Business Context and Reporting Period
This Form 8-K Current Report, dated September 29, 2014, is filed by CenturyLink, Inc. and its indirect wholly-owned subsidiary, Qwest Corporation (QC). The filing reports the completion of a public debt offering and a concurrent debt refinancing transaction.
Key Financial Metrics
- New Debt Issuance: QC issued $500 million aggregate principal amount of unsecured 6.875% Notes due 2054.
- Offering Price: 100% of the principal amount.
- Net Proceeds: Approximately $483 million after deducting underwriting discounts and estimated expenses.
- Debt Retirement: Proceeds are used to retire $600 million aggregate principal amount of outstanding 7.5% notes maturing October 1, 2014.
- Interest Payment: Approximately $23 million in accrued and unpaid interest is being paid on the retired notes.
- Liquidity Source: Net proceeds combined with available cash or additional borrowings from CenturyLink or affiliates.
Material Changes
The primary material change is the refinancing of short-term debt with long-term debt. QC is replacing $600 million of 7.5% notes maturing in 2014 with $500 million of 6.875% notes due in 2054. This transaction extends the maturity profile of the debt and reduces the coupon rate on the new issuance compared to the retired debt.
Outlook, Risks, and Unusual Items
- Over-Allotment Option: Underwriters hold an option exercisable through October 22, 2014, to purchase up to an additional $75 million of Notes to cover over-allotments.
- Listing: The Notes are expected to be listed on the New York Stock Exchange on or about September 30, 2014.
- Risks: Forward-looking statements are subject to risks including changes in cash requirements, unanticipated delays in listing, changes in credit facility terms, and general market or economic conditions.
- Unusual Items: None reported beyond the standard debt refinancing activity.
Investor Verification Checklist
- Verify the final listing date of the 6.875% Notes on the New York Stock Exchange.
- Confirm whether the underwriters exercised the $75 million over-allotment option by October 22, 2014.
- Review the Supplemental Indenture for specific redemption rights and covenants associated with the new Notes.
- Monitor subsequent filings for the exact amount of cash or affiliate borrowings used to bridge the gap between the $483 million net proceeds and the $623 million total retirement cost ($600 million principal + $23 million interest).