREFULLY THE PROSPECTUS AND VERIZON SHAREHOLDERS ARE URGED TO READ CAREFULLY THE PROXY STATEMENT, EACH TOGETHER WITH OTHER RELEVANT DOCUMENTS TO BE FILED WITH THE SEC, IN THEIR
ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED MATTERS. Investors and shareholders will be able to obtain free copies of the prospectus, the proxy statement and
other documents filed with the SEC by the parties through the website maintained by the SEC at www.sec.gov. In addition, investors and shareholders will be able to obtain free copies of the prospectus, the proxy statement and other documents filed
with the SEC by Verizon by contacting Verizons Assistant Corporate Secretary, Verizon Communications Inc., 140 West Street, 29th Floor, New York, New York 10007. These materials are also available on Verizons website at
Verizon, Vodafone and their respective directors and executive officers may be deemed to be participants in the solicitation of proxies from the shareholders
of Verizon in respect of the proposed transaction contemplated by the proxy statement. Information regarding the persons who are, under the rules of the SEC, participants in the solicitation of the shareholders of Verizon in connection with the
proposed transaction, including a description of their direct or indirect interests, by security holdings or otherwise, will be set forth in the proxy statement when it is filed with the SEC. Information regarding Verizons directors and
executive officers is contained in Verizons Annual Report on Form 10-K for the year ended December 31, 2012 and its Proxy Statement on Schedule 14A, dated March 18, 2013, which are filed with the SEC. Information regarding
Vodafones directors and executive officers is contained in Vodafones Annual Report on Form 20-F for the year ended December 31, 2012, which is filed with the SEC.
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned
hereunto duly authorized.
The above information was disclosed in a filing to the SEC. To see this filing in its entirety, click here. Verizon Communications Inc. next reports earnings on October 17, 2013.
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