Verizon expected to meet with investors on Vodafone

Verizon Communications Inc. is expected to meet with investors in the United States and Europe next week as it prepares to sell $50 billion of debt to buy Vodafone Group Plc out of their wireless joint venture.

Verizon hired banks to arrange the meetings starting Monday in the United States and Friday in Europe, according to a person with knowledge of the events. A first bond offering may exceed Apple Inc.'s record $17 billion issue in April.

"The bonds will be absorbed," said Peter Hamilton, a senior money manager at Hillswick Asset Management L.L.C. in Stamford, Conn., which manages $1.3 billion in fixed-income assets. "They're going to pay down the debt as fast as they can. They're a buy."

Verizon confirmed Friday that two top executives, Lowell McAdam and Fran Shammo, will be traveling to meet with investors.

The stakes are high for Verizon, which faces erosion in its legacy phone business and seeks full control of the highly profitable Verizon Wireless venture.

The $130 billion deal for the 45 percent of Verizon Wireless owned by Vodafone will give Verizon that control. Vodafone and Verizon have jointly owned the venture since 2000.

Verizon agreed to a $10 billion breakup fee if the deal collapses.

JPMorgan Chase & Co., Morgan Stanley, Bank of America Corp., and Barclays Plc are supplying $61 billion of bridge loans that will be converted into other debt. Verizon also will pay part of the deal's cost with stock.

The added debt would double Verizon's obligations to about $100 billion, which prompted Standard & Poor's and Moody's Investors Service to cut the telecom's credit rating one level, though it remains investment grade.

"The market expects them to be upgraded in a year or two," Hamilton said. "They can't really afford to have a high amount of interest-rate costs."

Separately, Verizon shareholder Natalie Gordon has sued to stop the transaction, saying the agreement is "insufficient and inadequate" to shareholders of New York-based Verizon. She seeks class action, or group status, for the lawsuit on behalf of all shareholders.

"Verizon shareholders are being shortchanged and their investment in Verizon will be diminished and diluted as a result of the stock purchase agreement," Gordon said in the complaint, filed on Thursday in New York State Supreme Court in Manhattan.

"We believe this lawsuit is entirely without merit, and Verizon intends to defend itself vigorously," Randal S. Milch, Verizon's executive vice president and general counsel said in a statement.