Telemar Norte Leste S.A. Announces Exchange Offer and Consent Solicitation for Its 9.50% Senior Notes Due 2019

RIO DE JANEIRO, Sept. 9 /PRNewswire/ -- Telemar Norte Leste S.A. ("Telemar") announced today that it has commenced a private exchange offer (the "exchange offer") for any and all of its outstanding 9.50% Senior Notes due 2019 (the "old notes") for its new 5.50% Senior Notes due 2020 to be issued pursuant to the exchange offer (the "new notes"). On September 8, 2010, Telemar priced its offering (the "offering") of U.S.$1.0 billion in aggregate principal amount of its 5.50% Senior Notes due 2020. The new notes will constitute an additional issuance of notes sold pursuant to the offering, will be identical to, and will be pari passu with, the new notes sold pursuant to the offering and will be treated as a single series of notes under the indenture that will govern the new notes (the "new notes indenture").  

In conjunction with the exchange offer, Telemar is also soliciting consents (the "consent solicitation" and, together with the exchange offer, the "exchange offer and consent solicitation") to amend certain provisions, including certain restrictive covenants and events of default, under the indenture governing the old notes (the "old notes indenture") to conform to the corresponding provisions in the new notes indenture. Any eligible holder who exchanges old notes for new notes pursuant to the exchange offer must also deliver its consent to the proposed amendments to the old notes indenture.

The exchange offer and consent solicitation is being solicited only from holders of old notes who are (i) "qualified institutional buyers" (as defined in Rule 144A under the Securities Act of 1933, as amended (the "Securities Act")), (ii) "accredited investors" (as defined in Rule 501 of Regulation D under the Securities Act) or (iii) non-U.S. Persons outside the United States (as defined in Regulation S under the Securities Act), each an "eligible holder."

Eligible holders who validly tender their old notes and deliver their consents at or prior to 5:00 p.m., New York City time, on September 22, 2010, unless extended by Telemar (the "early exchange date"), will receive the total exchange price.  The total exchange price shall be U.S.$1,295.12 in principal amount of new notes for each U.S.$1,000 in principal amount of old notes validly tendered on or prior to the early exchange date, and not validly withdrawn prior to the early exchange date, consisting of an exchange price of U.S.$1,265.12 in principal amount of new notes (the "exchange price") and an early exchange payment of U.S.$30.00 in principal amount of new notes (the "early exchange payment").  Eligible holders who validly tender their old notes and deliver their consents after the early exchange date but at or prior to 11:59 p.m., New York City time, on October 6, 2010, unless extended by Telemar (the "expiration date"), will receive the exchange price, but will not receive the early exchange payment.  An eligible holder whose old notes are validly tendered and accepted for exchange will also receive a cash payment equal to the accrued and unpaid interest on such old notes accepted for exchange from the last applicable interest payment date up to but excluding the applicable settlement date, less accrued and unpaid interest on the new notes to be received by such holder from the issue date of the new notes issued in the offering up to but excluding the applicable settlement date. Tenders of old notes will be accepted only in denominations of U.S.$100,000 and integral multiples of U.S.$1,000 in excess thereof.  Any fractional portion of new notes not received as a result of rounding down will be paid in cash.

Eligible holders may withdraw their tenders and revoke their consents at any time at or prior to the early exchange date, but not thereafter. An eligible holder may not revoke its consent without withdrawing its tender of the old notes.

The new notes have not been and will not be registered under the Securities Act or any state securities laws, may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements, and will therefore be subject to substantial restrictions on transfer.

This press release is neither an offer to sell nor the solicitation of an offer to buy any security.  This press release is also not a solicitation of any consent to the proposed amendments to the old notes indenture.  The exchange offer and consent solicitation is being made solely pursuant to a confidential offering memorandum, dated September 9, 2010 and the related letter of transmittal and consent (together, the "exchange offer documents").  No recommendation is made as to whether the eligible holders of old notes should tender their old notes for exchange and deliver their consents in the exchange offer and consent solicitation.

Global Bondholder Services Corporation is acting as the Information Agent and the Exchange Agent for the exchange offer and consent solicitation.  Holders can contact the Information Agent to request the eligibility letter that needs to be completed to determine if such holder is eligible to receive the exchange offer documents at (212) 430-3774 or toll-free at (866) 873-6300.

Notice regarding forward-looking statements

This press release contains forward-looking statements.  The words "will," "may," "should," "believes," "anticipates," "intends," "estimates," "expects," "projects," "plans," "seek" or similar expressions are intended to identify forward-looking statements.  All statements in this press release, other than statements of historical fact, including statements regarding the potential terms of the exchange offer and consent solicitation, the proposed amendments to the old notes indenture and new notes described, are forward-looking statements.   The potential transactions described in this press release may not occur on the terms described, or at all. All forward-looking statements speak only as of the date on which they are made.  They rely on a number of assumptions concerning future events and are subject to a number of risks and uncertainties, many of which are outside Telemar's control that could cause actual results to differ materially from such statements.  Many of these factors are beyond Telemar's ability to control or predict.  Given these uncertainties, you should not place undue reliance on the forward-looking statements.  Telemar disclaims any obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Telemar Norte Leste S.A.