Disposition of Businesses and Investments Telephone Access Lines Spin-off
On January 16, 2007, we announced a definitive agreement
FairPoint Communications, Inc. (FairPoint) that will
result in Verizon
establishing a separate entity for its local exchange
business assets in Maine, New Hampshire and Vermont,
off that new entity to Verizon shareowners, and immediately
merging it with and into FairPoint.
Upon the closing of the transaction, Verizon shareowners
will own approximately 60 percent of the new company
FairPoint stockholders will own approximately 40 percent.
Communications will not own any shares in FairPoint
merger. In connection with the merger, Verizon shareowners
receive one share of FairPoint stock for approximately
shares of Verizon stock held as of the record date.
Both the spin-off
and merger are expected to qualify as tax-free transactions,
to the extent that cash is paid to Verizon shareowners
in lieu of fractional
The total value to be received by Verizon and its
exchange for these operations will be approximately
Verizon shareowners will receive approximately $1,015
FairPoint common stock in the merger, based upon FairPoint’s
stock price and the terms of the merger agreement.
receive $1,700 million in value through a combination
of cash distributions
to Verizon and debt securities issued to Verizon prior
spin-off. Verizon may exchange these newly issued
for certain debt that was previously issued by Verizon,
have the effect of reducing Verizon’s then-outstanding
During the second quarter of 2006, we entered into
agreement to sell our indirect 28.5% interest in CANTV
to an entity
jointly owned by América Móvil and Telmex
for estimated pretax
proceeds of $677 million. Regulatory authorities in
commenced the formal review of that transaction and
the related tender offers for the remaining equity
securities of CANTV. On
February 8, 2007, after two prior extensions, the
the stock purchase agreement because the parties mutually
that the regulatory approvals would not be granted
In January 2007, the Bolivarian Republic of Venezuela
Republic) declared its intent to nationalize certain
including CANTV. On February 12, 2007, we entered
Memorandum of Understanding (MOU) with the Republic.
provides that the Republic will offer to purchase
all of the equity
securities of CANTV through public tender offers in
the United States at a price equivalent to $17.85
per ADS. If the
tender offers are completed, the aggregate purchase
Verizon’s shares would be $572 million. If the
2007 dividend that
has been recommended by the CANTV Board is approved
shareholders and paid prior to the closing of the
tender offers, this
amount will be reduced by the amount of the dividend.
agreed to tender its shares if the offers are commenced.
Republic has agreed to commence the offers within
assuming the satisfactory completion of its due diligence
of CANTV. The tender offers are subject to certain
including that a majority of the outstanding shares
are tendered to
the Government and receipt of regulatory approvals.
the terms of the MOU and our current investment balance
CANTV, we expect that we will record a loss on our
the first quarter of 2007. The ultimate amount of
the loss depends
on a variety of factors, including the successful
completion of the
tender offer and the satisfaction of other terms in
Redemption of Debt
On January 8, 2007, we redeemed the remaining $1,580
million of the
outstanding Verizon Communications Inc. floating rate
2007. The gain/(loss) on this redemption was immaterial.
* This is an interactive electronic version of Verizon’s 2006
Annual Report to Shareholders, and it is intended to be complete and
accurate. The contents of this version are qualified in their entirety
by reference to the printed version. A reproduction of the printed version
is available in PDF format on this website.