TELEPHONE AND DATA SYSTEMS, INC. (a Delaware corporation) Debt Securities TERMS AGREEMENT
Exhibit 1.2
TELEPHONE AND DATA SYSTEMS, INC.
(a Delaware corporation)
Debt Securities
TERMS AGREEMENT
March 21, 2011
To: Telephone and Data Systems, Inc.
30 N. LaSalle, Suite 4000
Chicago, Illinois 60602
Ladies and Gentlemen:
We understand that Telephone and Data Systems, Inc., a Delaware corporation (the “Company”), proposes to issue and sell $300,000,000 aggregate principal amount of its senior debt securities (the “Securities”) (such securities also being hereinafter referred to as the “Initial Underwritten Securities”). Subject to the terms and conditions set forth or incorporated by reference herein, the underwriters named below (the “Underwriters”) offer to purchase, severally and not jointly, the principal amount of Initial Underwritten Securities opposite their names set forth below at the purchase price set forth below, and a proportionate share of Option Underwritten Securities set forth below, to the extent any are purchased.
| Underwriters |
| Principal Amount |
| |
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| Citigroup Global Markets Inc. |
| $ | 58,312,500 |
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| Merrill Lynch, Pierce, Fenner & Smith Incorporated |
| 58,312,500 |
| |
| UBS Securities LLC |
| 58,312,500 |
| |
| Wells Fargo Securities, LLC |
| 58,312,500 |
| |
| RBC Capital Markets, LLC |
| 15,000,000 |
| |
| BNY Mellon Capital Markets, LLC |
| 6,000,000 |
| |
| Comerica Securities, Inc. |
| 6,000,000 |
| |
| SunTrust Robinson Humphrey, Inc. |
| 6,000,000 |
| |
| TD Securities (USA) LLC |
| 6,000,000 |
| |
| U.S. Bancorp Investments, Inc. |
| 6,000,000 |
| |
| BB&T Capital Markets, a division of Scott & Stringfellow, Inc. |
| 1,500,000 |
| |
| Incapital LLC |
| 1,500,000 |
| |
| Janney Montgomery Scott LLC |
| 1,500,000 |
| |
| Keefe, Bruyette & Woods, Inc. |
| 1,500,000 |
| |
| Morgan Keegan & Company, Inc. |
| 1,500,000 |
| |
| Oppenheimer & Co. Inc. |
| 1,500,000 |
| |
| Robert W. Baird & Co. Incorporated |
| 1,500,000 |
| |
| Stifel, Nicolaus & Company, Incorporated |
| 1,500,000 |
| |
| B.C. Ziegler and Company |
| 750,000 |
| |
| Blaylock Robert Van, LLC |
| 750,000 |
| |
| Cabrera Capital Markets, LLC |
| 750,000 |
| |
| CastleOak Securities, L.P. |
| 750,000 |
| |
| D.A. Davidson & Co. |
| 750,000 |
| |
| Davenport & Company LLC |
| 750,000 |
| |
| J.J.B. Hilliard, W.L. Lyons, Inc. |
| 750,000 |
| |
| KeyBanc Capital Markets Inc. |
| 750,000 |
| |
| Lebenthal & Co., LLC |
| 750,000 |
| |
| Mesirow Financial, Inc. |
| 750,000 |
| |
| Samuel A. Ramirez & Co., Inc. |
| 750,000 |
| |
| William Blair & Company, LLC |
| 750,000 |
| |
| The Williams Capital Group, L.P. |
| 750,000 |
| |
|
|
|
|
| |
| Total |
| $ | 300,000,000 |
|
The Underwritten Securities shall have the following terms:
Debt Securities
| Title: |
| 7% Senior Notes due 2060 |
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| Rank: |
| Senior unsecured obligations of the Company |
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| Aggregate principal amount of Initial Underwritten Securities: |
| $300,000,000 |
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| Option Underwritten Securities: |
| None |
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| Denominations: |
| $25 and integral multiples in excess thereof |
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| Currency of payment: |
| US Dollars |
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| Interest rate: |
| 7% per annum |
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| Interest payment dates: |
| March 15, June 15, September 15 and December 15, beginning on June 15, 2011 |
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| Regular record dates: |
| The first business day preceding the respective interest payment date |
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| Stated maturity date: |
| March 15, 2060 |
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| Redemption provisions: |
| The Notes may be redeemed, in whole or in part, at the Company’s option at any time on and after March 15, 2016 at a redemption price equal to |
2
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| 100% of the principal amount of the Notes being redeemed plus accrued and unpaid interest to the redemption date |
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| Sinking fund requirements: |
| None |
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| Conversion provisions: |
| None |
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| Listing requirements: |
| NYSE within 30 days of settlement date |
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| CUSIP / ISIN: |
| 879433 837 / US8794338371 |
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| Black-out provisions: |
| March 21, 2011 through March 28, 2011 |
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| Price to Public: |
| $25 per Note; 100% of the principal amount, plus accrued interest, if any, from March 28, 2011 |
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| Purchase price: |
| $24.2125 per Note; 96.85% of principal amount, plus accrued interest, if any, from March 28, 2011 |
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| Form: |
| Book-entry only |
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| Other terms and conditions: |
| None |
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| Initial Sale Time: |
| 4:15 P.M., New York City time, on March 21, 2011 |
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| Free writing prospectuses included in Disclosure Package (See Section 1(a)(2)): |
| Free writing prospectuses, dated March 21, 2011 |
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| Electronic road show or other written communications included in Company Additional Written Communication (See Section 1(a)(7)): |
| None |
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| Closing date and location: |
| March 28, 2011 at the offices of Sidley Austin LLP, One S. Dearborn Street, Chicago, Illinois 60603 |
All of the provisions contained in the document attached as Annex I hereto entitled “TELEPHONE AND DATA SYSTEMS, INC. — Debt Securities — Final Term Sheet” as was filed with the Securities and Exchange Commission on March 21, 2011, and the document attached as Annex II hereto entitled “TELEPHONE AND DATA SYSTEMS, INC. — Debt Securities — Underwriting Agreement” are hereby incorporated by reference in their entirety herein and shall be deemed to be a part of this Terms Agreement to the same extent as if such provisions had been set forth in full herein. Terms defined in such document are used herein as therein defined.
3
Please accept this offer no later than 5:00 o’clock P.M. (New York City time) on March 21, 2011 by signing a copy of this Terms Agreement in the space set forth below and returning the signed copy to us.
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| Very truly yours, | |
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| CITIGROUP GLOBAL MARKETS INC. | |
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| MERRILL LYNCH, PIERCE, FENNER & SMITH | |
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| INCORPORATED | |
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| UBS SECURITIES LLC | |
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| WELLS FARGO SECURITIES, LLC | |
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| As Representatives of the Several | |
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| Underwriters Referred to Below | |
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| BY: MERRILL LYNCH, PIERCE, FENNER & SMITH | |
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| INCORPORATED | |
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| By: | /s/ Keith Harman |
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| Authorized Signatory |
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| Acting on behalf of itself and the other named Underwriters. | |
| Accepted: |
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| TELEPHONE AND DATA SYSTEMS, INC. |
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| By | /s/ LeRoy T. Carlson, Jr. |
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| Name: LeRoy T. Carlson, Jr. |
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| Title: President and Chief Executive Officer |
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| By | /s/ Kenneth R. Meyers |
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| Name: | Kenneth R. Meyers |
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| Title: | Executive Vice President and Chief Financial Officer |
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[Signature Page to the Terms Agreement]
Annex I to Terms Agreement
Form of Pricing Term Sheet
Free Writing Prospectus
(To Prospectus dated March 21, 2011 and
Preliminary Prospectus Supplement Dated March 21, 2011)
$300,000,000
Telephone and Data Systems, Inc.
7% Senior Notes due 2060
Pricing Term Sheet
| Issuer: |
| Telephone and Data Systems, Inc. |
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| Security: |
| 7% Senior Notes due 2060 |
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| Principal Amount: |
| $300,000,000 |
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| Over-Allotment Option: |
| None |
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| Denominations: |
| $25 and integral multiples in excess thereof |
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| Trade Date: |
| March 21, 2011 |
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| Settlement Date: |
| March 28, 2011 (T+5) |
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| Maturity Date: |
| March 15, 2060 |
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| Coupon: |
| 7.00% |
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| Interest Payment Dates: |
| March 15, June 15, September 15 and December 15, commencing June 15, 2011 |
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| Price to Public: |
| $25 per note |
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| Optional Redemption: |
| The Issuer may redeem the Notes, in whole or in part, at any time on and after March 15, 2016 at a redemption price equal to 100% of the principal amount redeemed plus accrued and unpaid interest to the redemption date. |
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| Use of Proceeds: |
| The net proceeds to be received by the Issuer from the offering, after deducting underwriting discounts and commissions and other offering expenses payable by the Issuer, are estimated to be approximately $290.2 million. The Issuer expects to use approximately $282.5 million of the net proceeds from the offering to redeem all of its 7.6% Series A Notes due 2041, of which $282.5 million in aggregate principal amount is outstanding. The remaining net proceeds will be used for general corporate purposes. |
A-I-1
| Listing: |
| The Issuer intends to list the Notes on the New York Stock Exchange and expects trading in the Notes on the New York Stock Exchange to begin within 30 days after the Settlement Date. |
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| CUSIP/ISIN: |
| 879433 837 / US8794338371 |
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| Joint Book-Running Managers: |
| Citigroup Global Markets Inc. Merrill Lynch, Pierce, Fenner & Smith Incorporated UBS Securities LLC |
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| Co-Managers: |
| RBC Capital Markets, LLC BNY Mellon Capital Markets, LLC Comerica Securities, Inc. SunTrust Robinson Humphrey, Inc. TD Securities (USA) LLC U.S. Bancorp Investments, Inc. |
The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering.
You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling Citigroup Global Markets Inc. toll-free at ###-###-#### or e-mail ***@***; or Merrill Lynch, Pierce, Fenner & Smith Incorporated toll-free at ###-###-#### or e-mail ***@***; or UBS Securities LLC toll-free at ###-###-####, extension ###-###-####; or Wells Fargo Securities, LLC toll-free at ###-###-#### or e-mail ***@***.
A-I-2
Annex II to Terms Agreement
TELEPHONE AND DATA SYSTEMS, INC.
Underwriting Agreement
[see attached]
