Frontier Communications 2014 Annual Report Download - page 44

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deducting underwriting fees and offering expenses. The Company also commenced a tender offer to
purchase the maximum aggregate principal amount of its 8.250% Senior Notes due 2014 (the 2014
Notes) and its 7.875% Senior Notes due 2015 (the April 2015 Notes and, together with the 2014 Notes,
the Notes) that it could purchase for up to $500 million in cash (the 2012 Debt Tender Offer).
The 2023 Notes
On August 15, 2012, the Company completed a registered offering of $600 million aggregate
principal amount of 7.125% senior unsecured notes due 2023 (the 2023 Notes), issued at a price of
100% of their principal amount. We received net proceeds of $588 million from the offering after
deducting underwriting fees and offering expenses. The Company used the net proceeds from the sale
of the notes to repurchase or retire existing indebtedness in 2013.
On October 1, 2012, the Company completed a registered offering of $250 million aggregate
principal amount of the 2023 Notes, issued at a price of 104.250% of their principal amount. We
received net proceeds of $256 million from the offering after deducting underwriting fees and offering
expenses. The notes are an additional issuance of, are fully fungible with and form a single series
voting together as one class with the $600 million aggregate principal amount of the 2023 Notes issued
by the Company on August 15, 2012. The Company used the net proceeds from the sale of the notes
to repurchase or retire existing indebtedness in 2013.
Debt Reduction
During 2014, 2013 and 2012, we retired an aggregate principal amount of $260 million,
$1,563 million and $757 million, respectively, of debt consisting of $257 million, $1,563 million and
$756 million, respectively, of senior unsecured debt and $1 million in each period, of rural utilities
service loan contracts, as discussed below. Additionally, we retired $2 million of other secured debt
during 2014.
On April 10, 2013, the Company accepted for purchase $471 million aggregate principal amount of
its senior notes tendered for total consideration of $532 million, consisting of $194 million aggregate
principal amount of the Company’s 6.625% senior notes due 2015 (the March 2015 Notes), tendered
for total consideration of $216 million, and $277 million aggregate principal amount of the Company’s
7.875% senior notes due 2015 (the April 2015 Notes), tendered for total consideration of $316 million.
On April 24, 2013, the Company accepted for purchase $1 million aggregate principal amount of the
March 2015 Notes, tendered for total consideration of $1 million, $1 million of the April 2015 Notes,
tendered for total consideration of $1 million, and $225 million aggregate principal amount of the
Company’s 8.250% senior notes due 2017 (the 2017 Notes), tendered for total consideration of
$268 million. The repurchases in the debt tender offers for the senior notes resulted in a loss on the
early extinguishment of debt of $105 million ($65 million or $0.06 per share after tax).
Additionally, in 2013, the Company repurchased $209 million of the 2017 Notes in a privately
negotiated transaction, along with $17 million of its 8.125% senior notes due 2018 and $79 million of its
8.500% senior notes due 2020 in open market repurchases. These transactions resulted in a loss on
the early extinguishment of debt of $55 million ($34 million or $0.04 per share after tax).
Pursuant to the 2012 Debt Tender Offer, the Company accepted for purchase $400 million
aggregate principal amount of 2014 Notes, tendered for total consideration of $446 million, and
$50 million aggregate principal amount of April 2015 Notes, tendered for total consideration of
$54 million. The Company used proceeds from the sale of its May 2012 offering of $500 million of the
2021 Notes, plus cash on hand, to purchase the Notes.
The repurchases in the 2012 Debt Tender Offer for the 2014 Notes resulted in a loss on the early
extinguishment of debt of $69 million. We also recognized losses of $2 million during the second
quarter of 2012 for $78 million in total open market repurchases of our 6.25% Senior Notes due 2013.
On October 1, 2012, the Company purchased $76 million and $59 million aggregate principal
amount of the April 2015 Notes and the 2017 Notes, respectively, in open market repurchases for total
43
FRONTIER COMMUNICATIONS CORPORATION AND SUBSIDIARIES