Verizon buyer to sell junk bonds

Advertiser Staff and News Services

The Washington, D.C.-based Carlyle Group plans to sell $550 million of junk bonds this month to finance the purchase of Verizon Hawaii, the state's largest phone company.

Carlyle agreed to buy Verizon Hawaii from its parent, Verizon Communications Inc., for $1.65 billion in May 2004. The price was later cut to $1.6 billion. The deal is expected to net Verizon Communications more than $800 million, while nearly tripling the debt of the local phone company from $427 million to $1.22 billion.

Carlyle will change the name of the phone company to Hawaiian Telcom Communications Inc.

The bonds to be sold include notes maturing in eight years that pay interest at fixed and floating interest rates and 10-year fixed-rate securities, Hawaiian Telcom said in a news release.

Verizon Hawaii had $610 million of sales in 2003, New York-based Verizon said when the transaction was announced. The notes being sold this month haven't yet been rated by Moody's Investors Service or Standard & Poor's, though they will have high-yield, high-risk, credit ratings, Bloomberg News reported.

Goldman Sachs Group Inc., JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. are managing the bond offering.

The sale of Verizon Hawaii is expected to close next month.