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Tomahawk, WI 9/13/2013 (BasicsMedia) – Verizon Communications Inc. (NYSE:VZ) operates, both in the U.S and around 150 other nations all over the world, mainly as a holding company. The two segments under which the company operates include Verizon Wireless and Wireline. Its clients include businesses, individual consumers and governmental agencies all over the world. The company is set to conduct a bond sale which it expects to fetch around $49 billion in order to fund its upcoming deal with Vodafone; a deal which is worth around $130 billion. How will this affect it?

Verizon’s Deal With Vodafone Set to be a new record

If VZ successfully manages to raise the $49 billion from its bond sale, it will have set a record for other companies. This offering is almost thrice that of Apple which fetched around $17 billion, and was considered a record when it was announced at that time. When VZ first announced this bond offering, it added that it expected to raise around $20 billion but quickly had to change the figure once it emerged that there was overwhelming demand for this offering. Reports from Wall Street indicate that the company has received orders worth $90 billion.

What does VZ Need to do to Reduce Its Huge Debt?

Currently, VZ has debts totaling $49 billion. However, with this new bond offering, the debt will effectively have been doubled. What the company would have to do in order to reduce its debts include coming up with a free cash flow position which is very strong. Its free cash flow over the last twelve months as at the end of June 2013 currently stands at around $22.6 billion. VZ’s LTE network is the most developed in the U.S, and this is bound to continue bolstering the company’s position within the industry, both in the local industry as well as the rest of the world.

Banks Managing The Deal Between VZ and Vodafone

The banks which have been given the task of managing VZ bond offering include JPMorgan Chase & Co, Barclays Plc, Morgan Stanley, and the Bank of America. These largest banks are expected to provide the bridge loan to help finance the bond offering on behalf of VZ. If the offering is as successful as the company envisages, this will help to finance its goal of owning Verizon Wireless fully. Secondly, common shares of around $60.2 billion are expected to be issued by VZ. It is expected to issue notes worth $5 billion which are only payable to Vodafone.

Terms of the deal between Verizon and Vodafone

If the bond offering is to be perfectly completed, Verizon is also expected to sell to Vodafone its stake in Vodafone Omnitel N.V which currently stands at 23.1%, at an amount not in excess of $3.5 billion. If this bond offering takes place as it is widely expected to, it will be the largest in corporate history. Vodafone currently owns 45% of Verizon Wireless, which is the most profitable carrier in the U.S. The future looks bright for Verizon Communications Inc should it succeed in this deal with Vodafone bearing in mind the massive potential existing in this market.

The world is currently infatuated with going wireless and this is expected to go on for a very long time, much to the benefit of companies such as Verizon Communications Inc and its investors.

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