Verizon Communications (VZ) 8-KEntry into a Material Definitive Agreement

JPMorgan and Morgan Stanley 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. JPMorgan and Morgan Stanley and their affiliates may, from time to time, engage in transactions with and perform services for Verizon in the ordinary course of our business for which they may receive customary fees and reimbursement of expenses. In addition, JPMorgan and Morgan Stanley 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 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 last quoted by the Wall Street Journal as the “prime rate”, the federal funds rate plus 0.500%, and one-month LIBOR plus 1.000%, subject to a floor of 1.000%) or (ii) LIBOR, in each case plus a margin to be determined by reference to Verizon’s credit ratings and ranging from 0.000% to 0.125% in the case of base rate loans and 0.625% to 1.125% in the case of LIBOR loans. Additional margin of 0.125% is added to the loan on December 31, 2021.

Verizon will pay a commitment fee on the daily actual unused commitment of each lender starting on the date that is 60 days after the Effective Date through the last day of the Availability Period. This fee accrues at a rate determined by reference to Verizon’s credit ratings and ranges from 0.070% to 0.125% per annum.

The Credit Agreement requires Verizon to reduce unused commitments and prepay the loans with 100% of the net cash proceeds received from issuances or sales of equity and incurrences of borrowed money indebtedness, subject to certain exceptions.

The 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 inability to borrow in certain circumstances or the acceleration of any outstanding loan under the Credit Agreement, as applicable.

In September 2020, Cellco Partnership, a wholly-owned subsidiary of Verizon, filed an application to participate in FCC Auction 107, which relates to mid-band wireless spectrum known as C- Band. The auction commenced on December 8, 2020. On February 24, 2021, the FCC issued a final public notice announcing the conclusion and results of the auction. In its final notice, the FCC announced that Cellco Partnership was the winning bidder with respect to approximately $45.5 billion of licenses. Down payments, in the amount of 20% of the cost of the spectrum licenses less the amount of the upfront payment made by bidders in October 2020, with respect to the auction are due on March 10, 2021, and final payments in the amount of 80% of the cost of the spectrum licenses are due on March 24, 2021. In accordance with the rules applicable to the auction, licensees also must pay their allocable shares of an estimated $13.1 billion in associated clearing and incentive costs at the times contemplated by the auction rules.