TELUS Strengthens Capital Structure with $1.5 Billion Subordinated Notes Offering
- TELUS announces a US$1.5 billion offering of Junior Subordinated Notes to strengthen its capital structure.
- The offering includes Series A Notes at 6.625% and Series B Notes at 7.000%, both maturing in 2055.
- Proceeds will support tender offers, debt repayment, and enhance TELUS' financial standing with 50% equity credit from agencies.
TELUS Enhances Capital Structure with New Subordinated Notes Offering
TELUS, a leading telecommunications provider based in Vancouver, BC, announces a significant financial maneuver through the pricing of a US$1.5 billion offering of Fixed-to-Fixed Rate Junior Subordinated Notes. This strategic decision aims to bolster the company's capital structure and support its ongoing financial initiatives. The offering comprises two series: US$700 million in Series A Notes, maturing on October 15, 2055, with an initial interest rate of 6.625%, and US$800 million in Series B Notes, also maturing on the same date, offering a higher initial rate of 7.000%. These rates are structured to reset periodically, linking them to the Five-Year U.S. Treasury rate, which allows TELUS to manage interest costs effectively over the long term.
The Series A Notes will reset every five years starting from October 15, 2030, while the Series B Notes will adjust from October 15, 2035. This staggered reset mechanism provides TELUS with flexibility in its financial planning, allowing the company to align its debt obligations with market conditions. By securing a substantial amount of funding at favorable interest rates, TELUS demonstrates its commitment to maintaining a robust balance sheet, which is vital for financing future growth initiatives and sustaining operational stability in the competitive telecommunications landscape.
The proceeds from this offering will primarily be used to support TELUS' previously announced tender offers, with any remaining funds dedicated to debt repayment and general corporate purposes. This dual approach underscores TELUS' proactive financial management strategy, aimed at optimizing its capital structure while simultaneously providing opportunities for investors. Notably, credit rating agencies have recognized the value of these Notes, granting them 50% equity credit, which further enhances TELUS' financial standing and investment appeal. The offering is expected to close around June 27, 2025, pending customary conditions, with leading underwriters including J.P. Morgan Securities LLC, RBC Capital Markets, and Wells Fargo Securities managing the process.
In conjunction with the offering, TELUS will file a prospectus supplement with the U.S. Securities and Exchange Commission, adhering to regulatory requirements. Importantly, these Notes are not available in Canada except through exempt transactions, highlighting TELUS' strategic focus on international markets. This initiative not only reflects TELUS' dedication to strengthening its financial position but also its readiness to capitalize on market opportunities as it continues to evolve within the dynamic telecommunications sector.
