<PAGE> 1
THE INFORMATION IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING
PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. NEITHER THIS PROSPECTUS
SUPPLEMENT NOR THE ACCOMPANYING PROSPECTUS IS AN OFFER TO SELL THESE
SECURITIES AND NEITHER IS SOLICITING AN OFFER TO BUY THESE SECURITIES IN
ANY JURISDICTION WHERE THE OFFER OR SALE IS NOT PERMITTED.
Filed Pursuant to Rule 424(b)(5)
Registration No. 333-35432
SUBJECT TO COMPLETION, DATED OCTOBER 5, 2000
PROSPECTUS SUPPLEMENT
OCTOBER , 2000
(TO PROSPECTUS DATED MAY 15, 2000)
$
[CENTURYTEL LOGO]
$ % SENIOR NOTES, SERIES H, DUE
$ % REMARKETABLE SENIOR NOTES, SERIES I, DUE
$ % REMARKETABLE SENIOR NOTES, SERIES J, DUE
------------------------------
We will pay interest on our Series H notes semi-annually in arrears on
October and April of each year, beginning on April , 2001. We may redeem
some or all of our Series H notes at any time to the extent described herein.
The Series H notes are offered for sale in the United States and Europe. We have
applied to have the Series H notes listed and traded on the Luxembourg Stock
Exchange.
Our Series I remarketable notes will bear interest at the rate of % per
year from the date of issuance to but excluding October , 200 , which is the
first Series I Remarketing Date, and then at a fixed or floating rate as
described herein. Our Series J remarketable notes will bear interest at the rate
of % per year from the date of issuance to but excluding October , 200 ,
which is the first Series J Remarketing Date, and then at a fixed or floating
rate as described herein. We will pay interest on our Series I and Series J
remarketable notes semi-annually in arrears on October and April of each
year, beginning on April , 2001 and continuing through the first Remarketing
Date for that series, and then at the intervals described herein. On the
applicable Remarketing Date, our remarketable notes will either be mandatorily
tendered to and purchased by , as Series I Remarketing Dealer, or
, as Series J Remarketing Dealer, as the case may be, or mandatorily
redeemed by us, in each case at the prices described herein. We have the option
to redeem all or any of our remarketable notes under the circumstances and at
the prices described herein. The remarketable notes are offered for sale in the
United States only and will not be listed on any securities exchange or included
in any automated quotation system.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
------------------------------
<TABLE>
<CAPTION>
PER SERIES H PER SERIES I PER SERIES J TOTAL
NOTE NOTE NOTE NOTES
------------ ------------ ------------ -----
<S> <C> <C> <C> <C>
Price to Investors(1).......................... % % %
Total................................ $ $ $ $
Underwriting Discount and Commissions.......... % % %
Total................................ $ $ $ $
Proceeds, before expenses, to CenturyTel(2).... $ $ $ $
</TABLE>
---------------
(1) The prices to investors above do not include accrued interest, if any.
Interest on the notes will accrue from October , 2000 and must be paid by
the purchaser if the notes are delivered to the underwriters after October
, 2000.
(2) Includes consideration for the options related to the remarketable notes.
------------------------------
The underwriters expect to deliver the notes in book-entry form only through
the facilities of The Depositary Trust Company, including, with respect to the
Series H notes only, for the accounts of Euroclear and Clearstream Luxembourg,
against payment in New York, New York on or about October , 2000.
Joint Book-Running Managers
BANC OF AMERICA SECURITIES LLC SALOMON SMITH BARNEY
<PAGE> 2
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY
REFERENCE IN THIS PROSPECTUS SUPPLEMENT AND THE ACCOMPANYING PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT
PERMITTED. YOU SHOULD NOT ASSUME THAT THE INFORMATION CONTAINED OR INCORPORATED
BY REFERENCE IN THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS IS
ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT OF THIS PROSPECTUS
SUPPLEMENT. THE INFORMATION CONTAINED IN OUR WEBSITE, WWW.CENTURYTEL.COM, IS NOT
A PART OF THIS PROSPECTUS SUPPLEMENT OR THE ACCOMPANYING PROSPECTUS.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
PROSPECTUS SUPPLEMENT
About This Prospectus Supplement............................ S-3
Forward-Looking Statements.................................. S-4
Summary of the Offering..................................... S-5
The Company................................................. S-7
Recent Developments......................................... S-9
Use of Proceeds............................................. S-10
Capitalization.............................................. S-11
Selected Historical and Pro Forma Financial Data............ S-12
Directors and Executive Officers............................ S-14
Description of the Series H Notes........................... S-15
Description of the Remarketable Notes....................... S-22
Certain United States Tax Documentation Requirements........ S-34
Certain United States Tax Considerations.................... S-35
Underwriting................................................ S-39
Legal Matters............................................... S-41
Experts..................................................... S-41
Listing and General Information............................. S-41
PROSPECTUS
About This Prospectus....................................... 3
Where You Can Find More Information......................... 3
Forward-Looking Statements.................................. 4
The Company................................................. 5
Use of Proceeds............................................. 8
Earnings Ratios............................................. 8
Description of Senior Debt Securities....................... 8
Description of Preferred Stock.............................. 15
Description of the Common Stock............................. 17
Description of Warrants..................................... 18
Plan of Distribution........................................ 19
Legal Matters............................................... 20
Experts..................................................... 20
</TABLE>
S-2
<PAGE> 3
ABOUT THIS PROSPECTUS SUPPLEMENT
This prospectus supplement and the accompanying prospectus include
information furnished in compliance with the rules governing the listing of
securities on the Luxembourg Stock Exchange for the purpose of giving
information with regard to CenturyTel. CenturyTel accepts responsibility for the
information contained in this prospectus supplement and the accompanying
prospectus. The Luxembourg Stock Exchange takes no responsibility for the
contents of this document, makes no representation as to its accuracy or
completeness and expressly disclaims any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the contents
of this document.
Our Series H notes are offered globally for sale in those jurisdictions in
the United States and Europe where it is lawful to make such offers. Offers and
sales of the Series H notes are subject to restrictions in certain
jurisdictions. We urge you to inform yourself of these restrictions and observe
them. The distribution of this prospectus supplement and accompanying prospectus
and the offering of the Series H notes in certain other jurisdictions may also
be restricted by law. See "Underwriting."
We cannot guarantee that our application to the Luxembourg Stock Exchange
with respect to the Series H notes will be approved, and the sale of the Series
H notes is not conditioned on obtaining the listing.
Our remarketable notes will be offered only in the United States and will
not be listed on any securities exchange or included in any automated quotation
system.
S-3
<PAGE> 4
FORWARD-LOOKING STATEMENTS
Certain statements made in this prospectus supplement and the documents
incorporated in the accompanying prospectus by reference that are not historical
facts are intended to be forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Our actual results could
differ materially from such statements due to several important factors,
including the following:
- our ability to effectively manage our growth, including obtaining
adequate financing on attractive terms, integrating newly acquired
businesses into our operations, hiring adequate numbers of qualified
staff and successfully upgrading our billing and other information
systems
- the risks inherent in rapid technological change
- the effects of ongoing changes in the regulation of the communications
industry
- the effects of greater than anticipated competition in our markets
- possible changes in the demand for, or pricing of, our products and
services
- our ability to successfully introduce new product or service offerings on
a timely and cost-effective basis
- the effects of more general factors such as changes in general market or
economic conditions or in legislation, regulation or public policy.
These factors, and others, are described in greater detail in Item 1 of our
Annual Report on Form 10-K for the year ended December 31, 1999. You are
cautioned not to place undue reliance on our forward-looking statements, which
speak only as of the date hereof. Except for our obligations to disclose
material information under the federal securities laws, we undertake no
obligation to update any of our forward-looking statements for any reason.
----------
When used in this prospectus supplement, (1) the term "LEC" means a local
exchange carrier that provides local telephone service, (2) the term "MSA" means
a Metropolitan Statistical Area for which the Federal Communications Commission
("FCC") has granted a cellular operating license, (3) the term "pops," whenever
used with respect to the operations of CenturyTel, means the population of
licensed markets (based on independent third-party population estimates)
multiplied by the proportionate equity interests of CenturyTel in the licensed
operators of those markets, (4) the term "RSA" means a Rural Service Area for
which the FCC has granted a cellular operating license, and (5) the term
"Verizon Acquisitions" refers to our recent acquisitions of telephone properties
from Verizon, which are described further below. All references to "CenturyTel,"
"we," "our" or "us" mean CenturyTel, Inc. and its consolidated subsidiaries,
unless the context requires otherwise. All references to "Verizon" shall include
Verizon Communications, Inc., its predecessor, GTE Corporation, and their
respective affiliates, and all references to underwriters shall include their
respective affiliates where appropriate. All references to "dollars," "$" and
"U.S. Dollars" are to United States dollars.
S-4
<PAGE> 5
SUMMARY OF THE OFFERING
We have briefly described below certain terms of this offering. For a more
complete description of the notes, see "Description of the Series H Notes" and
"Description of the Remarketable Notes" herein and "Description of Senior Debt
Securities" in the accompanying prospectus.
Issuer..................... CenturyTel, Inc.
Notes Offered.............. $ principal amount of % Senior Notes,
Series H, due
$ principal amount of % Remarketable
Senior Notes, Series I, due
$ principal amount of % Remarketable
Senior Notes, Series J, due
Maturity................... The Series H notes will mature on October , 20 .
The Series I remarketable notes will mature on
October , 20 , unless extended until the tenth
anniversary of the Series I Fixed Rate Remarketing
Date. The Series J remarketable notes will mature
on October , 20 , unless extended until the
tenth anniversary of the Series J Fixed Rate
Remarketing Date.
Interest Payment Dates..... October and April of each year, commencing on April
, 2001, and payable through (i) , 20
with respect to the Series H notes and (ii) the
first Remarketing Date for each series of
remarketable notes, and then at the intervals
described under "Description of the Remarketable
Notes."
Sinking Fund............... None.
Redemption of Series H
Notes...................... We may redeem some or all of our Series H notes at
any time at a redemption price equal to the greater
of (a) 100% of the principal amount of the Series H
notes or (b) the sum of the present values of the
remaining scheduled payments with respect to the
Series H notes, discounted to the redemption date
at a rate equal to the sum of the then-prevailing
U.S. Treasury rate and basis points,
together with all accrued and unpaid interest, if
any. Upon the occurrence of certain events
involving U.S. taxation described herein under
"Description of the Series H Notes -- Tax
Redemption," we may also redeem the Series H notes
at a redemption price equal to 100% of the
principal amount thereof, together with all accrued
and unpaid interest, if any.
Mandatory Tender of
Remarketable Notes....... We have entered into Remarketing Agreements with
respect to each of the series of remarketable
notes. Each agreement gives the applicable
Remarketing Dealer the option to purchase (and
imposes on the holders the obligation to tender)
all of the remarketable notes of the applicable
series for a purchase price equal to 100% of the
aggregate principal amount outstanding on the
applicable first Remarketing Date (October ,
200 for the Series I remarketable notes, and
October , 200 for the Series J remarketable
notes), or the Dollar Price on the applicable
subsequent Remarketing Date, if any.
Mandatory Redemption of
Remarketable Notes....... If a Remarketing Dealer does not purchase the
applicable series of remarketable notes on a
Remarketing Date for that series, we must redeem
all of the remarketable notes of that series for
100% of the
S-5
<PAGE> 6
aggregate principal amount outstanding on the first
Remarketing Date or the Dollar Price plus all
accrued and unpaid interest, if any, on any
subsequent Remarketing Date.
Optional Redemption of
Remarketable Notes....... If a Remarketing Dealer elects to purchase the
applicable series of remarketable notes on any
Remarketing Date, then we will have the option of
redeeming all of such series of remarketable notes
from the Remarketing Dealer on the Remarketing Date
at the Dollar Price plus all accrued and unpaid
interest, if any. We may redeem some or all of
either series of remarketable notes at any time
after the Fixed Rate Remarketing Date for such
series at, in each case, the redemption price plus
accrued and unpaid interest to the date of
redemption, if any. See "Description of the
Remarketable Notes -- Post-Remarketing Optional
Redemption."
Trading.................... We have been advised by the underwriters that they
intend to make a market in the notes but that they
are not obligated to do so and may discontinue
market-making at any time without notice. We have
applied to have the Series H notes listed and
traded on the Luxembourg Stock Exchange.
Form of Notes.............. The notes of each series will be issued in the form
of one or more fully registered global notes. We
will deposit the notes with The Depositary Trust
Company (the "Depositary"). Beneficial interests in
the global notes will be represented through
book-entry accounts of financial institutions
acting on behalf of the beneficial owner. Investors
may elect to hold interests in the Series H notes
through the Depositary, Clearstream Luxembourg or
Euroclear. Investors will hold interests in the
Series I and Series J remarketable notes through
the Depositary. Under certain circumstances
described herein, the notes of any series may be
issued in definitive form.
CUSIP...................... for the Series H notes.
for the Series I notes.
for the Series J notes.
Common Code................ for the Series H notes.
ISIN....................... for the Series H notes.
S-6
<PAGE> 7
THE COMPANY
We are a U.S. regional integrated communications company. We are primarily
engaged in providing local telephone and wireless communications services in 21
states. We also provide long distance, Internet access, security monitoring, and
other communications and business information services. For the six months ended
June 30, 2000, our telephone, wireless and other operations contributed 66.1%,
25.3% and 8.6% of our revenues, respectively.
Our principal operating subsidiaries are CenturyTel of Washington, Inc.,
CenturyTel of Eagle, Inc., CenturyTel of Midwest-Kendall, Inc., CenturyTel of
Montana, Inc., CenturyTel of Evangeline, LLC, CenturyTel of Arkansas, Inc.,
CenturyTel of Mountain Home, Inc., CenturyTel of Wisconsin, LLC, CenturyTel
Midwest-Michigan, Inc., Century Cellunet of Southern Michigan, Inc., CenturyTel
Wireless, Inc., CenturyTel of Ohio, Inc., Pacific Telecom Cellular, Inc.,
Spectra Communications Group, LLC, Telephone USA of Wisconsin, LLC, CenturyTel
of Northwest Arkansas, LLC, CenturyTel of Central Arkansas, LLC, and CenturyTel
of Central Wisconsin, LLC. We conduct substantially all of our business through
these and other operating subsidiaries.
Our principal executive offices are located at 100 Century Park Drive,
Monroe, Louisiana, United States of America 71203, and our telephone number is
(318) 388-9000. We were incorporated in Louisiana on April 30, 1968.
TELEPHONE OPERATIONS
According to published sources, we are currently the eighth largest local
exchange telephone company in the United States, based on the number of
telephone access lines served. Our telephone subsidiaries serve almost 1.8
million access lines in 21 states, primarily in rural, suburban and small urban
communities (including over 490,000 lines that we recently purchased from
Verizon). All of our access lines are served by digital switching technology,
which enables us to offer additional premium services to our customers,
including call forwarding, conference calling, caller identification, selective
call ringing and call waiting.
The table below sets forth information with respect to our access lines:
<TABLE>
<CAPTION>
NUMBER OF
ACCESS PERCENT OF
STATE LINES(1)(2) ACCESS LINES
----- ------------ ------------
<S> <C> <C>
Wisconsin............................................ 498,903(3) 27.8%
Arkansas............................................. 276,778 15.4
Washington........................................... 188,809 10.5
Missouri............................................. 127,738(4) 7.1
Michigan............................................. 116,457 6.5
Louisiana............................................ 102,477 5.7
Colorado............................................. 93,989 5.2
Ohio................................................. 84,852 4.7
Oregon............................................... 80,361 4.5
Montana.............................................. 66,093 3.7
Texas................................................ 49,804 2.8
Minnesota............................................ 30,876 1.7
Tennessee............................................ 27,605 1.5
Mississippi.......................................... 23,038 1.3
New Mexico........................................... 6,329 0.4
Idaho................................................ 6,291 0.4
Indiana.............................................. 5,392 0.3
Wyoming.............................................. 5,199 0.3
Iowa................................................. 2,025 0.1
Arizona.............................................. 1,929 0.1
Nevada............................................... 520 0.0
--------- ------
1,795,465 100.0%
========= ======
</TABLE>
(footnotes on following page)
S-7
<PAGE> 8
----------
(1) Includes approximately 491,400 access lines that we recently acquired from
Verizon. See "Recent Developments -- Acquisitions."
(2) All figures are as of August 31, 2000, except for the figures disclosed in
notes (1) and (3), which are as of July 31, 2000.
(3) Approximately 62,900 of these lines are owned and operated by our 89%-owned
affiliate, Telephone USA of Wisconsin, LLC.
(4) These lines are owned and operated by our 57%-owned affiliate, Spectra
Communications Group LLC.
----------
We expect future growth in our telephone operations to be derived from
acquiring additional telephone properties, providing service to new customers,
increasing network usage and providing additional services, including those
described below under "Recent Developments."
Our telephone subsidiaries are installing fiber optic cable in certain of
our high traffic markets and provide alternative routing of telephone service
over fiber optic networks in several strategic operating areas. By year end
2000, we expect to have approximately 8,250 miles of fiber optic cable in use
(exclusive of amounts that we acquired in the Verizon Acquisitions).
WIRELESS OPERATIONS
According to published sources, we are currently the eighth largest
cellular telephone company in the United States, based on cellular pops. At
August 31, 2000, our majority-owned and operated cellular systems had access to
approximately 7.6 million cellular pops and served approximately 747,800
customers in 19 MSAs in Michigan, Louisiana, Arkansas, Mississippi, Wisconsin
and Texas and 22 RSAs, most of which are in Michigan, Louisiana, Arkansas,
Mississippi and Wisconsin. At August 31, 2000, we also owned minority equity
interests in 10 MSAs and 16 RSAs, covering approximately 1.9 million cellular
pops. Of our 9.5 million aggregate cellular pops, approximately 65% are
attributable to our MSA interests, with the balance attributable to our RSA
interests.
We also hold licenses to provide personal communications services ("PCS")
in markets that represent approximately 10.0 million pops, and in late 1998
commenced marketing PCS services in a limited number of our Michigan markets as
a fixed wireless alternative to LEC services. At August 31, 2000, we served
approximately 450 PCS customers in markets representing approximately 10% of our
PCS pops. We are currently evaluating our options with respect to our PCS
licenses for our remaining PCS markets.
Our business development strategy for wireless operations is to secure
operating control of geographically clustered service areas. Clustered systems
aid our marketing efforts and provide various operating and service advantages.
Approximately 45% of our cellular customers are in a single, contiguous cluster
of eight MSAs and nine RSAs in Michigan. Another 33% are in a cluster of six
MSAs and ten RSAs in northern and central Louisiana, southern Arkansas, eastern
Texas and central Mississippi.
We began offering digital cellular service in certain markets in late 1996
using the Time Division Multiple Access (TDMA) digital standard. Digital
cellular service is currently available in all of our MSA markets and over 40%
of our RSA markets. Approximately 15% of our contract cellular customers
currently subscribe to digital services.
OTHER OPERATIONS
We also provide long distance, Internet access, security monitoring, cable
television and interactive services in certain local and regional markets, as
well as certain printing and related business information services. At August
31, 2000, our long distance business served approximately 343,400 customers in
certain of our markets. At August 31, 2000, we provided Internet access services
to approximately 96,900 customers in over 400 markets in 13 states. These
markets cover over 70% of the access lines served by our incumbent LECs
(exclusive of recently acquired access lines). For additional information on our
new service offerings, see "Recent Developments -- New Services."
S-8
<PAGE> 9
RECENT DEVELOPMENTS
THIRD QUARTER OPERATING RESULTS
On September 29, 2000, we announced that we expect our third quarter 2000
earnings per share, excluding one-time items, will equal or exceed FirstCall
consensus earnings estimates of $.42 per share, and that our revenues for the
third quarter will likely range from $470 million to $480 million. Additional
information about our third quarter operating results is contained in our
current report on Form 8-K filed with the Securities and Exchange Commission on
October 5, 2000.
ACQUISITIONS
On July 31, 2000 and September 29, 2000, CenturyTel affiliates acquired
over 490,000 telephone access lines and related assets from Verizon in four
separate transactions in exchange for approximately $1.5 billion in cash.
Under these transactions:
- On July 31, 2000, we purchased approximately 231,000 telephone access
lines and related local exchange assets comprising 106 exchanges
throughout Arkansas for approximately $843 million in cash.
- On July 31, 2000, Spectra Communications Group LLC purchased
approximately 127,000 telephone access lines and related local exchange
assets comprising 107 exchanges throughout Missouri for approximately
$297 million cash. We own 57.1% of Spectra, which was organized to
acquire and operate these Missouri properties. At closing, we made a
preferred equity investment in Spectra of approximately $55 million and
financed substantially all of the remainder of the purchase price.
- On September 29, 2000, we purchased approximately 70,500 telephone access
lines and related local exchange assets comprising 42 exchanges
throughout Wisconsin for approximately $194 million in cash.
- On September 29, 2000, Telephone USA of Wisconsin, LLC purchased
approximately 62,900 telephone access lines and related local exchange
assets comprising 35 exchanges throughout Wisconsin for approximately
$170 million in cash. We own 89% of Telephone USA, which was organized to
acquire and own these Wisconsin properties. At closing, we made an equity
investment in Telephone USA of approximately $37.8 million and financed
substantially all of the remainder of the purchase price.
To finance these acquisitions on a short-term basis, we borrowed $1.157
billion on a floating-rate basis under our new $1.5 billion credit facility with
Bank of America, N.A. and Citibank, N.A., as lenders, and Banc of America
Securities LLC and Salomon Smith Barney Inc., as arrangers, and borrowed $300
million on a floating-rate basis under our existing credit facility with Bank of
America, N.A.
The orders of the Arkansas and Wisconsin public service commissions
approving our purchases of the Arkansas and Wisconsin assets remain subject to
appeal, but those orders (and each other regulatory order necessary to authorize
the Verizon Acquisitions) are in full force and effect. We expect that the order
of the Wisconsin Public Service Commission, when issued in writing, will contain
several requirements relating to rates, service standards and other matters. In
connection with authorizing the Wisconsin acquisitions, the Wisconsin Public
Service Commission indicated its intent to review the possibility of regulating
all of our Wisconsin LECs on an unitary basis, which would reduce our revenues
in Wisconsin (unless and to the extent we could mitigate these reductions
through rate adjustments or other revenue enhancements approved by the Wisconsin
Public Service Commission).
The purchase price payable in connection with each Verizon Acquisition is
subject to various post-closing adjustments to reflect, among other things, the
actual amount of account receivables acquired by us.
S-9
<PAGE> 10
The purchase prices disclosed above reflect all adjustments made to date. We do
not expect the aggregate effect of any remaining adjustments to be material.
NEW SERVICES
We have recently begun offering several new services, including the
following:
- DSL. In late 1999 and early 2000, we began offering in select markets
digital subscriber line ("DSL") Internet access services, a high-speed
premium-priced data service. By year end 2000, we plan to make this
service available in markets covering between 30% to 40% of our telephone
access lines (exclusive of those lines that we acquired in the Verizon
Acquisitions). At August 31, 2000, we had approximately 2,010 DSL
customers.
- CLEC. Late in the third quarter of 2000, we began offering competitive
local exchange ("CLEC") telephone services (coupled with long distance,
wireless, Internet access and other services) to small and medium-sized
businesses in Shreveport, Louisiana. We currently plan to offer similar
services in nine other initial new markets. In connection with
constructing our CLEC networks, we expect, based on our current plans, to
make capital expenditures of approximately $8 million during 2000 and
approximately $16 million during 2001. In connection with providing these
services, we expect to incur consolidated pre-tax operating losses of
approximately $4 million to $6 million in 2000 and approximately $10
million to $15 million in 2001. We anticipate that CenturyTel or its CLEC
subsidiary may need to obtain third-party debt or equity financing to
fund our CLEC operations, particularly if we expand our number of target
markets or target service offerings.
- Broadband. In connection with our long-range plans to sell capacity to
other carriers in or near certain of our select markets, we recently
completed construction of a substantial portion of a 650-mile fiber optic
ring connecting several communities in southern and central Michigan, and
began providing initial network services during the third quarter of
2000. We expect to complete construction of the remainder of the 650-mile
ring by year end 2000 and to complete construction of an extension spur
connecting Chicago and Detroit in early 2001.
USE OF PROCEEDS
We expect to receive net proceeds of approximately $ million from this
offering. We intend to use the net proceeds to repay a portion of the $1.457
billion of aggregate indebtedness that we incurred under our credit facilities
in connection with the Verizon Acquisitions. See "Recent
Developments -- Acquisitions." This indebtedness matures over the next 10 to 23
months and bears interest at floating rates based on London InterBank Offered
Rates for short-term periods. The weighted average interest rate of this
indebtedness at October 4, 2000 was 7.0463%. We currently intend to repay a
portion of our remaining acquisition indebtedness with the proceeds from a
commercial paper issuance. See "Capitalization."
We may incur additional indebtedness under our credit facilities or issue
additional commercial paper in the future to finance expanded service offerings,
additional acquisitions or other general corporate expenditures. See "Recent
Developments -- New Services."
S-10
<PAGE> 11
CAPITALIZATION
(U.S. DOLLARS IN THOUSANDS)
The following table sets forth the following unaudited information as of
June 30, 2000:
- our actual consolidated capitalization
- our pro forma consolidated capitalization assuming that we completed on
June 30, 2000 all of the Verizon Acquisitions (see "Recent Developments")
- our pro forma consolidated capitalization after giving effect to the
Verizon Acquisitions, this offering and our anticipated repayment of
indebtedness with the net proceeds therefrom.
Except as set forth in this prospectus supplement or the documents incorporated
into the accompanying prospectus by reference, there has been no material change
in our capitalization since June 30, 2000. You should read the following table
in conjunction with our Consolidated Financial Statements and Pro Forma
Consolidated Condensed Financial Statements, and the notes thereto, incorporated
into the accompanying prospectus by reference.
<TABLE>
<CAPTION>
AS OF JUNE 30, 2000
-----------------------------------------------------------
(UNAUDITED)
PRO FORMA FOR
PRO FORMA FOR VERIZON ACQUISITIONS
ACTUAL VERIZON ACQUISITIONS(1) AND OFFERING(2)
---------- ----------------------- --------------------
<S> <C> <C> <C>
Short-term debt.................................... $ -- $1,157,000 $
---------- ---------- ----------
Long-term debt:
CenturyTel, Inc.
Senior credit facility, due through 2002....... 279,938 579,938 579,938
Senior debentures, due 2028.................... 425,000 425,000 425,000
Senior notes, due 2008......................... 240,000 240,000 240,000
Senior notes, due 2005......................... 100,000 100,000 100,000
Senior notes, due 2024......................... 100,000 100,000 100,000
Senior notes, due 2025......................... 100,000 100,000 100,000
Senior notes, due 2004......................... 50,000 50,000 50,000
Senior notes, due 2005......................... 50,000 50,000 50,000
Notes to banks, due 2002....................... 2,000 2,000 2,000
Senior notes, due through 2003................. 16,025 16,025 16,025
Employee stock ownership plan commitment, due
in installments through 2004................. 4,000 4,000 4,000
Other.......................................... 213 213 213
Series H notes offered hereby.................. -- --
Series I notes offered hereby.................. -- --
Series J notes offered hereby.................. -- --
---------- ---------- ----------
Total CenturyTel, Inc. ................... 1,367,176 1,667,176
---------- ---------- ----------
Subsidiaries..................................... 661,690 661,690 661,690
---------- ---------- ----------
Total long-term debt............................... 2,028,866 2,328,866
Less: Current maturities........................... 75,022 75,022 75,022
---------- ---------- ----------
Total long-term debt, excluding current
maturities.............................. 1,953,844 2,253,844
---------- ---------- ----------
Stockholders' equity:
Common Stock, $1.00 par value, 350,000,000 shares
authorized, 140,539,960 shares issued and
outstanding.................................... 140,540 140,540 140,540
Paid-in capital.................................. 502,971 502,971 502,971
Unrealized holding gain on investments, net of
taxes.......................................... 59,359 59,359 59,359
Retained earnings................................ 1,240,706 1,240,706 1,240,706
Unearned ESOP Shares............................. (4,000) (4,000) (4,000)
Preferred Stock -- non-redeemable................ 7,975 7,975 7,975
---------- ---------- ----------
Total stockholders' equity................ 1,947,551 1,947,551 1,947,551
---------- ---------- ----------
Total capitalization...................... $3,976,417 $5,433,417 $
========== ========== ==========
</TABLE>
---------------
(1) Reflects our borrowings of $1.157 billion under our new credit facility and
$300 million under our existing credit facility. See "Recent
Developments -- Acquisitions."
(2) Assumes that we will use all of the net proceeds from this offering to
reduce the indebtedness that we incurred under our new credit facility. See
"Use of Proceeds."
S-11
<PAGE> 12
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(U.S. DOLLARS IN THOUSANDS)
The selected historical financial data of CenturyTel set forth below have
been derived from our historical consolidated financial statements as they
appeared in our annual report on Form 10-K filed with the Securities and
Exchange Commission for the year ended December 31, 1999, and our quarterly
report on Form 10-Q filed with the Securities and Exchange Commission for the
six months ended June 30, 2000. Our unaudited financial statements have not been
audited by independent public accountants; however, in the opinion of our
management, we have made all adjustments (which include only normal recurring
adjustments) necessary to present fairly the results of operations for the
periods in the tables set forth below. The operating results for the six months
ended June 30, 2000 are not necessarily indicative of the results to be expected
for any future periods.
The tables also set forth certain unaudited consolidated condensed pro
forma financial information as of the dates and for the periods indicated below
that gives effect to the Verizon Acquisitions and, with respect to the balance
sheet data, also gives effect to the consummation of this offering. See "Recent
Developments -- Acquisitions." The pro forma income statement and balance sheet
information set forth below has been derived from our Pro Forma Consolidated
Condensed Financial Information, including the notes thereto, as it appeared in
our current report on Form 8-K filed with the Securities and Exchange Commission
on October 5, 2000. As explained further in our current report on Form 8-K, the
pro forma information does not give effect to any potential revenue enhancements
or cost synergies or other operating efficiencies that could result from the
Verizon Acquisitions. We have presented the pro forma information for
comparative purposes only and do not purport that this information is indicative
of our actual results or financial condition had such transactions actually
occurred on the dates indicated below, or results which may be obtained in the
future.
The following information should be read in conjunction with our (1)
Consolidated Financial Statements and the notes thereto, which among other
things describe the impact of our acquisitions and dispositions on the data
presented below, and (2) Pro Forma Consolidated Condensed Financial Information
and the notes thereto. These materials are incorporated into the accompanying
prospectus by reference.
<TABLE>
<CAPTION>
PRO FORMA FOR VERIZON
ACQUISITIONS(1)
-------------------------
SIX MONTHS ENDED SIX MONTHS
YEAR ENDED DECEMBER 31, JUNE 30, YEAR ENDED ENDED
---------------------------------- ------------------- DECEMBER 31, JUNE 30,
1997 1998 1999 1999 2000 1999 2000
-------- ---------- ---------- -------- -------- ------------ ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenues:
Telephone........................... $526,428 $1,077,343 $1,126,112 $563,170 $553,014 $1,465,435 $ 720,707
Wireless............................ 307,742 407,827 422,269 208,593 211,546 422,269 211,546
Other............................... 67,351 91,915 128,288 59,243 71,552 128,288 71,552
-------- ---------- ---------- -------- -------- ---------- ----------
Total operating revenues...... 901,521 1,577,085 1,676,669 831,006 836,112 2,015,992 1,003,805
-------- ---------- ---------- -------- -------- ---------- ----------
Operating expenses:
Cost of sales and operating
expenses.......................... 474,256 768,720 819,784 393,765 429,218 993,388 505,856
Depreciation and amortization....... 159,495 328,554 348,816 175,993 170,580 468,708 230,663
-------- ---------- ---------- -------- -------- ---------- ----------
Total operating expenses...... 633,751 1,097,274 1,168,600 569,758 599,798 1,462,096 736,519
-------- ---------- ---------- -------- -------- ---------- ----------
Operating income...................... 267,770 479,811 508,069 261,248 236,314 553,896 267,286
-------- ---------- ---------- -------- -------- ---------- ----------
Other income (expense) Interest
expense............................. (56,474) (167,552) (150,557) (79,728) (71,309) (270,760) (131,410)
Income from unconsolidated cellular
entities.......................... 27,794 32,869 27,675 16,112 8,016 27,675 8,016
Minority interest................... (5,498) (12,797) (27,913) (22,100) (5,163) (23,060) (4,526)
Gain on sales of assets............. 169,640 49,859 62,808 49,959 9,910 62,808 9,910
Other income and expense............ 5,109 5,268 9,190 5,614 6,613 9,190 6,613
-------- ---------- ---------- -------- -------- ---------- ----------
Total other income............ 140,571 (92,353) (78,797) (30,143) (51,933) (194,147) (111,397)
-------- ---------- ---------- -------- -------- ---------- ----------
Income before income tax expense...... 408,341 387,458 429,272 231,105 184,381 359,749 155,889
Income tax expense.................... 152,363 158,701 189,503 116,538 77,252 161,090 65,477
-------- ---------- ---------- -------- -------- ---------- ----------
Net income............................ $255,978 $ 228,757 $ 239,769 $114,567 $107,129 $ 198,659 $ 90,412
======== ========== ========== ======== ======== ========== ==========
Basic earnings per share.............. $ 1.89 $ 1.67 $ 1.72 $ .83 $ .76 $ 1.43 $ .64
======== ========== ========== ======== ======== ========== ==========
Diluted earnings per share............ $ 1.87 $ 1.64 $ 1.70 $ .81 $ .76 $ 1.41 $ .64
======== ========== ========== ======== ======== ========== ==========
Cash diluted earnings per
share(2)(unaudited)................. $ 1.97 $ 1.95 $ 2.02 $ .99 $ .92 $ 1.82 $ .85
======== ========== ========== ======== ======== ========== ==========
</TABLE>
S-12
<PAGE> 13
<TABLE>
<CAPTION>
PRO FORMA FOR VERIZON
ACQUISITIONS(1)
-------------------------
SIX MONTHS ENDED SIX MONTHS
YEAR ENDED DECEMBER 31, JUNE 30, YEAR ENDED ENDED
---------------------------------- ------------------- DECEMBER 31, JUNE 30,
1997 1998 1999 1999 2000 1999 2000
-------- ---------- ---------- -------- -------- ------------ ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C>
OTHER FINANCIAL DATA:
Capital expenditures.................. $181,225 $ 310,919 $ 389,980 $149,128 $139,407 $ 455,785 $ 166,391
Ratio of earnings to fixed
charges(3).......................... 7.84 3.25 3.76 3.75 3.55 2.29 2.19
Ratio of earning to fixed charges and
preferred stock dividends(3)........ 7.80 3.25 3.75 3.74 3.54 2.29 2.19
</TABLE>
<TABLE>
<CAPTION>
PRO FORMA FOR VERIZON
ACQUISITIONS
DECEMBER 31, -------------------------
------------------------------------- JUNE 30, DECEMBER 31, JUNE 30,
1997 1998 1999 2000 1999(4) 2000(5)
---------- ---------- --------- --------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA (UNAUDITED):
Local exchange access lines in
service............................... 1,203,650 1,346,567 1,272,867(6) 1,296,043 1,748,767 1,787,290
Cellular pops........................... 10,282,072 10,053,116 9,548,380(7) 9,505,805(8) 9,548,380 9,505,805
Cellular subscribers.................... 569,983 624,290 707,486(7) 749,400(8) 707,486 749,400
Long distance customers................. 171,962 226,730 303,722 326,402 303,722 326,402
Employees (approximate)................. 5,700 5,800 5,700 5,800 6,200 6,300
</TABLE>
<TABLE>
<CAPTION>
JUNE 30, 2000 (UNAUDITED)
---------------------------------------------------
PRO FORMA FOR
DECEMBER 31, PRO FORMA FOR VERIZON
----------------------- VERIZON ACQUISITIONS AND
1998 1999 ACTUAL ACQUISITIONS(5)(10) OFFERING(9)(10)
---------- ---------- ---------- ------------------- ----------------
<S> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Cash and cash equivalents...................... $ 5,742 $ 56,640 $ 49,685 $ 22,685 $ 22,685
Net property, plant and equipment.............. 2,351,453 2,256,458 2,235,891 2,845,578 2,845,578
Excess cost of net assets acquired, less
accumulated amortization..................... 1,956,701 1,644,884 1,621,491 2,507,741 2,507,741
Total assets................................... 4,935,455 4,705,407 4,721,867 6,240,182 6,240,182
Total debt (including current maturities of
long-term debt and short-term debt).......... 2,611,010 2,140,409 2,028,866 3,485,866 3,485,866
Stockholders' equity........................... 1,531,482 1,847,992 1,947,551 1,947,551 1,947,551
</TABLE>
---------------
(1) Assumes each Verizon Acquisition was consummated on January 1, 1999.
(2) Cash diluted earnings per share is calculated in the same manner as diluted
earnings per share, but after adding back to net income the after-tax
effect of goodwill amortization. Cash diluted earnings per share is not a
measurement determined in accordance with generally accepted accounting
principles and may not be calculated by all companies in a consistent
manner, and as such may not be comparable to similarly titled measures
reported by other companies.
(3) Calculated in the manner described in the accompanying prospectus.
(4) Assumes each Verizon Acquisition was consummated on December 31, 1999.
(5) Assumes each Verizon Acquisition was consummated on June 30, 2000.
(6) Reflects our May 1999 disposition of approximately 134,900 access lines in
Alaska.
(7) Reflects our June 1999 disposition of our controlling interests in the
Brownsville and McAllen, Texas MSAs (representing approximately 625,280
cellular pops and 7,400 cellular subscribers).
(8) Reflects our February 2000 disposition of our controlling interest in
Alaska RSA #1 (representing approximately 84,030 cellular pops and 10,600
cellular subscribers).
(9) Assumes each of these transactions was consummated on June 30, 2000.
(10) Amounts are based on our preliminary allocations of the aggregate Verizon
purchase price to the acquired Verizon assets; our preliminary estimates of
the fair value and useful lives of Verizon's noncurrent assets and
liabilities are subject to change upon completion of our valuation
analysis.
S-13
<PAGE> 14
DIRECTORS AND EXECUTIVE OFFICERS
The following table lists the name and principal occupation or employment
of each director and executive officer of CenturyTel. The business address of
each such person is CenturyTel, Inc., 100 Century Park Drive, Monroe, Louisiana,
United States of America 71203.
<TABLE>
<CAPTION>
DIRECTORS OCCUPATION
--------- ----------
<S> <C>
William R. Boles, Jr..... President and practicing attorney -- The Boles Law Firm
Virginia Boulet.......... Partner -- Phelps Dunbar, L.L.P., a law firm
Ernest Butler, Jr........ Chairman and President -- I. E. Butler Securities, Inc.
Calvin Czeschin.......... President -- Yelcot Telephone Company and Czeschin Motors
James B. Gardner......... Managing Director -- SAMCO Capital Markets, a division of a
financial services firm
W. Bruce Hanks........... Vice President-Strategic Issues -- CenturyTel, Inc.
R. L. Hargrove, Jr....... Retired CenturyTel executive providing part-time financial
and tax consulting services
Johnny Hebert............ Retired owner and executive of an electrical contracting
businesses
F. Earl Hogan............ Retired managing partner of EDJ Farms Partnership, a family
enterprise
C. G. Melville, Jr....... Private investor
Harvey P. Perry.......... Executive Vice President, Chief Administrative Officer and
General Counsel -- CenturyTel, Inc.
Glen F. Post, III........ Vice Chairman of the Board, President and Chief Executive
Officer -- CenturyTel, Inc.
Jim D. Reppond........... Retired CenturyTel executive
Clarke M. Williams....... Chairman of the Board -- CenturyTel, Inc.
</TABLE>
<TABLE>
<CAPTION>
EXECUTIVE OFFICERS OCCUPATION
------------------ ----------
<S> <C>
Clarke M. Williams....... Chairman of the Board
Glen F. Post, III........ Vice Chairman of the Board, President and Chief Executive
Officer
Karen A. Puckett......... Executive Vice President and Chief Operating Officer
R. Stewart Ewing, Jr..... Executive Vice President and Chief Financial Officer
Harvey P. Perry.......... Executive Vice President, Chief Administrative Officer and
General Counsel
David D. Cole............ Senior Vice President-Operations Support
Michael E. Maslowski..... Senior Vice President and Chief Information Officer
</TABLE>
S-14
<PAGE> 15
DESCRIPTION OF THE SERIES H NOTES
The Series H notes offered hereby constitutes a single series of unsecured
senior debt securities described in the accompanying prospectus and will be
issued under the Indenture referred to therein. The following description of the
specific terms of the Series H notes supplements and should be read in
conjunction with the description of the general terms and provisions of the
senior debt securities set forth in the accompanying prospectus under the
caption "Description of Senior Debt Securities." The following description is
qualified in its entirety by reference to the accompanying prospectus and the
Indenture. Unless otherwise indicated, each capitalized term not otherwise
defined herein has the meaning ascribed to it in the accompanying prospectus or
in the Indenture.
PRINCIPAL AMOUNT, MATURITY AND INTEREST
The Series H notes will be initially issued in the principal amount of
$ . The Series H notes will mature on . Interest on the
Series H notes will accrue at the rate set forth on the cover page hereof and
will be payable semi-annually in arrears on April and October of each year,
commencing on April , 2001, to the persons in whose names the Series H notes
are registered at the close of business on the preceding and ,
respectively. Notwithstanding the foregoing, payment of defaulted interest will
be made to the persons in whose names the Series H notes are registered at the
close of business on a special record date to be set by the Trustee. We may
issue additional Series H notes in the future at our discretion.
RANKING
The Series H notes will rank equally in right of payment with all of our
existing and future unsecured senior indebtedness.
PAYING AGENTS
In addition to the Trustee, which will act as our U.S. paying agent, Credit
Agricole Indosuez Luxembourg will act as our paying agent for the Series H notes
in Luxembourg. As long as the Series H notes are listed on the Luxembourg Stock
Exchange, we will maintain a paying agent in Luxembourg, and any change in the
Luxembourg paying agent will be published in Luxembourg in the manner described
below under "-- Notices."
BOOK-ENTRY, DELIVERY AND FORM
We will issue the Series H notes in the form of one or more fully
registered global notes, which we refer to as the "Global Notes," which will be
deposited with, or on behalf of, The Depository Trust Company, New York, New
York, which we refer to as the "Depositary" or "DTC," and registered in the name
of the Depositary's nominee. Beneficial interests in the Global Notes will be
represented through book-entry accounts of financial institutions acting on
behalf of beneficial owners as direct and indirect participants in the
Depositary. Investors may elect to hold interests in the Global Notes through
the Depositary, Clearstream Banking, Societe Anonyme, which we refer to as
"Clearstream Luxembourg," or Morgan Guaranty Trust Company of New York, Brussels
Office, as operator of the Euroclear System, which we refer to as "Euroclear,"
if they are participants of such systems, or indirectly through organizations
which are participants in such systems. Clearstream Luxembourg and Euroclear
will hold interests on behalf of their participants through customers'
securities accounts in Clearstream Luxembourg's and Euroclear's names on the
books of their respective depositaries, which in turn will hold such interests
in customers' securities accounts in the depositaries' names on the books of the
Depositary. Citibank, N.A. will act as depositary for Clearstream Luxembourg and
The Chase Manhattan Bank will act as depositary for Euroclear, which we refer to
in such capacities as the "U.S. Depositaries." Except as set forth below, the
Global Notes may be transferred, in whole and not in part, only to another
nominee of the Depositary or to a successor of the Depositary or its nominee.
S-15
<PAGE> 16
The Depositary has advised us that it is a limited-purpose trust company
organized under the New York banking law, a "banking organization" within the
meaning of the New York banking law, a member of the Federal Reserve System, a
"clearing corporation" within the meaning of the New York Uniform Commercial
Code, and a "clearing agency" registered pursuant to the provisions of Section
17A of the U.S. Securities Exchange Act of 1934. The Depositary holds securities
deposited with it by its participants and facilitates the settlement of
transactions among its participants in such securities through electronic
computerized book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depositary's participants include securities brokers and dealers, including the
underwriters, banks, trust companies, clearing corporations and certain other
organizations, some of whom, or their representatives, own the Depositary.
Access to the Depositary's book-entry system is also available to others, such
as banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a participant, either directly or indirectly.
Clearstream Luxembourg advises that it is incorporated under the laws of
Luxembourg as a bank. Clearstream Luxembourg holds securities for its customers,
which we refer to as "Clearstream Luxembourg Customers," and facilitates the
clearance and settlement of securities transactions between Clearstream
Luxembourg Customers through electronic book-entry transfers between their
accounts. Clearstream Luxembourg provides to Clearstream Luxembourg Customers,
among other things, services for safekeeping, administration, clearance and
settlement of internationally traded securities and securities lending and
borrowing. Clearstream Luxembourg interfaces with domestic securities markets in
over 30 countries through established depositary and custodial relationships. As
a bank, Clearstream Luxembourg is subject to regulation by the Luxembourg
Commission for the Supervision of the Financial Sector, also known as the
Commission de Surveillance du Secteur Financier. Clearstream Luxembourg
Customers are recognized financial institutions around the world, including
underwriters, securities brokers and dealers, banks, trust companies, clearing
corporations and certain other organizations. Clearstream Luxembourg's U.S.
customers are limited to securities brokers and dealers and banks. Indirect
access to Clearstream Luxembourg is also available to other institutions such as
banks, brokers, dealers and trust companies that clear through or maintain a
custodial relationship with a Clearstream Luxembourg Customer.
Distributions with respect to the Series H notes held through Clearstream
Luxembourg will be credited to cash accounts of Clearstream Luxembourg Customers
in accordance with its rules and procedures, to the extent received by the U.S.
Depositary for Clearstream Luxembourg.
Euroclear advises that it was created in 1968 to hold securities for its
participants, which we refer to as "Euroclear Participants," and to clear and
settle transactions between Euroclear Participants through simultaneous
electronic book-entry delivery against payment, thereby eliminating the need for
physical movement of certificates and any risk from lack of simultaneous
transfers of securities and cash. Euroclear provides various other services,
including securities lending and borrowing and interfaces with domestic markets
in several countries. Euroclear is operated by the Brussels, Belgium office of
Morgan Guaranty Trust Company of New York, which we refer to as the "Euroclear
Operator," under contract with Euroclear Clearance Systems, S.C., a Belgian
cooperative corporation, which we refer to as the "Cooperative." All operations
are conducted by the Euroclear Operator, and all Euroclear securities clearance
accounts and Euroclear cash accounts are accounts with the Euroclear Operator,
not the Cooperative. The Cooperative establishes policy for Euroclear on behalf
of Euroclear Participants. Euroclear Participants include banks, including
central banks, securities brokers and dealers and other professional financial
intermediaries and may include the underwriters. Indirect access to Euroclear is
also available to other firms that clear through or maintain a custodial
relationship with a Euroclear Participant, either directly or indirectly.
The Euroclear Operator is the Belgian branch of a New York banking
corporation which is a member bank of the Federal Reserve System. As such, it is
regulated and examined by the Board of Governors of the Federal Reserve System
and the New York State Banking Department, as well as the Belgian Banking
Commission.
Securities clearance accounts and cash accounts with the Euroclear Operator
are governed by the Terms and Conditions Governing Use of Euroclear and the
related Operating Procedures of the Euroclear System,
S-16
<PAGE> 17
and applicable Belgian law, which we refer to collectively as the "Terms and
Conditions." The Terms and Conditions govern transfers of securities and cash
within Euroclear, withdrawals of securities and cash from Euroclear, and
receipts of payments with respect to securities in Euroclear. All securities in
Euroclear are held on a fungible basis without attribution of specific
certificates to specific securities clearance accounts. The Euroclear Operator
acts under the Terms and Conditions only on behalf of Euroclear Participants and
has no record of or relationship with persons holding through Euroclear
Participants.
Distributions with respect to the Series H notes held beneficially through
Euroclear will be credited to the cash accounts of Euroclear Participants in
accordance with the Terms and Conditions, to the extent received by the U.S.
Depositary for Euroclear.
Euroclear further advises that investors that acquire, hold and transfer
interests in the Series H notes by book-entry through accounts with the
Euroclear Operator or any other securities intermediary are subject to the laws
and contractual provisions governing their relationship with their intermediary,
as well as the laws and contractual provisions governing the relationship
between such an intermediary and each other intermediary, if any, standing
between themselves and the Global Notes.
The Euroclear Operator advises that under Belgian law, investors that are
credited with securities on the records of the Euroclear Operator have a
co-property right in the fungible pool of interests in securities on deposit
with the Euroclear Operator in an amount equal to the amount of interests in
securities credited to their accounts. In the event of the insolvency of the
Euroclear Operator, Euroclear Participants would have a right under Belgian law
to the return of the amount and type of interests in securities credited to
their accounts with the Euroclear Operator. If the Euroclear Operator did not
have a sufficient amount of interests in securities on deposit of a particular
type to cover the claims of all Participants credited with such interests in
securities on the Euroclear Operator's records, all Participants having an
amount of interests in securities of such type credited to their accounts with
the Euroclear Operator would have the right under Belgian law to the return of
their pro rata share of the amount of interests in securities actually on
deposit.
Under Belgian law, the Euroclear Operator is required to pass on the
benefits of ownership in any interests in securities on deposit with it, such as
dividends, voting rights and other entitlements, to any person credited with
such interests in securities on its records.
DTC has advised that pursuant to procedures established by it (i) upon the
issuance by us of the Series H notes, DTC will credit the accounts of
participants designated by the underwriters with the principal amount of the
Series H notes purchased by the underwriters and (ii) ownership of beneficial
interests in the Series H notes will be shown on, and the transfer of that
ownership will be effected only through, records maintained by DTC (with respect
to participants' interests), the participants and the indirect participants. The
laws of some jurisdictions require that certain persons take physical delivery
in definitive form of securities which they own. Consequently, the ability to
transfer beneficial interests in the Global Notes is limited to such extent.
So long as a nominee of DTC is the registered owner of the Global Notes,
such nominee will be considered the sole owner or holder of the Global Notes for
all purposes under the Indenture. Except as provided below, owners of beneficial
interests in the Global Notes will not be entitled to have the Series H notes
registered in their names, will not receive or be entitled to receive physical
delivery of the Series H notes in definitive form and will not be considered the
owners or holders thereof under the Indenture.
Neither we, the Trustee, any paying agent nor the registrar will have any
responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes,
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interests.
Principal and interest payments on the Global Notes registered in the name
of DTC's nominee will be made by us, through our paying agent, to DTC's nominee
as the registered owner of the Global Notes. Under the terms of the Indenture,
we and the Trustee will treat the persons in whose names the Global Notes are
registered as the owners of such notes for the purpose of receiving payments of
principal and interest on such notes, receiving redemption and other notices
with respect to such notes and for all other purposes
S-17
<PAGE> 18
whatsoever. Therefore, neither CenturyTel, the Trustee nor any paying agent has
any direct responsibility or liability for the payment of principal or interest
on the Series H notes to owners of beneficial interests in the Global Notes. DTC
has advised CenturyTel and the Trustee that its present practice is, upon
receipt of any payment of principal or interest, to credit immediately the
accounts of the participants with payment in amounts proportionate to their
respective holdings in principal amount of beneficial interests in the Global
Notes as shown on the records of DTC. Payments by participants and indirect
participants to owners of beneficial interests in the Global Notes will be
governed by standing instructions and customary practices, and will be the
responsibility of such participants or indirect participants.
If DTC is at any time unwilling, unable or ineligible to continue as
depositary and a successor depositary is not appointed by us within 90 days, we
will issue the Series H notes in definitive form in exchange for the Global
Notes. In addition, we may at any time determine not to have the Series H notes
represented by Global Notes and, in such event, will issue the Series H notes in
definitive form in exchange for the Global Notes. In either instance, an owner
of a beneficial interest in the Global Notes will be entitled to have Series H
notes equal in principal amount to such beneficial interest registered in its
name and will be entitled to physical delivery of such notes in definitive form.
The Series H notes so issued in definitive form will be issued in denominations
of $1,000 and integral multiples thereof and will be issued in registered form
only, without coupons. The Trustee or CenturyTel may require Series H notes
surrendered for exchange or transfer to be accompanied by satisfactory
instruments of transfer. If at any time the Series H notes are issued in
definitive form, interest will be paid by check mailed on or before the payment
date, by first class mail, to the holders thereof, unless we determine
otherwise. We will notify the holders as to any alternative method of payment we
elect. Interest payments on definitive Series H notes will also be made at the
offices of the Luxembourg paying agent. Payments of principal on definitive
Series H notes will be made against surrender of the Series H notes at the
principal office in the United States of the Trustee, as U.S. paying agent, or
at the offices in Luxembourg of our Luxembourg paying agent.
Title to book-entry interests in the Series H notes will pass by book-entry
registration of the transfer within the records of Clearstream Luxembourg,
Euroclear or DTC, as the case may be, in accordance with their respective
procedures. Book-entry interests in the Series H notes may be transferred within
Clearstream Luxembourg and within Euroclear and between Clearstream Luxembourg
and Euroclear in accordance with procedures established for these purposes by
Clearstream Luxembourg and Euroclear. Book-entry interests in the Series H notes
may be transferred within DTC in accordance with procedures established for this
purpose by DTC. Transfers of book-entry interests in the Series H notes among
Clearstream Luxembourg and Euroclear and DTC may be effected in accordance with
procedures established for this purpose by Clearstream Luxembourg, Euroclear and
DTC.
GLOBAL CLEARANCE AND SETTLEMENT PROCEDURES
Initial settlement for the Series H notes will be made in immediately
available funds. Secondary market trading between DTC participants will occur in
the ordinary way in accordance with the Depositary's rules and will be settled
in immediately available funds using the Depositary's Same-Day Funds Settlement
System. Secondary market trading between Clearstream Luxembourg Customers and
Euroclear Participants will occur in the ordinary way in accordance with the
applicable rules and operating procedures of Clearstream Luxembourg and
Euroclear and will be settled using the procedures applicable to conventional
Eurobonds in immediately available funds.
Cross-market transfers between persons holding directly or indirectly
through the Depositary on the one hand, and directly or indirectly through
Clearstream Luxembourg Customers or Euroclear Participants, on the other, will
be effected in the Depositary in accordance with the Depositary's rules on
behalf of the relevant European international clearing system by its U.S.
Depositary; however, such cross-market transactions will require delivery of
instructions to the relevant European international clearing system by the
counterparty in such system in accordance with its rules and procedures and
within its established deadlines, in European time. The relevant European
international clearing system will, if the transaction meets its settlement
requirements, deliver instructions to its U.S. Depositary to take action to
effect final settlement on its behalf by delivering interests in the Series H
notes to or receiving interests in the Series H notes from the
S-18
<PAGE> 19
Depositary, and making or receiving payment in accordance with normal procedures
for same-day funds settlement applicable to the Depositary. Clearstream
Luxembourg Customers and Euroclear Participants may not deliver instructions
directly to their respective U.S. Depositaries.
Because of time-zone differences, credits of interests in the Series H
notes received in Clearstream Luxembourg or Euroclear as a result of a
transaction with a DTC participant will be made during subsequent securities
settlement processing and dated the business day following the Depositary
settlement date. Such credits or any transactions involving interests in such
notes settled during such processing will be reported to the relevant
Clearstream Luxembourg Customers or Euroclear Participants on such business day.
Cash received in Clearstream Luxembourg or Euroclear as a result of sales of
interests in the Series H notes by or through a Clearstream Luxembourg Customer
or a Euroclear Participant to a DTC participant will be received with value on
the Depositary settlement rate but will be available in the relevant Clearstream
Luxembourg or Euroclear cash account only as of the business day following
settlement in the Depositary.
Although the Depositary, Clearstream Luxembourg and Euroclear have agreed
to the foregoing procedures in order to facilitate transfers of interests in the
Series H notes among participants of the Depositary, Clearstream Luxembourg and
Euroclear, they are under no obligation to perform or continue to perform such
procedures and such procedures may be changed or discontinued at any time.
PAYMENT OF ADDITIONAL AMOUNTS
We will, subject to certain exceptions and limitations set forth below, pay
such additional amounts to the beneficial owner of any Series H note who is a
non-United States person (as defined below under "Certain United States Tax
Considerations") as may be necessary in order that every net payment of
principal of and interest on such note and any other amounts payable on such
note, after withholding for or on account of any present or future tax,
assessment or governmental charge imposed upon or as a result of such payment by
the United States, or any political subdivision or taxing authority thereof or
therein, will not be less than the amount provided for in such note to be then
due and payable. We will not, however, be required to make any such payment of
additional amounts to any beneficial owner for or on account of:
- any such tax, assessment or other governmental charge that would not have
been so imposed or withheld but for the existence of any present or
former connection between such beneficial owner (or between a fiduciary,
settlor, beneficiary, member or shareholder of such beneficial owner, if
such beneficial owner is an estate, a trust, a partnership, a corporation
or similar entity) and the United States and its possessions, including,
without limitation, such beneficial owner (or such fiduciary, settlor,
beneficiary, member or shareholder) being or having been a citizen or
resident thereof or being or having been engaged in a trade or business
or present therein or having, or having had, a permanent establishment
therein;
- any estate, inheritance, gift, sales, excise, transfer, wealth or
personal property tax or any similar tax, assessment or governmental
charge;
- any tax, assessment or other governmental charge imposed or withheld by
reason of such beneficial owner's past or present status as a personal
holding company or foreign personal holding company or controlled foreign
corporation or passive foreign investment company with respect to the
United States or as a corporation that accumulates earnings to avoid
United States federal income tax;
- any tax, assessment or other governmental charge that is payable
otherwise than by withholding from payments on or in respect of any
Series H note;
- any tax, assessment or other governmental charge that would not have been
imposed or withheld but for the failure to comply with certification,
information or other reporting requirements concerning the nationality,
residence or identity of the beneficial owner of such Series H note, if
such compliance is required by statute or by regulation of the United
States or of any political subdivision or taxing authority thereof or
therein or by an applicable income tax treaty to which the United States
is a party as a precondition to relief or exemption from such tax,
assessment or other governmental charge;
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- any tax, assessment or other governmental charge imposed or withheld by
reason of such beneficial owner's past or present status as the actual or
constructive owner of 10% or more of the total combined voting power of
all classes of our stock entitled to vote or as a controlled foreign
corporation that is related directly or indirectly to us through stock
ownership;
- to the extent applicable, any tax, assessment or governmental charge that
is imposed or withheld solely because of a change in law, regulation, or
administrative or judicial interpretation that becomes effective more
than 15 days after the payment becomes due or is duly provided for,
whichever occurs later;
- any tax, assessment or governmental charge any paying agent must withhold
from any payment of principal of or interest on any Series H note, if
such payment can be made without such withholding by any other paying
agent; or
- any combination of these factors.
Such additional amounts shall also not be paid with respect to any payment
on a Series H note to a non-United States person who is a fiduciary or
partnership or other than the sole beneficial owner of such payment to the
extent such payment would be required by the laws of the United States, or any
political subdivision thereof, to be included in the income, for tax purposes,
of a beneficiary or settlor with respect to such fiduciary or a member of such
partnership or a beneficial owner who would not have been entitled to such
additional amounts had such beneficiary, settlor, member or beneficial owner, as
the case may be, held its interest in the note directly.
The Series H notes are subject in all cases to any tax, fiscal or other law
or regulation or administrative or judicial interpretation applicable. Except as
specifically provided under this heading "-- Payment of Additional Amounts," we
are not required to make any payment with respect to any tax, assessment or
governmental charge imposed by any government or a political subdivision or
taxing authority.
OPTIONAL REDEMPTION
We may redeem, at our option at any time, the Series H notes, as a whole or
in part, at a redemption price equal to the greater of (a) 100% of the principal
amount of the Series H notes to be redeemed or (b) the sum of the present values
of the Remaining Scheduled Payments (as hereinafter defined) thereon discounted
to the redemption date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Treasury Rate (as hereinafter
defined) plus basis points for such Series H notes, together in all cases
with accrued and unpaid interest on the principal amount being redeemed to the
redemption date.
"Treasury Rate" means, with respect to any redemption date, the rate per
annum equal to the semi-annual equivalent yield to maturity (computed as of the
second business day immediately preceding such redemption date) of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such redemption date.
"Comparable Treasury Issue" means the United States Treasury security
selected by an Independent Investment Banker that would be utilized, at the time
of selection and in accordance with customary financial practice, in pricing new
issues of corporate debt securities of comparable maturity to the remaining term
of such Series H notes. "Independent Investment Banker" means one of the
Reference Treasury Dealers appointed by the Trustee after consultation with us.
"Comparable Treasury Price" means, with respect to any redemption date for
the Series H notes: (a) the average of four Reference Treasury Dealer Quotations
for such redemption date, after excluding the highest and lowest of such
Reference Treasury Dealer Quotations or (b) if the Trustee obtains fewer than
four such Reference Treasury Dealer Quotations, the average of all such
Quotations obtained by the Trustee.
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"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Trustee, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Trustee by such Reference Treasury Dealer at 3:30 p.m., New York
time, on the third business day preceding such redemption date.
"Reference Treasury Dealer" means each of Banc of America Securities LLC,
Salomon Smith Barney Inc. and , and their respective successors; provided,
however, that if any of the foregoing shall cease to be a primary U.S.
Government securities dealer (a "Primary Treasury Dealer"), we shall substitute
therefor another Primary Treasury Dealer.
"Remaining Scheduled Payments" means the remaining scheduled payments of
the principal of the Series H notes to be redeemed and interest thereon that
would be due after the related redemption date but for such redemption;
provided, however, that if such redemption date is not an interest payment date
with respect to such notes, the amount of the next succeeding scheduled interest
payment thereon will be reduced by the amount of interest accrued thereon to
such redemption date.
Notice of any redemption will be mailed at least 30 days but not more than
60 days before the redemption date to each holder of Series H notes to be
redeemed. This notice will be given in accordance with "-- Notices" below.
Unless CenturyTel defaults in payment of the redemption price, on and after
the applicable redemption date, interest will cease to accrue on Series H notes,
or portions thereof called for redemption.
There will be no mandatory sinking fund payments for the Series H notes.
TAX REDEMPTION
We may redeem, at our option at any time, the Series H notes as a whole,
upon the giving of a notice of redemption as described below, if (a) we
determine that, as a result of any change in or amendment to the laws, or any
regulations or rulings promulgated thereunder, of the United States or of any
political subdivision or taxing authority thereof or therein, or any change in
official position regarding the application or interpretation of such laws,
regulations or rulings, which change or amendment becomes effective on or after
the date of this prospectus supplement, we have or will become obligated to pay
additional amounts as described above under "-- Payment of Additional Amounts"
or (b) a taxing authority of the United States takes an action on or after the
date of this prospectus supplement whether or not with respect to us or any of
our affiliates that results in a substantial probability that we will or may be
required to pay such additional amounts, in either case, with respect to such
notes for reasons outside our control and after taking reasonable measures
available to us to avoid such obligation. In either such instance, the Series H
notes will be redeemed at a redemption price equal to 100% of the principal
amount thereof, together with accrued and unpaid interest to the date fixed for
redemption. Prior to the giving of any notice of redemption pursuant to this
paragraph, we will deliver to the Trustee:
- a certificate stating that we are entitled to effect such redemption and
setting forth a statement of facts showing that the conditions precedent
to our right to so redeem have occurred, and
- an opinion of independent counsel satisfactory to the Trustee to the
effect that we have or will become obligated or there is a substantial
probability that we will or may be required to pay such additional
amounts for the reasons described above;
provided that no such notice of redemption shall be given earlier than 60 days
prior to the earliest date on which we would be obligated to pay such additional
amounts if a payment in respect of the Series H note were then due.
Notice of redemption will be given not less than 30 nor more than 60 days
prior to the date fixed for redemption, which date and the applicable redemption
price will be specified in the notice. This notice will be given in accordance
with "-- Notices" below.
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NOTICES
Notices to holders of the Series H notes will be sent by mail to the
registered holders and will be published, whether the notes are in global or
definitive form, and so long as the notes are listed on the Luxembourg Stock
Exchange, in a daily newspaper of general circulation in Luxembourg. It is
expected that publication will be made in Luxembourg in the Luxemburger Wort.
Any such notice shall be deemed to have been given on the date of such
publication or, if published more than once, on the date of the first such
publication. So long as the notes are listed on the Luxembourg Stock Exchange,
any appointment of or change in the Luxembourg paying agent and transfer agent
will be published in Luxembourg in the manner set forth above.
DESCRIPTION OF THE REMARKETABLE NOTES
The Series I remarketable notes and the Series J remarketable notes offered
hereby each constitute a single series of unsecured senior debt securities
described in the accompanying prospectus and will be issued under the Indenture
referred to therein. The following description of the specific terms of the
remarketable notes supplements and should be read in conjunction with the
description of the general terms and provisions of the senior debt securities
set forth in the accompanying prospectus under the caption "Description of Debt
Securities." The following description is qualified in its entirety by reference
to the accompanying prospectus and the Indenture. Unless otherwise indicated,
each capitalized term not defined herein has the meaning ascribed to it in the
accompanying prospectus or the Indenture.
GENERAL
The Series I remarketable notes will initially be issued in the aggregate
principal amount of $ , and will mature on October , 20 , unless
extended until the tenth anniversary of the Series I Fixed Rate Remarketing Date
(the "Series I Maturity Date"). The Series J remarketable notes will initially
be issued in the aggregate principal amount of $ and will mature on October
, 20 , unless extended until the tenth anniversary of the Series J Fixed Rate
Remarketing Date (the "Series J Maturity Date"). We may redeem, or be required
to redeem, the Series I or Series J remarketable notes before their respective
maturity dates but not prior to their first Remarketing Dates. We may issue
additional Series I remarketable notes or Series J remarketable notes in the
future at our discretion.
The remarketable notes will not be subject to any sinking fund.
The remarketable notes will initially be issued only in registered,
book-entry form, in denominations of $1,000 and multiples thereof as described
in "-- Book-Entry Only Issuance -- The Depository Trust Company." We will issue
global securities in denominations equal to the total principal amount of each
series of remarketable notes.
If any interest, principal or other payment date of the remarketable notes
(including any payment in connection with the mandatory tender or any mandatory
redemption as described below) with respect to a series of remarketable notes
that then accrues interest at a fixed rate does not fall on a Business Day, a
payment otherwise payable on that day will be made on the next succeeding
Business Day. Such payment will have the same effect as if made on the
originally scheduled payment date, and no interest will accrue for the period
from and after such payment date. In the case of any payment with respect to a
series of remarketable notes that then accrues interest at a floating rate of
interest, interest will accrue from such originally scheduled payment date to
but excluding such next succeeding Business Day (except in the case of an
interest payment at maturity, in which case no interest will accrue from and
after the maturity date).
"Business Day" means any day other than a Saturday or Sunday or a day on
which banking institutions in New York, New York or Monroe, Louisiana are
authorized or obligated by law or executive order to close.
"London Business Day" means any day on which dealings in U.S. dollars are
transacted in the London Inter-Bank Market.
"LIBOR Business Day" means a day that is a Business Day and a London
Business Day.
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We will agree with each Remarketing Dealer that we will not cause or permit
the terms or provisions of the remarketable notes (or the Indenture, as it
relates to the remarketable notes) to be modified in any way, and may not make
open market or other purchases of the Series I or Series J remarketable notes
prior to the applicable first Remarketing Date (as defined in "Interest and
Interest Payment Dates" below) except to fulfill the mandatory redemption
obligations, or in other limited circumstances, without the prior written
consent of the applicable Remarketing Dealer.
RANKING
The remarketable notes will rank equally in right of payment with all of
our existing and future unsecured senior indebtedness.
INTEREST AND INTEREST PAYMENT DATES
The Series I remarketable notes will bear interest at % per year, from
the date of issuance to but excluding October , 200 , which is the first
Series I Remarketing Date, computed on the basis of a 360-day year consisting of
twelve 30-day months. We will pay interest semi-annually in arrears on October
and April , beginning on April , 2001, until the first Series I
Remarketing Date to the persons in whose name the Series I remarketable notes
are registered at the close of business on the preceding and ,
respectively.
The Series J remarketable notes will bear interest at % per year, from
the date of issuance to but excluding October , 200 , which is the first
Series J Remarketing Date, computed on the basis of a 360-day year consisting of
twelve 30-day months. We will pay interest semi-annually in arrears on October
and April , beginning on April , 2001, until the first Series J
Remarketing Date to the persons in whose name the Series J remarketable notes
are registered at the close of business on the preceding and ,
respectively.
"Series I Remarketing Date(s)" means October , 200 or the day of each
month thereafter until October , 20 , assuming the Series I Remarketing
Dealer has elected to purchase the Series I remarketable notes and we have
elected to exercise our Series I Floating Period Option (as defined under the
heading "-- Floating Rate Period" below).
"Series J Remarketing Date(s)" means October , 200 or the day of each
month thereafter until October , 20 , assuming the Series J Remarketing
Dealer has elected to purchase the Series J remarketable notes and we have
elected to exercise our Series J Floating Period Option (as defined under the
heading "-- Floating Rate Period" below).
"Series I Fixed Rate Remarketing Date" means (a) the first Series I
Remarketing Date, assuming the Series I Remarketing Dealer has elected to
purchase the Series I remarketable notes and we have not elected to exercise our
Series I Floating Period Option, or (b) the subsequent Series I Remarketing Date
on which the Series I Remarketing Dealer is obligated to remarket the Series I
remarketable notes in the event that we have elected to exercise our Series I
Floating Period Option.
"Series J Fixed Rate Remarketing Date" means (a) the first Series J
Remarketing Date, assuming the Series J Remarketing Dealer has elected to
purchase the Series J remarketable notes and we have not elected to exercise our
Series J Floating Period Option, or (b) the subsequent Series J Remarketing Date
on which the Series J Remarketing Dealer is obligated to remarket the Series J
remarketable notes in the event that we have elected to exercise our Series J
Floating Period Option.
From and after the Series I or Series J Fixed Rate Remarketing Date, as
applicable, until the maturity date of the applicable series, interest will
accrue on that series of remarketable notes at a fixed rate equal to the
Interest Rate to Maturity (as defined in "-- Interest Rate to Maturity"). During
this period, we will pay interest on such remarketable notes semi-annually on
each six-month anniversary of the Fixed Rate Remarketing Date. Interest on such
remarketable notes during this period will be computed on the basis of a 360-day
year consisting of twelve 30-day months.
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From and after the first Series I or Series J Remarketing Date, as
applicable, if we elect to exercise the applicable Series I or Series J Floating
Period Option, interest on such remarketable notes accruing during any
applicable Floating Rate Reset Period (as defined under the heading "-- Floating
Rate Period" below) will be payable on the next following applicable Reference
Rate Reset Date. Interest on such remarketable notes during such Floating Rate
Reset Period will be computed on the basis of the actual number of days in such
Floating Rate Reset Period over a 360-day year. See "-- Floating Rate Period"
below.
Interest payable on any interest payment date for a series will be payable
to the persons in whose names the remarketable notes of that series are
registered on the 15th calendar day (whether or not a Business Day) immediately
preceding the related interest payment date.
Interest payments will be in the amount of interest accrued from and
including the next preceding interest payment date (or from and including the
date of issuance if no interest has been paid or duly provided with respect to
the remarketable notes) to but excluding the relevant interest payment date,
Remarketing Date or stated maturity date, as the case may be.
INTEREST RATE TO MATURITY
If a Remarketing Dealer elects to purchase the remarketable notes of the
applicable series, then by 3:30 p.m., New York City time, on the Floating Rate
Spread Determination Date or the Fixed Rate Determination Date (each a
"Determination Date"), as the case may be, that Remarketing Dealer will
determine either (a) the Floating Rate Spread (as defined in "-- Floating Rate
Period" below), in the event we have elected to exercise our Floating Period
Option for that series, or (b) the Interest Rate to Maturity to the nearest one
hundredth of one percent per annum (0.01%), unless we have elected to redeem, or
are required to redeem, the remarketable notes of that series. The Floating
Period Interest Rate for a series of remarketable notes will equal the sum of
the Reference Rate (as defined in "-- Floating Rate Period" below) and the
Floating Rate Spread for that series. The "Interest Rate to Maturity" for a
series of remarketable notes shall be equal to the sum of % (the "Base Rate")
and the Applicable Spread (as defined below), which will be based on the Dollar
Price of the remarketable notes of that series. The Interest Rate to Maturity
for a series of remarketable notes announced by the applicable Remarketing
Dealer, absent manifest error, shall be binding and conclusive upon the
beneficial owners of such remarketable notes, CenturyTel and the Trustee.
For this purpose, the following terms have the following meanings:
"Applicable Spread" shall be the lowest Fixed Rate Bid, expressed as a
spread (in the form of a percentage or in basis points) above the applicable
Base Rate for the remarketable notes of a series, obtained by the Remarketing
Dealer for that series by 3:30 p.m., New York City time, on the Fixed Rate
Determination Date for that series from the Fixed Rate Bids quoted to that
Remarketing Dealer by up to five Reference Corporate Dealers.
A "Fixed Rate Bid" will be an irrevocable offer to purchase the aggregate
outstanding principal amount of a series of remarketable notes at the Dollar
Price, but assuming:
(1) a settlement date that is the Fixed Rate Remarketing Date
applicable to such series, without accrued interest,
(2) a maturity date that is the tenth anniversary of the Fixed Rate
Remarketing Date for that series, and
(3) a stated annual interest rate equal to the Base Rate plus the
spread bid by the Reference Corporate Dealer.
"Comparable Treasury Issue" for any of the Series I or Series J
remarketable notes means the U.S. Treasury security or securities selected by
the Remarketing Dealer as of the first Determination Date as having an actual
maturity comparable to the remaining term of that series of remarketable notes.
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"Comparable Treasury Price" means, with respect to the first Remarketing
Date of a series of remarketable notes:
(1) the offer prices for the Comparable Treasury Issue (expressed in
each case as a percentage of their principal amount) at 12:00 noon, New
York City time, on the first Determination Date, as set forth on "Telerate
Page 500" (or such other page as may replace "Telerate Page 500"), or
(2) if such page (or any successor page) is not displayed or does not
contain such offer prices on such first Determination Date, (1) the average
of up to five Reference Treasury Dealer Quotations for such Remarketing
Date, after excluding the highest and lowest Reference Treasury Dealer
Quotations, or (2) if fewer than five such Reference Treasury Dealer
Quotations are obtained, the average of all such quotations.
"Telerate Page 500" means the display designated as "Telerate page 500" on
Dow Jones Markets (or such other page as may replace "Telerate page 500" on such
service) or such other service displaying the offer prices as may replace Dow
Jones Markets.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer, the offer prices for the Comparable Treasury Issue
(expressed, in each case, as a percentage of their principal amount) quoted in
writing to the applicable Remarketing Dealer by such Reference Treasury Dealer,
by 3:30 p.m., New York City time, on the applicable Determination Date.
"Dollar Price" means, with respect to a series of remarketable notes (1)
the principal amount of such remarketable notes, plus (2) the premium equal to
the excess, if any, of (A) the present value, as of the first Remarketing Date
for that series, of the Remaining Scheduled Payments (as defined below) for such
remarketable notes, discounted to such first Remarketing Date on a semi-annual
basis (assuming a 360-day year consisting of twelve 30-day months) at the
Treasury Rate, over (B) the principal amount of such remarketable notes.
"Fixed Rate Determination Date" means the third Business Day prior to the
Fixed Rate Remarketing Date of a series of remarketable notes.
"Reference Corporate Dealer" means each of up to five leading dealers of
publicly traded debt securities, including our debt securities, which shall be
selected by us. We will advise the applicable Remarketing Dealer of our
selection of Reference Corporate Dealers no later than five Business Days prior
to the applicable Series I or Series J Fixed Rate Remarketing Date. If either
Banc of America Securities LLC or Salomon Smith Barney Inc. is then acting as
the Remarketing Dealer for the series, or if either or both are acting as an
underwriter for that series, then either or both will be among the Reference
Corporate Dealers we will select.
"Reference Treasury Dealer" means each of up to five Primary U.S.
Government Securities dealers (each a "Primary Treasury Dealer") to be selected
by us, and their respective successors; provided that if any of the foregoing
ceases to be a Primary Treasury Dealer, we will substitute another Primary
Treasury Dealer. We will advise the applicable Remarketing Dealer of our
selection of Reference Treasury Dealers no later than five Business Days prior
to the applicable Series I or Series J Fixed Rate Remarketing Date. If either
Banc of America Securities LLC or Salomon Smith Barney Inc. is then acting as
the Remarketing Dealer for the series, or if either or both are acting as an
underwriter for that series, then either or both will be among the Reference
Treasury Dealers we will select.
"Remaining Scheduled Payments" means, with respect to a series of
remarketable notes, the remaining scheduled payments of the principal of and
interest on such remarketable notes, calculated at the Base Rate applicable to
such series, that would be due after the first Remarketing Date, for such
series, to and including the stated maturity date for such series; provided that
if such first Remarketing Date is not an interest payment date, the amount of
the next succeeding scheduled interest payment will be reduced by the amount of
interest accrued to such first Remarketing Date.
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"Treasury Rate" for a series of remarketable notes means, with respect to a
Remarketing Date the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue for such series of remarketable notes,
calculated using a price for the Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Comparable Treasury Price for
such Remarketing Date.
The Treasury Rate will be calculated on the third Business Day preceding
the applicable Remarketing Date.
NOTIFICATION OF INTEREST RATE TO MATURITY
Subject to a Remarketing Dealer's election to remarket the Series I or
Series J remarketable notes, as applicable, the applicable Remarketing Dealer
shall notify us, the Trustee and DTC by telephone, confirmed in writing (which
may include facsimile or other electronic transmission), by 4:00 p.m., New York
City time, on the Series I or Series J Fixed Rate Determination Date of the
Interest Rate to Maturity effective from and including the Series I or Series J
Fixed Rate Remarketing Date.
FLOATING RATE PERIOD
Following a Remarketing Dealer's election to purchase the applicable series
of remarketable notes, but prior to the fourth Business Day immediately
preceding the first Remarketing Date for that series (the "Floating Period
Notification Date"), we may elect to exercise our Floating Period Option for
that series. If we exercise this Floating Period Option, the remarketable notes
of that series will be remarketed at a floating rate equal to the Floating
Period Interest Rate for a period of one year, or for the period ending on a
date which otherwise would be a Reference Rate Reset Date for that series
following the date on which we elect to terminate such Floating Rate Period (the
"Floating Rate Period Termination Notification Date"), whichever is shorter (the
last day of such period being the "Floating Period Termination Date"). In the
event that we exercise our Floating Period Option for a series, the maturity of
the remarketable notes for that series will be extended to the tenth anniversary
of the Fixed Rate Remarketing Date for that series, not to exceed October ,
20 , in the case of the Series I remarketable notes, or October , 20 , in
the case of the Series J remarketable notes.
The amount of interest for each day that the remarketable notes of a series
are outstanding during the Floating Rate Period for that series will be
calculated by dividing the Floating Period Interest Rate in effect for that day
by 360 and multiplying the result by the Dollar Price. The amount of interest to
be paid for a Floating Rate Reset Period will be calculated by adding the daily
interest amounts for each day in that Floating Rate Reset Period. The Floating
Period Interest Rate for a series of remarketable notes announced by the
Remarketing Dealer for that series, absent manifest error, will be binding and
conclusive upon the beneficial owners of such remarketable notes, CenturyTel and
the Trustee.
For this purpose, the following terms have the following meanings:
"Floating Period Interest Rate" for a series of remarketable notes means
the sum of the Reference Rate and the Floating Rate Spread for such series.
"Floating Rate Spread Determination Date" for a series of remarketable
notes means the third Business Day prior to the Floating Rate Remarketing Date
for such series.
"Floating Rate Remarketing Date" means October , 20 in the event that we
have elected to exercise our Series I Floating Period Option or October , 20
in the event that we have elected to exercise our Series J Floating Period
Option.
"Series I Floating Period Option" means our right, on any date subsequent
to the Series I Remarketing Dealer's election to purchase the Series I
remarketable notes, but prior to the fourth Business Day immediately preceding
the first Series I Remarketing Date, to require the Series I Remarketing Dealer
to remarket the Series I remarketable notes at the Floating Period Interest
Rate.
"Series J Floating Period Option" means our right, on any date subsequent
to the Series J Remarketing Dealer's election to purchase the Series J
remarketable notes, but prior to the fourth Business Day
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immediately preceding the first Series J Remarketing Date, to require the Series
J Remarketing Dealer to remarket the Series J remarketable notes at the Floating
Period Interest Rate.
"Floating Rate Period" with respect to a series of remarketable notes,
means the period from (and including) the Floating Rate Remarketing Date for
that series to (but excluding) the applicable Floating Period Termination Date
for that series.
"Floating Rate Spread" shall be the lowest applicable Floating Rate Bid
expressed as a spread (in the form of a percentage or in basis points) above the
Reference Rate for a series of remarketable notes obtained by the Remarketing
Dealer for that series by 3:30 p.m., New York City time, on the third Business
Day prior to the Floating Rate Remarketing Date for that series, from the
Floating Rate Bids quoted to that Remarketing Dealer by up to five Reference
Money Market Dealers.
A "Floating Rate Bid" will be an irrevocable offer to purchase the
aggregate outstanding principal amount of a series of remarketable notes at the
Dollar Price for that series, but assuming:
(1) a settlement date that is the Floating Rate Remarketing Date for
that series without accrued interest,
(2) a maturity date equal to the Floating Period Termination Date for
that series,
(3) a stated annual interest rate equal to the Reference Rate plus the
Floating Rate Spread for that series,
(4) that such remarketable notes are callable for repurchase by the
Remarketing Dealer for that series at the Dollar Price on the Floating
Period Termination Date for that series, and
(5) that we will redeem such remarketable notes at the Dollar Price on
the Floating Period Termination Date for that series if not previously
repurchased by a Remarketing Dealer for that series.
"Floating Rate Reset Period" with respect to a series of remarketable
notes, means the period from (and including) the first Reference Rate Reset Date
for that series to (but excluding) the next following Reference Rate Reset Date,
and thereafter the period from (and including) a Reference Rate Reset Date for
that series to (but excluding) the next following Reference Rate Reset Date;
provided that the final Floating Rate Reset Period during the Floating Rate
Period for such series will run to (but exclude) the Floating Period Termination
Date for such series.
"Reference Money Market Dealer" means each of up to five dealers of
publicly traded debt securities, including our debt securities, selected by us,
who are also leading dealers in money market instruments. We will advise the
applicable Remarketing Dealer of our selection of Reference Money Market Dealers
no later than five Business Days prior to the applicable Floating Rate
Remarketing Date. If either Banc of America Securities LLC or Salomon Smith
Barney Inc. is then a Series I or Series J Remarketing Dealer for that series,
or if either or both are acting as an underwriter for that series, then either
or both will be among the Reference Money Market Dealers we will select.
"Reference Rate" means:
(1) The rate for each Floating Rate Reset Period which will be the
rate for deposits in U.S. Dollars for a period of one month which appears
on the Telerate Page 3750 (or any successor page) as of 11:00 a.m., London
time, on the applicable Reference Rate Determination Date.
(2) If no rate appears on Telerate Page 3750 on the Reference Rate
Determination Date, the applicable Remarketing Dealer will request the
principal London offices of four major reference banks in the London
Inter-Bank Market to provide it with their offered quotations for deposits
in U.S. Dollars for the period of one month, commencing on the first day of
the Floating Rate Reset Period, to prime banks in the London Inter-Bank
Market at approximately 11:00 a.m., London time, on the Reference Rate
Determination Date and in a principal amount that is representative for a
single transaction in U.S. Dollars in that market at that time. If at least
two quotations are provided, then the Reference Rate will be the average of
those quotations. If fewer than two quotations are provided, then the
Reference
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Rate will be the average (rounded, if necessary, to the nearest one
hundredth (0.01) of one percent) of the rates quoted at approximately 11:00
a.m., New York City time, on the Reference Rate Determination Date by three
major banks in New York City selected by the applicable Remarketing Dealer
for loans in U.S. dollars to leading European banks, having a one-month
maturity and in a principal amount that is representative for a single
transaction in U.S. dollars in that market at that time. If the banks
selected by the Remarketing Dealer are not providing quotations in the
manner described by this paragraph, the rate for the Floating Rate Reset
Period following the Reference Rate Determination Date will be the rate in
effect on that Reference Rate Determination Date.
"Telerate Page 3750" means the display designated as "Telerate page 3750"
on Dow Jones Markets (or such other page as may replace "Telerate page 3750" on
such service) or such other service displaying the offer prices, as may replace
Dow Jones Markets.
"Reference Rate Reset Date" means the first Series I Remarketing Date or
the first Series J Remarketing Date, as applicable, or, in each case, the day
of each month thereafter until (but excluding) the Floating Period Termination
Date applicable to such series.
"Reference Rate Determination Date" will be the second LIBOR Business Day
preceding each Reference Rate Reset Date.
MANDATORY TENDER
On a Business Day not earlier than 20 Business Days prior to the first
Series I or Series J Remarketing Date, as applicable, and not later than 4:00
p.m., New York City time, on the 15th Business Day prior to the first Series I
or Series J Remarketing Date, the applicable Remarketing Dealer will notify us
and the Trustee as to whether it elects to purchase the Series I or Series J
remarketable notes on such Series I or Series J Remarketing Date (the
"Notification Date").
If, and only if, the Series I or Series J Remarketing Dealer, as
applicable, so elects at the first Remarketing Date, or upon the subsequent
Remarketing Date, if any, such Series I or Series J remarketable notes will be
subject to mandatory tender to the Series I or Series J Remarketing Dealer for
purchase and remarketing on such Series I or Series J Remarketing Date, in
accordance with the terms and subject to the conditions set forth in the
applicable Remarketing Agreement and described in this prospectus supplement.
Each series of remarketable notes will be remarketed at a fixed rate of
interest equal to the Interest Rate to Maturity, unless we have elected to
exercise our applicable Series I or Series J Floating Period Option, prior to
the fourth Business Day prior to the first Remarketing Date. Under these
circumstances, the Series I or Series J remarketable notes will be remarketed at
a floating rate for up to one year until the Floating Period Termination Date
for each series, at which time they will be remarketed at a fixed rate of
interest equal to the Interest Rate to Maturity unless we have chosen to redeem,
or are required to redeem, such remarketable notes.
The purchase price payable to the holders of tendered remarketable notes
will be equal to 100% of the aggregate principal amount thereof on the first
Series I or Series J Remarketing Date, as applicable, or the Dollar Price on the
subsequent Series I or Series J Remarketing Date.
Subject to a Remarketing Dealer's election to purchase and remarket the
Series I or Series J remarketable notes, on the first Series I or Series J
Remarketing Date, as applicable, the Remarketing Dealer will then sell the
aggregate principal amount of the Series I or Series J remarketable notes at the
Dollar Price to the Reference Money Market Dealer, or to the Reference Corporate
Dealer, whichever is applicable, providing the lowest applicable Fixed Rate Bid
or applicable Floating Rate Bid. If the lowest applicable Fixed Rate Bid or
applicable Floating Rate Bid is submitted by two or more of the applicable
Reference Dealers, the Remarketing Dealer may sell such Series I or Series J
remarketable notes to one or more of such Reference Dealers, as it will
determine in its sole discretion.
At the subsequent Remarketing Date for a series of remarketable notes, if
any, following the applicable Remarketing Dealer's purchase of the remarketable
notes, the Remarketing Dealer will then sell the aggregate
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principal amount of the Series I or Series J Remarketable notes at the Dollar
Price to the Reference Corporate Dealer providing the lowest applicable Fixed
Rate Bid. If the lowest applicable Fixed Rate Bid is submitted by two or more of
the Reference Corporate Dealers, the Remarketing Dealer may sell such Series I
or Series J remarketable notes to one or more of such Reference Corporate
Dealers, as it will determine in its sole discretion.
If a Remarketing Dealer elects to remarket the Series I or Series J
remarketable notes, the obligation of such Remarketing Dealer to purchase the
Series I or Series J remarketable notes on any Remarketing Date, as applicable,
is subject to certain conditions set forth in the applicable Remarketing
Agreement.
If for any reason the applicable Remarketing Dealer does not purchase all
of the Series I or Series J remarketable notes on any applicable Remarketing
Date, we will be required to redeem all of the Series I or Series J remarketable
notes as discussed under "-- Mandatory Redemption".
MANDATORY REDEMPTION
We will be required to redeem the Series I or Series J remarketable notes
in whole on the applicable Remarketing Date at a price equal to 100% of the
aggregate principal amount of the Series I or Series J remarketable notes, as
applicable, if such Series I or Series J Remarketing Date is the first Series I
or Series J Remarketing Date, or at the Dollar Price on the subsequent
applicable Remarketing Date, plus all accrued and unpaid interest, if any, to
the applicable Series I or Series J Remarketing Date in the event that:
(1) the applicable Remarketing Dealer for any reason does not elect,
by notice to us and the Trustee not later than the Notification Date, to
purchase all of the outstanding applicable Series I or Series J
remarketable notes for remarketing on the first Series I or Series J
Remarketing Date, as applicable,
(2) prior to any Series I or Series J Remarketing Date, the Series I
or Series J Remarketing Dealer resigns and no successor has been appointed
on or before the applicable Determination Date,
(3) at any time after a Remarketing Dealer elects on the Notification
Date to remarket the Series I or Series J remarketable notes, the
Remarketing Dealer elects to terminate its Remarketing Agreement in
accordance with its terms,
(4) a Remarketing Dealer for any reason does not notify us of the
Series I or Series J Floating Period Interest Rate or of the Series I or
Series J Interest Rate to Maturity by 4:00 p.m. New York City time, on the
applicable Determination Date,
(5) a Remarketing Dealer for any reason does not deliver the purchase
price of the Series I or Series J remarketable notes to the Trustee on the
Series I or Series J Remarketing Date, or does not purchase all tendered
Series I or Series J remarketable notes on such Series I or Series J
Remarketing Date, or
(6) we for any reason fail to redeem the Series I or Series J
remarketable notes from a Remarketing Dealer following our election to
effect such redemption.
OPTIONAL REDEMPTION
If a Remarketing Dealer elects to purchase and remarket the Series I or
Series J remarketable notes, we have the option to redeem all of such series of
remarketable notes. To exercise this redemption option we must notify the
Remarketing Dealer and the Trustee, not later than 4:00 p.m., New York City
time, on the Business Day immediately preceding any applicable Determination
Date that we irrevocably elect to exercise our right to redeem the Series I or
Series J remarketable notes in whole from the applicable Remarketing Dealer on
the first Series I or Series J Remarketing Date or on the Series I or Series J
Floating Period Termination Date immediately following the applicable
Determination Date.
If we so elect to redeem the Series I or Series J remarketable notes, we
will redeem the Series I or Series J remarketable notes from the Remarketing
Dealer on the date specified at the Dollar Price, plus all accrued and unpaid
interest, if any, to such date.
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POST-REMARKETING OPTIONAL REDEMPTION
After the Series I Fixed Rate Remarketing Date, in the case of the Series I
remarketable notes, and after the Series J Fixed Rate Remarketing Date, in the
case of the Series J remarketable notes, the remarketable notes are redeemable,
in whole or in part, at any time, and at our option, at a redemption price equal
to the greater of:
(1) 100% of the principal amount of the Series I or Series J
remarketable notes then outstanding to be redeemed, or
(2) the sum of the present values of the remaining scheduled payments
of principal and interest thereon (not including any portion of such
payments of interest accrued as of the redemption date) discounted to such
applicable redemption date on a semi-annual basis (assuming a 360-day year
consisting of twelve 30-day months) at the Adjusted Treasury Rate, plus
basis points in the case of the Series I remarketable notes, or
basis points in the case of the Series J remarketable notes, as
calculated by an Independent Investment Banker,
plus, in either of the above cases, accrued and unpaid interest thereon to the
applicable redemption date.
"Adjusted Treasury Rate" means, with respect to any redemption date:
(1) the yield, under the heading which represents the average for the
immediately preceding week, appearing in the most recently published
statistical release designated "H.15(519)" or any successor publication
which is published weekly by the Board of Governors of the Federal Reserve
System and which establishes yields on actively traded United States
Treasury securities adjusted to constant maturity under the caption
"Treasury Constant Maturities," for the maturity corresponding to the Post-
Remarketing Comparable Treasury Issue (if no maturity is within three
months before or after the remaining term of the applicable series of
remarketable notes, yields for the two published maturities most closely
corresponding to the Post-Remarketing Comparable Treasury Issue will be
determined and the Adjusted Treasury Rate will be interpolated or
extrapolated from such yields on a straight line basis, rounding to the
nearest month); or
(2) if such release (or any successor release) is not published during
the week preceding the calculation date or does not contain such yields,
the rate per annum equal to the semi-annual equivalent yield to maturity of
the Post-Remarketing Comparable Treasury Issue, calculated using a price
for the Post-Remarketing Comparable Treasury Issue (expressed as a
percentage of its principal amount) equal to the Post-Remarketing
Comparable Treasury Price for such redemption date.
The Adjusted Treasury Rate will be calculated on the third Business Day
preceding the applicable redemption date.
"Post-Remarketing Comparable Treasury Issue" for any of the Series I or
Series J remarketable notes means the U.S. Treasury security selected by an
Independent Investment Banker as having a maturity comparable to the remaining
term of the remarketable notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such remarketable notes or, if, in the reasonable judgment of
the Independent Investment Banker for the series, there is no such security,
then the Post-Remarketing Comparable Treasury Issue will mean the U.S. Treasury
security or securities selected by an Independent Investment Banker as having an
actual or interpolated maturity or maturities comparable to the remaining term
of that series of remarketable notes.
"Post-Remarketing Comparable Treasury Price" means (1) the average of five
Post-Remarketing Reference Treasury Dealer Quotations for such redemption date,
after excluding the highest and lowest Post-Remarketing Reference Treasury
Dealer Quotations, or (2) if the Independent Investment Banker obtains fewer
than five such Post-Remarketing Reference Treasury Dealer Quotations, the
average of all such quotations.
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"Independent Investment Banker" means either Banc of America Securities LLC
or Salomon Smith Barney Inc. and their respective successors as selected by us,
or if all of these firms are unwilling or unable to serve as such, an
independent investment and banking institution of national standing appointed by
us.
"Post-Remarketing Reference Treasury Dealer Quotations" means, with respect
to each Reference Treasury Dealer and any redemption date, the average, as
determined by the Independent Investment Banker, of the bid and asked prices for
the Post-Remarketing Comparable Treasury Issue (expressed in each case as a
percentage of its principal amount) quoted in writing to the Independent
Investment Banker at 5:00 p.m., New York City time, on the third Business Day
preceding such redemption date.
We will mail a notice of redemption at least 20 days but not more than 60
days before a redemption date to each holder of Series I or Series J
remarketable notes to be redeemed. If we elect to partially redeem the Series I
or Series J remarketable notes, the Trustee will select in a fair and
appropriate manner the Series I or Series J remarketable notes to be redeemed.
Unless we default in payment of the redemption price, on and after a
redemption date, interest will cease to accrue on the Series I or Series J
remarketable notes or portions thereof called for redemption.
BOOK-ENTRY ONLY ISSUANCE -- THE DEPOSITORY TRUST COMPANY
DTC will act as the initial securities depositary for the remarketable
notes. The remarketable notes will be issued only as fully registered securities
registered in the name of DTC's nominee. One or more fully registered global
certificates for each series of remarketable notes will be issued, representing
in the aggregate the total principal amount of remarketable notes, and will be
deposited with DTC or its custodian. For additional information on DTC, see
"Description of the Series H Notes -- Book-Entry, Delivery and Form."
Purchases of remarketable notes within the DTC system must be made by or
through direct participants, which will receive a credit for the remarketable
notes on DTC's records. The ownership interest of each actual purchaser of
remarketable notes (the "beneficial owner") is in turn to be recorded on the
direct and indirect participants' records. Beneficial owners will not receive
written confirmation from DTC of their purchases, but beneficial owners are
expected to receive written confirmations providing details of the transactions,
as well as periodic statements of their holdings, from the direct or indirect
participants through which the beneficial owners purchased remarketable notes.
Transfers of ownership interests in the remarketable notes are to be
accomplished by entries made on the books of participants acting on behalf of
beneficial owners. Beneficial owners will not receive certificates representing
their ownership interests in remarketable notes, except in the event that use of
the book-entry system for the remarketable notes is discontinued.
DTC has no knowledge of the actual beneficial owners of the remarketable
notes. DTC's records reflect only the identity of the direct participants to
whose accounts the remarketable notes are credited, which may or may not be the
beneficial owners. The participants will remain responsible for keeping account
of their holdings on behalf of their customers.
Conveyance of notices and other communications by DTC to direct
participants, by direct participants to indirect participants, and by direct
participants and indirect participants to beneficial owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time.
Payments on the remarketable notes will be made to DTC in immediately
available funds. DTC's practice is to credit direct participants' accounts on
the relevant payment date in accordance with their respective holdings shown on
DTC's records unless DTC has reason to believe that it will not receive payments
on the relevant payment date. Payments by participants to beneficial owners will
be governed by standing instructions and customary practices, as is the case
with securities held for the account of customers in bearer form or registered
in "street name," and will be the responsibility of the participant and not of
DTC or CenturyTel, subject to any statutory or regulatory requirements as may be
in effect from time to time. Payment to DTC is our responsibility, disbursement
of the payments to direct participants is the responsibility of DTC, and
disbursement of the payments to the beneficial owners is the responsibility of
direct and indirect
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participants. Except as provided in this prospectus supplement, a beneficial
owner of remarketable notes will not be entitled to receive physical delivery of
remarketable notes. Accordingly, each beneficial owner must rely on the
procedures of DTC to exercise any rights under the remarketable notes. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of securities in definitive form. These laws may impair the
ability to transfer beneficial interests in a global remarketable note.
DTC may discontinue providing its services as securities depositary with
respect to the remarketable notes at any time by giving reasonable notice to us.
Under those circumstances, in the event that a successor securities depositary
is not obtained, remarketable notes certificates will be printed and delivered
to the holders of record. Additionally, we may decide to discontinue use of the
system of book-entry transfers through DTC (or a successor depositary) with
respect to the remarketable notes. In that event, certificates for the
remarketable notes will be printed and delivered to the holders of record. We
have no responsibility for the performance by DTC or its participants of their
respective obligations as described in this prospectus supplement or under the
rules and procedures governing their respective operations.
SETTLEMENT
In the event that any of the Series I or Series J remarketable notes are
remarketed, the Series I or Series J Remarketing Dealer, as applicable, will pay
to the Trustee, not later than 12:00 noon, New York City time, on the first
Series I or Series J Remarketing Date, as applicable, an amount equal to 100% of
the aggregate principal amount of the Series I or Series J remarketable notes or
on the subsequent Series I or Series J Remarketing Date, an amount equal to the
Dollar Price.
On any such Series I or Series J Remarketing Date, the applicable
Remarketing Dealer will cause the Trustee to make payment to DTC for payment to
the DTC participant of each tendering beneficial owner of Series I or Series J
remarketable notes, subject to remarketing, by book-entry through DTC by the
close of business on such Series I or Series J Remarketing Date, against
delivery through DTC of such beneficial owner's tendered Series I or Series J
remarketable notes, of the purchase price for tendered Series I or Series J
remarketable notes that have been purchased for remarketing by a Remarketing
Dealer.
The purchase price of such tendered remarketable notes shall be equal to
100% of the aggregate principal amount thereof on the first Series I or Series J
Remarketing Date or the Dollar Price on the subsequent Series I or Series J
Remarketing Date. We will make, or cause the Trustee to make, payment to DTC for
payment of interest to each beneficial owner of remarketable notes, due on a
Remarketing Date by book-entry through DTC, by the close of business on such
Remarketing Date.
The transactions described above will be executed on each Remarketing Date
through DTC in accordance with the procedures of DTC, and the accounts of the
respective participants will be debited and credited, and the remarketable notes
delivered by book-entry as necessary to effect the purchases and sales thereof.
Settlement for the remarketable notes on the date of issuance will be made
by the underwriters in immediately available funds. All payments of principal
and interest in respect of the remarketable notes in book-entry form will be
made in immediately available funds. The remarketable notes will trade in DTC's
Same-Day Funds Settlement System until the applicable Maturity Date or
Remarketing Date, as the case may be, or until the remarketable notes are issued
in definitive form, and secondary market trading activity in the remarketable
notes will be required by DTC to settle in immediately available funds.
The tender and settlement procedures described above, including the
provisions for payment to selling beneficial owners of tendered remarketable
notes, or for payment by the purchasers of remarketable notes, in a remarketing,
may be modified to the extent required by DTC or, if the book-entry system is no
longer available for the remarketable notes at the time of a remarketing, to the
extent required to facilitate the tendering and remarketing of remarketable
notes in certificated form. In addition, a Remarketing Dealer may modify the
settlement procedures set forth above in order to facilitate the settlement
process.
As long as DTC or its nominee holds a certificate representing the
remarketable notes in the book-entry system of DTC, no certificates for such
remarketable notes will be delivered to any beneficial owner. In
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addition, under the terms of the remarketable notes and the applicable
Remarketing Agreement, we have agreed that (1) we will use our best efforts to
maintain the remarketable notes in book-entry form with DTC or any successor
thereto, and to appoint a successor depository to the extent necessary to
maintain the remarketable notes in book-entry form and (2) we will waive any
discretionary right we otherwise have under the Indenture to cause the
remarketable notes to be issued in certificated form.
REMARKETING DEALERS
On or prior to the date of original issuance of the remarketable notes, we
will enter into Remarketing Agreements with as Remarketing Dealer for
the Series I remarketable notes and as Remarketing Dealer for Series J
remarketable notes. The Remarketing Dealers will not receive any fees or
reimbursement of expenses from us in connection with the remarketing, except
under certain circumstances. The aggregate price paid to us by the underwriters
for the purchase of the remarketable notes will include an amount paid by each
Remarketing Dealer for its right to remarket the Series I or Series J
remarketable notes.
We will agree to indemnify each Remarketing Dealer against certain
liabilities, including liabilities under the U.S. Securities Act of 1933,
arising out of or in connection with its duties under each Remarketing
Agreement.
If a Remarketing Dealer elects to remarket the Series I or Series J
remarketable notes, the obligation of the Remarketing Dealer to purchase such
remarketable notes will be subject to several conditions set forth in the
applicable Remarketing Agreement. In addition, upon the occurrence of certain
events after the Remarketing Dealer elects to remarket the Series I or Series J
remarketable notes, as applicable, a Remarketing Dealer will have the right to
terminate its Remarketing Agreement or terminate its obligation to purchase the
Series I or Series J remarketable notes, as applicable, or, until 3:30 p.m., New
York City time, on the Business Day immediately preceding the applicable
Remarketing Date, to redetermine the applicable interest rate.
No beneficial owner of the Series I or Series J remarketable notes will
have any rights or claims under the Series I or Series J Remarketing Agreement
or against us or the Series I or Series J Remarketing Dealer, as a result of the
Series I or Series J Remarketing Dealer not purchasing the remarketable notes,
as applicable.
Each Remarketing Agreement will provide that a Remarketing Dealer may
resign at any time as a Remarketing Dealer, such resignation to be effective ten
Business Days after the delivery to us and the Trustee of notice of such
resignation. In such case, we have no obligation to appoint a successor
Remarketing Dealer. A Remarketing Dealer may exercise any vote or join in any
action that any beneficial owner of remarketable notes may be entitled to
exercise, or take, as if it did not act in any capacity under the Remarketing
Agreement. A Remarketing Dealer, in its individual capacity, either as principal
or agent, may engage in or have an interest in any financial or other
transaction with us, as freely as if it did not act in any capacity under a
Remarketing Agreement.
As long as the Series I or Series J Remarketing Agreement is in effect, we
will not acquire any of the Series I or Series J remarketable notes, as
applicable, prior to any remarketing by the respective Remarketing Dealer, other
than in connection with the fulfillment of our obligation to redeem the
remarketable notes, or the exercise of our right to redeem the remarketable
notes, on a Remarketing Date. After all Remarketing Dates or termination of a
Remarketing Agreement prior thereto, we may at any time purchase any Series I or
Series J remarketable notes, as applicable, at any price in the open market or
otherwise. The Series I or Series J remarketable notes so purchased by us may,
at our discretion, be held, resold or surrendered to the Trustee for
cancellation.
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CERTAIN UNITED STATES TAX DOCUMENTATION REQUIREMENTS
A beneficial owner of a note will generally be subject to the 30% United
States federal withholding tax that generally applies to payments of interest on
a registered form debt obligation issued by a United States person (as defined
under "Certain United States Tax Considerations"), unless one of the following
steps is taken to obtain an exemption from or reduction of the tax pursuant to
the applicable regulations of the U.S. Internal Revenue Services ("IRS"):
Exemption for Non-United States persons (IRS Form W-8BEN or IRS Form
W-8). A beneficial owner of a note that is a non-United States person (as
defined under "Certain United States Tax Considerations") (other than certain
persons that are related to CenturyTel through stock ownership as described in
clauses (x)(a) and (b) of Paragraph (i) under "Certain United States Tax
Considerations -- Certain Considerations Relating to Non-United Sates Persons")
can obtain an exemption from the withholding tax by providing a properly
completed IRS Form W-8BEN (Certificate of Foreign Status of Beneficial Owner for
United States Tax Withholding) or, through December 31, 2000, IRS Form W-8 may
be used. Copies of IRS Form W-8BEN or IRS Form W-8 may be obtained from our
Luxembourg listing agent.
Exemption for Non-United States persons with effectively connected income
(IRS Form W-8ECI or IRS Form 4224). A beneficial owner of a note that is a
non-United States person, including a non-United States corporation or bank with
a United States branch, that conducts a trade or business in the United States
with which interest income on a note is effectively connected, can obtain an
exemption from the withholding tax by providing a properly completed IRS Form
W-8ECI (Certificate of Foreign Person's Claim for Exemption from Withholding on
Income Effectively Connected with the Conduct of a Trade or Business in the
United States) or, through December 31, 2000, IRS Form 4224 may be used.
Exemption or reduced rate for Non-United States persons entitled to the
benefits of a treaty (IRS Form W-8BEN or IRS Form 1001). A beneficial owner of a
note that is a non-United States person entitled to the benefits of an income
tax treaty to which the United States is a party can obtain an exemption from or
reduction of the withholding tax (depending on the terms of the treaty) by
providing a properly completed IRS Form W-8BEN (Certificate of Foreign Status of
Beneficial Owner for United States Tax Withholding) or, through December 31,
2000, IRS Form 1001 may be used.
Exemption for United States Persons (IRS Form W-9). A beneficial owner of a
note that is a United States person can obtain a complete exemption from the
withholding tax by providing a properly completed IRS Form W-9 (Request for
Taxpayer Identification Number and Certification).
United States federal income tax reporting procedure. A beneficial owner of
a note or, in the case of IRS Forms W-8BEN and W-8ECI, its agent, is required to
submit the appropriate IRS Form under applicable procedures to the person
through which the owner directly holds the note. For example, if the beneficial
owner of our Series H notes is listed directly on the books of Euroclear or
Clearstream Luxembourg as the holder of the note, the IRS Form must be provided
to Euroclear or Clearstream Luxembourg, as the case may be. Each other person
through which a note is held must submit, on behalf of the beneficial owner, the
IRS Form (or in certain cases a copy thereof) under applicable procedures to the
person through which it holds the note, until the IRS Form is received by the
person who would otherwise be required to withhold United States federal income
tax from interest on the note. For example, in the case of Series H notes held
through Euroclear or Clearstream Luxembourg, the IRS Form (or a copy thereof)
must be received by the U.S. Depositary of such clearing agency. Applicable
procedures include additional certification requirements, described in clause
(x)(c)(B) of Paragraph (i) under "Certain United States Tax
Considerations -- Certain Considerations Relating to Non-United States Persons,"
if a beneficial owner of the note provides an IRS Form W-8BEN to a securities
clearing organization, bank or other financial institution that holds the note
on its behalf.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 2000, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
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Each holder of a note should be aware that if it does not properly provide
the required IRS form (or any required renewal thereof), or if the IRS form (or,
if permissible, a copy of such form) is not properly transmitted to and received
by the person otherwise required to withhold United States federal income tax,
interest on the note may be subject to United States withholding tax at a 30%
rate and the holder (including the beneficial owner) will not be entitled to any
additional amounts from CenturyTel described under the heading "Description of
the Series H Notes -- Payment of Additional Amounts" with respect to such tax.
Such tax, however, may in certain circumstances be allowed as a refund or as a
credit against such holder's United States federal income tax. The foregoing
does not deal with all aspects of federal income tax withholding that may be
relevant to non-United States holders of the notes. Investors are advised to
consult their own tax advisors for specific advice concerning the ownership and
disposition of our notes.
CERTAIN UNITED STATES TAX CONSIDERATIONS
The following discussion summarizes certain material United States federal
income tax consequences of the purchase, ownership and disposition of our notes
by persons that (i) acquire the notes in the original offering at their initial
offering price and (ii) hold such notes as capital assets within the meaning of
Section 1221 of the Internal Revenue Code of 1986, as amended (the "Code").
This summary is based on provisions of the Code, final and proposed
Treasury Regulations promulgated thereunder, IRS rulings and pronouncements, and
administrative and judicial interpretations thereof, all as in effect as of the
date hereof and all of which are subject to change, possibly on a retroactive
basis, or possible differing interpretations. This summary does not address all
tax consequences that may be important to a holder in light of the holder's
particular circumstances or to holders subject to special rules, such as banks
and other financial institutions, real estate investment trusts, regulated
investment companies, insurance companies, tax-exempt organizations, dealers in
securities or currencies, broker-dealers, traders in securities that elect to
mark to market, individual retirement and other tax deferred accounts, persons
whose functional currency is not the United States dollar, and persons engaging
in straddles or hedges relating to the notes. CenturyTel has not sought and will
not seek any rulings from the IRS concerning the tax consequences of the
purchase, ownership, or disposition of any of our Series H notes or remarketable
notes offered hereunder and, accordingly, there can be no assurance that the IRS
will not successfully challenge the tax consequences described below. In
addition, this summary does not address foreign, state, or local tax
consequences.
As used herein, "United States" means the United States of America and its
territories, its possessions and other areas subject to its jurisdiction; a
"non-United States person" means a person (other than a partnership) that is not
a United States person (and a "non-United States holder" means a non-United
States person that beneficially owns our notes); and a "United States person"
means (i) a citizen or resident of the United States, (ii) a corporation, or
other entity treated as a corporation, created or organized under the laws of
the United States or any State thereof or the District of Columbia, (iii) an
estate whose income is subject to United States federal income tax without
regard to its source or (iv) a trust the administration of which is subject to
the primary jurisdiction of a court within the United States and for which one
or more United States persons have the authority to control all substantial
decisions (and a "United States holder" means a United States person that
beneficially owns our notes). If a partnership holds notes, the United States
federal income tax treatment of a partner generally will depend upon the status
of the partner and the activities of the partnership. Partners of partnerships
holding notes should consult their tax advisors.
EACH PROSPECTIVE PURCHASER OF ANY OF OUR SERIES H NOTES OR REMARKETABLE
NOTES OFFERED HEREUNDER (INCLUDING UNITED STATES PERSONS) IS URGED TO CONSULT
WITH HIS OWN TAX ADVISOR WITH RESPECT TO THE UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES OF HOLDING AND DISPOSING OF OUR NOTES, AS WELL AS THE TAX
CONSEQUENCES UNDER FOREIGN, STATE, LOCAL, AND OTHER UNITED STATES FEDERAL TAX
LAWS AND THE POSSIBLE EFFECTS OF CHANGES IN TAX LAWS.
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<PAGE> 36
CERTAIN CONSIDERATIONS RELATING TO THE REMARKETABLE NOTES
The United States federal income tax treatment of debt obligations such as
the remarketable notes is not entirely certain. Because the Series I and Series
J remarketable notes are subject to mandatory tender or mandatory redemption on
the Series I or Series J Remarketing Date, respectively, CenturyTel intends to
treat the remarketable notes as maturing on the applicable Remarketing Date for
United States federal income tax purposes. By purchasing the remarketable notes,
each United States holder agrees to follow such treatment for United States
federal income tax purposes. Based on such treatment, interest on the
remarketable notes should constitute "qualified stated interest" and generally
should be taxable to a United States holder as ordinary interest income at the
time such payments are accrued or received (in accordance with the United States
holder's regular method of accounting). If, under the foregoing treatment, the
excess of the remarketable notes' "stated redemption price at maturity" over
their "issue price" does not equal or exceed the statutory de minimis amount
(generally 1/4 of 1% of the Series I or Series J remarketable notes' stated
redemption price at the Series I or Series J Remarketing Date, as applicable,
multiplied by the number of complete years to the applicable Remarketing Date
from their issue date), the remarketable notes will not be treated as having
original issue discount.
If the excess of the remarketable notes' stated redemption price at
maturity over their issue price is equal to or greater than the statutory de
minimis amount, a United States holder must include original issue discount in
gross income as ordinary interest income for United States federal income tax
purposes as it accrues under a "constant yield to maturity" method in advance of
receipt of the cash payments attributable to such income, regardless of the
United States holder's regular method of accounting. In such event, a United
States holder:
- will be required to accrue an amount of original issue discount in income
each year under such method as determined under Section 1272 of the Code
(under these rules, United States holders generally will have to include
in income increasingly greater amounts of original issue discount in
successive accrual periods),
- will not separately report as taxable income the actual cash payments in
respect of the accrued original issue discount,
- will increase its tax basis in the remarketable notes by the amount of
original issue discount included in its gross income, and
- will decrease its tax basis in the remarketable notes by the amount of
cash payments in respect of the accrued original issue discount.
Under the foregoing treatment, upon the sale, exchange or retirement of the
remarketable notes, a United States holder generally will recognize taxable gain
or loss equal to the difference between the amount realized on the sale,
exchange or retirement (other than amounts representing accrued and unpaid
interest) and such United States holder's adjusted tax basis in the remarketable
notes. A United States holder's adjusted tax basis in the remarketable notes
generally will equal such United States holder's initial investment in the
remarketable notes increased by original issue discount included in income and
decreased by the amount of any payments, other than qualified stated interest
payments, received with respect to such remarketable notes.
The highest marginal individual federal income tax rate (which applies to
ordinary income and gain from sales or exchanges of capital assets held for one
year or less) is 39.6%. In the case of a United States holder who is an
individual taxpayer, taxable gain recognized from the sale or exchange of
remarketable notes held as capital assets for longer than one year is subject to
tax at a maximum capital gain tax rate of 20%. The use of capital losses is
subject to certain limitations. With limited exceptions, net capital gains of a
corporate taxpayer are subject to tax at ordinary corporate income tax rates of
up to 35%.
There can be no assurance that the IRS will agree with our treatment of the
remarketable notes, and it is possible that the IRS could assert another
treatment. For instance, it is possible that the IRS could seek to treat the
remarketable notes as maturing on their stated maturity date.
S-36
<PAGE> 37
The Treasury regulations do not address debt instruments involving a reset
mechanism identical to the reset mechanism in the remarketable notes. Thus it is
possible that the IRS could treat the remarketable notes as "contingent payment
debt instruments." In such event, under Treasury regulations governing debt
instruments that provide for contingent payments (the "Contingent Payment
Regulations"), we would be required to construct a projected payment schedule
for the remarketable notes, based upon our current borrowing costs for our
comparable, noncontingent debt instruments, from which an estimated yield on the
remarketable notes would be calculated. A United States holder would be required
to include in income original issue discount in an amount equal to the product
of the adjusted issue price of the remarketable notes at the beginning of each
interest accrual period and the estimated yield of the remarketable notes. In
general, for these purposes, a series of remarketable notes' adjusted issue
price would equal the remarketable notes' issue price increased by the original
issue discount (which would include all stated interest) previously accrued on
the remarketable notes, and reduced by all payments made on the remarketable
notes. As a result of the application of the Contingent Payment Regulations, it
is possible that a United States holder would be required to include interest in
income in excess of actual cash payments received for certain taxable years.
In addition, the character of any gain or loss, upon the sale or exchange
of the remarketable notes (including a sale pursuant to the mandatory tender on
the applicable Remarketing Date) by a United States holder, would likely differ
if the remarketable notes were treated as contingent payment debt obligations.
Any such taxable gain generally would be treated as ordinary income, any such
taxable loss generally would be ordinary to the extent of previously accrued
original issue discount, and any excess would generally be treated as capital
loss.
Non-United States holders are urged to review the information under the
headings "Certain United States Tax Documentation Requirements" and "-- Certain
Considerations Relating to Non-United States Persons", and to consult with their
own advisor.
CERTAIN CONSIDERATIONS RELATING TO NON-UNITED STATES PERSONS
In the opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P., special tax counsel to CenturyTel, under United States federal tax law
as of the date of this prospectus supplement, and subject to the discussion of
backup withholding below:
(i) payments of principal and interest on a note that is beneficially owned
by a non-United States person will not be subject to United States federal
withholding tax; provided, that in the case of interest, (x) (a) the beneficial
owner does not actually or constructively own 10% or more of the total combined
voting power of all classes of stock of CenturyTel entitled to vote, (b) the
beneficial owner is not a controlled foreign corporation that is related to
CenturyTel through stock ownership, and (c) either (A) the beneficial owner of
the note certifies to the person otherwise required to withhold United States
federal income tax from such interest, under penalties of perjury, that it is
not a United States person and provides its name and address or (B) a securities
clearing organization, bank or other financial institution that holds customers'
securities in the ordinary course of its trade or business (a "financial
institution") and holds the note certifies to the person otherwise required to
withhold United States federal income tax from such interest, under penalties of
perjury, that such statement has been received from the beneficial owner by it
or by a financial institution between it and the beneficial owner and furnishes
the payor with a copy thereof; (y) the beneficial owner is entitled to the
benefits of an income tax treaty under which the interest is exempt from United
States federal withholding tax and the beneficial owner of the note or such
owner's agent provides an IRS Form W-8BEN (or, through December 31, 2000, IRS
Form 1001) claiming the exemption; or (z) the beneficial owner conducts a trade
or business in the United States to which the interest is effectively connected
and the beneficial owner of the note or such owner's agent provides an IRS Form
W-8ECI (or, through December 31, 2000, IRS Form 4224); provided that in each
such case, the relevant certification or IRS Form is delivered pursuant to
applicable procedures and is properly transmitted to the person otherwise
required to withhold United States federal income tax, and none of the persons
receiving the relevant certification or IRS Form has actual knowledge that the
certification or any statement on the IRS Form is false;
S-37
<PAGE> 38
(ii) a non-United States person will not be subject to United States
federal income or withholding tax on any gain realized on the sale, exchange or
redemption of a note unless the gain is effectively connected with the
beneficial owner's trade or business in the United States or in the case of an
individual holder who has become a "resident" of the United States for federal
income tax purposes or is present in the United States for 183 days or more in
the taxable year in which the sale, exchange or redemption occurs and certain
other conditions are met; and
(iii) a note owned by an individual who at the time of death is not a
citizen or resident of the United States will not be subject to United States
federal estate tax as a result of such individual's death if the individual does
not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of CenturyTel entitled to vote and the income on
the note would not have been effectively connected with a U.S. trade or business
of the individual.
A non-United States holder that is engaged in a trade or business in the
United States will generally be taxed in the same manner as a United States
holder on payments on, or gain from the retirement or disposition of, our notes
if such payments or gain is effectively connected with the conduct of such
United States trade or business.
In general, information reporting requirements will apply to payments of
principal and interest made on a note and the proceeds of the sale of a note
within the United States to non-corporate holders of the notes, and "backup
withholding" at a rate of 31% will apply to such payments if the holder fails to
provide an accurate taxpayer identification number in the manner required or to
report all interest and dividends required to be shown on its federal income tax
returns.
Information reporting on IRS Form 1099 and backup withholding will not
apply to payments made by CenturyTel or a paying agent to a non-United States
person on a note if, in the case of interest, the IRS Form described in clause
(y) or (z) in Paragraph (i) above has been provided under applicable procedures,
or, in the case of interest or principal, the certification described in clause
(x)(c) in Paragraph (i) above and a certification that the beneficial owner
satisfies certain other conditions have been supplied under applicable
procedures, provided that the payor does not have actual knowledge that the
certifications are incorrect.
Payments of the proceeds from the sale of a note made to or through a
foreign office of a broker will not be subject to information reporting or
backup withholding, except that if the broker is a United States person, a
controlled foreign corporation for United States tax purposes or a foreign
person 50% or more of whose gross income is effectively connected with a United
States trade or business for a specified three-year period, information
reporting may apply to such payments. Payments of the proceeds from the sale of
a note to or through the United States office of a broker are subject to
information reporting and backup withholding unless the holder or beneficial
owner certifies that it is a non-United States person and that it satisfies
certain other conditions or otherwise establishes an exemption from information
reporting and backup withholding.
Regulations recently issued by the IRS, which will be effective for
payments made after December 31, 2000, make certain modifications to the
certification procedures applicable to non-United States persons. Prospective
investors should consult their tax advisors regarding the certification
requirements for non-United States persons.
Backup withholding is not a separate tax, but is allowed as a refund or
credit against the holder's United States federal income tax, provided the
necessary information is furnished to the Internal Revenue Service.
Interest on a note that is beneficially owned by a non-United States person
will be reported annually on IRS Form 1042-S, which must be filed with the IRS
and furnished to such beneficial owner.
S-38
<PAGE> 39
UNDERWRITING
Subject to the terms and conditions set forth in the Underwriting Agreement
dated as of October , 2000 CenturyTel has agreed to sell to each of the
underwriters named below, and each of the underwriters has severally agreed to
purchase, the principal amount of Series H, I and J notes set forth opposite its
name below:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF PRINCIPAL AMOUNT OF
UNDERWRITER SERIES H NOTES SERIES I NOTES SERIES J NOTES
----------- ------------------- ------------------- -------------------
<S> <C> <C> <C>
Banc of America Securities LLC... $ $ $
Salomon Smith Barney Inc. .......
------------ ------------ ------------
Total.................. $ $ $
============ ============ ============
</TABLE>
Banc of America Securities LLC and Salomon Smith Barney Inc. are joint
book-running managers for this offering.
The Underwriting Agreement provides that the obligations of the several
underwriters to purchase the notes included in this offering are subject to the
approval of certain legal matters by counsel and to certain other conditions.
The underwriters are obligated to purchase all the notes if they purchase any of
the notes.
CenturyTel has been advised by the underwriters that they propose initially
to offer each series of the notes to the public at the respective public
offering prices set forth on the cover page of this prospectus supplement, and
to certain dealers at such prices less a concession not in excess of % of the
principal amount of the Series H notes, % of the principal amount of the
Series I remarketable notes and % of the principal amount of the Series J
remarketable notes. The underwriters may allow, and such dealers may reallow, a
concession not in excess of % of the principal amount of each series of the
notes to certain other dealers. After the initial public offering, the public
offering prices and such concessions may be changed.
In connection with this offering, certain underwriters and their affiliates
may engage in transactions that stabilize, maintain or otherwise affect the
market price of the notes. Such transactions may include stabilization
transactions effected in accordance with Rule 104 of Regulation M under the U.S.
Securities Exchange Act of 1934, pursuant to which such persons may bid for or
purchase the notes for the purpose of stabilizing their market price. The
underwriters also may create a short position for the account of the
underwriters by selling more of the notes in connection with the offering than
they are committed to purchase from CenturyTel, and in such case may purchase
the notes in the open market following completion of the offering to cover such
short position. Any of the transactions described in this paragraph may result
in the maintenance of the price of the notes at a level above that which might
otherwise prevail in the open market. None of the transactions described in this
paragraph is required, and, if they are undertaken, they may be discontinued at
any time.
The underwriters may also impose a penalty bid. Penalty bids permit the
underwriters to reclaim a selling concession from a syndicate member when they,
in covering syndicate short positions or making stabilizing purchases,
repurchase notes originally sold by that syndicate member.
We have been advised by the underwriters that they intend to make a market
in the notes but that they are not obligated to do so and may discontinue
market-making at any time without notice.
Although application has been made to list the Series H notes on the
Luxembourg Stock Exchange, each of the Series H, I and J notes are new issues of
securities with no established trading market. No assurance
S-39
<PAGE> 40
can be given as to the liquidity of, or the trading markets for, the notes.
Purchasers of the notes may be required to pay stamp taxes and other charges in
accordance with the laws and practices of the country of purchase in addition to
the issue prices set forth on the cover page hereof.
The Underwriting Agreement provides that we will indemnify the several
underwriters against certain liabilities, including liabilities under the U.S.
Securities Act of 1933, as amended, or contribute to payments the underwriters
may be required to make in respect of any of these liabilities.
Some of the underwriters and their affiliates have performed certain
investment banking and advisory and general financing and banking services for
us from time to time for which they have received customary fees and expenses.
The underwriters and their affiliates may, from time to time, be customers of,
engage in transactions with or perform services for us in the ordinary course of
their business.
We estimate expenses for the offering to be $ . We have agreed
with Banc of America Securities LLC and Salomon Smith Barney Inc., on behalf of
the underwriters, not to offer or sell any other debt securities by public
offering for 60 days from the date of this prospectus supplement without their
consent.
Affiliates of certain of the underwriters are lenders to CenturyTel under
revolving credit facilities and will receive a portion of the amounts repaid
under one such credit facility from the proceeds of the offering. See "Use of
Proceeds." Because more than 10% of the net proceeds of the offering will be
paid to affiliates of members of the National Association of Securities Dealers,
Inc. (the "NASD") who are participating in the offering, the offering is being
conducted in compliance with Rule 2710(c)(8) of the Conduct Rules of the NASD.
The Series H notes are offered for sale in those jurisdictions in the
United States and Europe where it is lawful to make such offers.
The Series I and J remarketable notes are offered for sale only in those
jurisdictions in the United States where it is lawful to make such offers.
Each of the underwriters has represented and agreed that it has not and
will not offer, sell or deliver any of the notes directly or indirectly, or
distribute this prospectus supplement or the accompanying prospectus or any
other offering material relating to the notes, in or from any jurisdiction
except under circumstances that will result in compliance with the applicable
laws and regulations thereof.
In particular, with respect to the Series H notes only, each underwriter
has represented and agreed that:
- It has not offered or sold and will not offer or sell any Series H notes
to persons in the United Kingdom prior to the expiry of the period of six
months from the issue date of the notes except to persons whose ordinary
activities involve them in acquiring, holding, managing or disposing of
investments (as principal or agent) for the purpose of their businesses
or otherwise in circumstances which have not resulted and will not result
in an offer to the public in the United Kingdom within the meaning of the
Public Offers of Securities Regulations 1995.
- It has only issued or passed on and will only issue or pass on in the
United Kingdom any document received by it in connection with the issue
of the notes to a person who is of a kind described in Article 11(3) of
the Financial Services Act 1986 (Investment Advertisements) (Exemptions)
Order 1996 (as amended) or is a person to whom such document may
otherwise lawfully be issued or passed on.
- It has complied and will comply with all applicable provisions of the
Financial Services Act 1986 with respect to anything done by it in
relation to any notes in, from or otherwise involving the United Kingdom.
S-40
<PAGE> 41
LEGAL MATTERS
The validity of the notes will be passed upon for CenturyTel by Jones,
Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., New Orleans, Louisiana.
Certain legal matters will be passed upon for the underwriters by Winthrop,
Stimson, Putnam & Roberts, New York, New York.
EXPERTS
The consolidated financial statements and related financial statement
schedules of CenturyTel, Inc. and subsidiaries as of December 31, 1999 and 1998,
and for each of the three years in the three-year period ended December 31,
1999, included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, have been incorporated by reference in the accompanying
prospectus and registration statement in reliance upon the report of KPMG LLP,
independent certified public accountants, incorporated by reference therein, and
upon the authority of said firm as experts in accounting and auditing.
The special purpose financial statements, pertaining to the operations
acquired or to be acquired by CenturyTel, Inc. pursuant to the Verizon
Acquisitions, incorporated by reference in this prospectus and elsewhere in the
registration statement to the extent and for the periods indicated in their
reports have been audited by Arthur Andersen LLP, independent public
accountants, and are included herein in reliance upon the authority of said firm
as experts in accounting and auditing in giving said reports.
LISTING AND GENERAL INFORMATION
Application has been made to list our Series H notes on the Luxembourg
Stock Exchange. There can be no assurance that we will obtain such listing. In
connection with the listing application, the amended and restated articles of
incorporation and the by-laws of CenturyTel and a legal notice relating to the
issuance of the Series H notes have been deposited prior to listing with the
Chief Registrar of the District Court of Luxembourg, where copies thereof may be
obtained upon request. Copies of the above documents together with this
prospectus supplement, the accompanying prospectus, our Indenture dated as of
March 31, 1994 and our current Annual Report on Form 10-K, Quarterly Reports on
Form 10-Q and Current Reports on Form 8-K, as well as all such future reports,
so long as any of the Series H notes are outstanding, will be made available to
holders free of charge at the main office of Credit Agricole Indosuez
Luxembourg, 39, Allee Scheffer, L-2520 Luxembourg. Credit Agricole Indosuez
Luxembourg will act as intermediary between CenturyTel and the holders of the
Series H notes.
We do not intend to list the Series I or Series J remarketable notes on the
Luxembourg Stock Exchange.
Our independent accountants are KPMG LLP, Shreveport, Louisiana.
Other than as disclosed or contemplated herein or in the documents
incorporated herein by reference, there has been no material adverse change in
our financial position since June 30, 2000.
Neither we nor any of our subsidiaries is involved in litigation,
arbitration or administrative proceedings relating to claims or amounts that are
material in the context of the issue of the Series H notes and we are not aware
of any such litigation, arbitration or administrative proceedings pending or
threatened.
Resolutions relating to the issue and sale of the notes were adopted by the
Board of Directors of CenturyTel on November 18, 1999 and by the Pricing
Committee of the Board on October , 2000.
The Series H notes have been accepted for clearance by Euroclear and
Clearstream Luxembourg. With respect to the Series H notes, the CUSIP number is
, the Euroclear and Clearstream Luxembourg Common Code is ,
and the International Security Identification Number (ISIN) is . The
CUSIP number of the Series I remarketable notes is . The CUSIP number
of the Series J remarketable notes is .
S-41
<PAGE> 42
$2,000,000,000
[CENTURYTEL LOGO]
SENIOR DEBT SECURITIES
PREFERRED STOCK
COMMON STOCK
WARRANTS
---------------------
We may use this prospectus to offer the following securities for sale,
either separately or together:
- Senior debt securities
- Preferred stock
- Common stock
- Warrants
We will describe the specific terms of any securities that we offer in one
or more supplements to this prospectus. A supplement may also update or change
information contained in this prospectus.
We may sell securities directly to one or more purchasers or to or through
underwriters, dealers or agents. If any underwriters, dealers or agents are
involved in the sale of securities, the accompanying prospectus supplement will
set forth their names, the principal amounts, if any, to be purchased by
underwriters, any applicable fees, commissions or discounts, and the net
proceeds to be received by us.
Our common stock trades on the New York Stock Exchange under the symbol
"CTL".
You should read this prospectus and any prospectus supplement carefully
before you invest. This prospectus may not be used to sell securities unless
accompanied by a prospectus supplement.
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
---------------------
The date of this prospectus is May 15, 2000.
<PAGE> 43
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ABOUT THIS PROSPECTUS....................................... 3
WHERE YOU CAN FIND MORE INFORMATION......................... 3
FORWARD-LOOKING STATEMENTS.................................. 4
THE COMPANY................................................. 5
USE OF PROCEEDS............................................. 8
EARNINGS RATIOS............................................. 8
DESCRIPTION OF SENIOR DEBT SECURITIES....................... 8
DESCRIPTION OF PREFERRED STOCK.............................. 15
DESCRIPTION OF THE COMMON STOCK............................. 17
DESCRIPTION OF WARRANTS..................................... 18
PLAN OF DISTRIBUTION........................................ 19
LEGAL MATTERS............................................... 20
EXPERTS..................................................... 20
</TABLE>
---------------------
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED OR INCORPORATED BY REFERENCE
IN THIS PROSPECTUS AND ANY PROSPECTUS SUPPLEMENT. WE HAVE NOT AUTHORIZED ANYONE
TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT MAKING AN OFFER TO SELL
THE SECURITIES IN ANY JURISDICTION WHERE THE OFFER IS NOT PERMITTED. YOU SHOULD
NOT ASSUME THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS OR ANY PROSPECTUS
SUPPLEMENT IS ACCURATE AS OF ANY DATE OTHER THAN THE DATE ON THE FRONT COVER OF
THOSE DOCUMENTS. THE INFORMATION CONTAINED IN OUR WEBSITE, WWW.CENTURYTEL.COM,
IS NOT A PART OF THIS PROSPECTUS OR ANY PROSPECTUS SUPPLEMENT.
2
<PAGE> 44
ABOUT THIS PROSPECTUS
This prospectus is part of a registration statement on Form S-3 that we
filed with the Securities and Exchange Commission utilizing a shelf registration
process. Under the shelf process, we may sell any combination of securities
described in this prospectus in one or more offerings, up to a total dollar
amount of $2,000,000,000. This prospectus provides you with a general
description of the securities we may offer. Each time we sell securities, we
will provide a prospectus supplement that will contain specific information
about the terms of that offering. The prospectus supplement may also add, update
or change information contained in this prospectus. You should read both this
prospectus and any prospectus supplement together with additional information
described immediately below under the heading "Where You Can Find More
Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission. You can read and copy
that information at the public reference room of the SEC at 450 Fifth Street,
NW, Washington, D.C. 20549. You may call the SEC at 1-800-SEC-0330 for more
information about the public reference room. The SEC also maintains an Internet
site that contains reports, proxy and information statements and other
information regarding registrants, like us, that file reports with the SEC
electronically. The SEC's Internet address is http://www.sec.gov.
We have filed a registration statement on Form S-3 and related exhibits
with the SEC under the Securities Act of 1933. The registration statement
contains additional information about us and our securities. You may read the
registration statement and exhibits without charge at the SEC's public reference
room, and you may obtain copies from the SEC at prescribed rates.
The SEC allows us to "incorporate by reference" the information we file
with it, which means that we can disclose important information to you by
referring to documents on file with the SEC. Some information that we currently
have on file is incorporated by reference and is an important part of this
prospectus. You will be deemed to have notice of all information incorporated by
reference in this prospectus as if that information was included in this
prospectus. You should therefore read the information incorporated by reference
in this prospectus with the same care you use when reading this prospectus and
any prospectus supplement. Certain information that we file later with the SEC
will automatically update and supersede information incorporated by reference in
this prospectus and information contained in this prospectus or any prospectus
supplement.
We incorporate by reference the following documents that we have filed with
the SEC pursuant to the Securities Exchange Act of 1934:
- Annual Report on Form 10-K for the year ended December 31, 1999 (filed
March 15, 2000)
- Quarterly Report on Form 10-Q for the quarter ended March 31, 2000 (filed
May 12, 2000)
- Current Reports on Form 8-K filed March 7, 2000 and April 28, 2000
- The description of our common stock contained in our registration
statement, as amended and restated on Form 8-A/A (File No. 1-7784; filed
November 19, 1999), and the description of the related preference share
purchase rights contained in our registration statement, as amended and
restated on Form 8-A/A (File No. 1-7784; filed November 19, 1999)
- All documents filed by us with the SEC pursuant to Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934 after the date of this
prospectus and prior to the termination of this offering.
At your request, we will provide you with a free copy of any of these
filings (except for exhibits, unless the exhibits are specifically incorporated
by reference into the filing). You may request copies by writing us at 100
Century Park Drive, Monroe, Louisiana 71203, Attention: Harvey P. Perry, or by
telephoning us at (318) 388-9000.
3
<PAGE> 45
FORWARD-LOOKING STATEMENTS
Certain statements made in this prospectus and the documents incorporated
herein by reference that are not historical facts are intended to be
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Our actual results could differ materially from
such statements due to several important factors, including the following:
- our ability to timely consummate our pending acquisitions and effectively
manage our growth, including obtaining adequate financing on attractive
terms, integrating newly acquired properties into our operations, hiring
adequate numbers of qualified staff and successfully upgrading our
billing and other information systems
- the risks inherent in rapid technological change
- the effects of ongoing deregulation in the telecommunications industry
- the effects of greater than anticipated competition in our markets
- possible changes in the demand for our products and services
- our ability to successfully introduce new product or service offerings on
a timely and cost-effective basis
- the effects of more general factors such as changes in general market or
economic conditions or in legislation, regulation or public policy.
These factors, and others, are described in greater detail in Item 1 of our
Annual Report on Form 10-K for the year ended December 31, 1999. You are
cautioned not to place undue reliance on our forward-looking statements, which
speak only as of the date hereof. Except for our obligations to disclose
material information under the federal securities laws, we undertake no
obligation to update any of our forward-looking statements for any reason.
---------------------
When used in this prospectus, (1) the term "MSA" means a Metropolitan
Statistical Area for which the Federal Communications Commission (the "FCC") has
granted a cellular operating license, (2) the term "RSA" means a Rural Service
Area for which the FCC has granted a cellular operating license, (3) the term
"PCS" means Personal Communications Services, a digital mobile communications
service, (4) the term "LEC" means a local exchange carrier that provides local
telephone service, and (5) the term "pops," whenever used with respect to the
operations of CenturyTel, means the population of licensed markets (based on
independent third-party population estimates) multiplied by the proportionate
equity interests of CenturyTel in the licensed operators of those markets.
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<PAGE> 46
THE COMPANY
We are a regional diversified communications company. We are primarily
engaged in providing local telephone and wireless communications services in 20
states. We also provide long distance, Internet, security monitoring, and other
communications and business information services.
CenturyTel is incorporated in Louisiana. Our principal executive offices
are located at 100 Century Park Drive, Monroe, Louisiana 71203, and our
telephone number is (318) 388-9000.
OPERATIONS
Telephone operations. According to published sources, we are currently the
seventh largest local exchange telephone company in the United States, based on
the number of telephone access lines served. At March 31, 2000, our telephone
subsidiaries served approximately 1.28 million access lines in 20 states,
primarily in rural, suburban and small urban communities. We currently operate
over 560 central office and remote switching centers in our telephone operating
areas. All of our access lines are served by digital switching technology, which
in conjunction with other technologies allows us to offer additional premium
services to our customers, including call forwarding, conference calling, caller
identification, selective call ringing and call waiting.
The table below sets forth information with respect to our access lines as
of March 31, 2000 and 1999.
<TABLE>
<CAPTION>
MARCH 31, 2000 MARCH 31, 1999
--------------------------- ---------------------------
NUMBER OF PERCENT OF NUMBER OF PERCENT OF
STATE ACCESS LINES ACCESS LINES ACCESS LINES ACCESS LINES
----- ------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Wisconsin............................ 359,678 28.1% 347,278 25.4%
Washington........................... 184,849 14.7 177,670 13.0
Alaska............................... 0 0.0 134,276 9.8
Michigan............................. 112,663 8.9 109,263 8.0
Louisiana............................ 101,969 8.0 98,739 7.2
Colorado............................. 92,331 7.2 87,215 6.4
Ohio................................. 84,274 6.6 81,362 6.0
Oregon............................... 78,727 6.1 75,750 5.5
Montana.............................. 64,895 5.1 61,473 4.5
Texas................................ 49,457 3.9 45,885 3.4
Arkansas............................. 46,256 3.6 44,276 3.2
Minnesota............................ 30,591 2.4 29,809 2.2
Tennessee............................ 27,155 2.1 26,057 1.9
Mississippi.......................... 22,245 1.7 20,232 1.5
Idaho................................ 6,048 0.5 5,924 0.4
New Mexico........................... 6,406 0.5 5,914 0.4
Indiana.............................. 5,311 0.4 5,169 0.4
Wyoming.............................. 4,878 0.4 4,706 0.3
Iowa................................. 2,017 0.2 1,960 0.1
Arizona.............................. 1,971 0.2 1,803 0.1
Nevada............................... 516 0.0 444 0.0
--------- ----- --------- -----
1,282,237 100.0% 1,365,205 100.0%
========= ===== ========= =====
</TABLE>
We expect future growth in our telephone operations to be derived from
acquiring additional telephone properties, providing service to new customers,
increasing network usage and providing additional services, including those
described below under "Recent Developments."
Our telephone subsidiaries are installing fiber optic cable in certain of
our high traffic markets and have provided alternative routing of telephone
service over fiber optic cable networks in several strategic operating
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<PAGE> 47
areas. At March 31, 2000, our telephone subsidiaries had installed approximately
7,300 miles of fiber optic cable in use.
Wireless Operations. According to published sources, we are currently the
ninth largest cellular telephone company in the United States, based on cellular
pops. At March 31, 2000, our majority-owned and operated cellular systems had
access to approximately 7.5 million cellular pops and served approximately
730,000 customers in 19 MSAs in Michigan, Louisiana, Arkansas, Mississippi,
Wisconsin and Texas and 22 RSAs, most of which are in Michigan, Louisiana,
Arkansas, Mississippi and Wisconsin. At March 31, 2000, we also owned minority
equity interests in 10 MSAs and 17 RSAs, which allowed us access to
approximately 1.9 million cellular pops. Of our 9.4 million aggregate cellular
pops, approximately 65% are attributable to our MSA interests, with the balance
attributable to our RSA interests.
We also hold licenses to provide PCS services in markets that represent
approximately 9.9 million pops, and in late 1998 commenced marketing PCS
services in a limited number of our Michigan markets as a fixed wireless
alternative to LEC services. At March 31, 2000, we served approximately 600 PCS
customers in markets representing approximately 10% of our PCS pops.
Our business development strategy for wireless operations is to secure
operating control of geographically clustered service areas. Clustered systems
aid our marketing efforts and provide various operating and service advantages.
Approximately 44% of our cellular customers are in a single, contiguous cluster
of eight MSAs and nine RSAs in Michigan. Another 26% are in a cluster of five
MSAs and seven RSAs in northern and central Louisiana, southern Arkansas and
eastern Texas.
We began offering digital cellular service in certain markets in late 1996
using the TDMA digital standard. Digital cellular service is currently available
in all of our MSA markets and approximately a third of our RSA markets.
Approximately 5% of our cellular customers currently subscribe to digital
services.
Other Operations. We also provide long distance, Internet, security
monitoring, cable television and interactive services in certain local and
regional markets, as well as certain printing and related business information
services. At March 31, 2000, our long distance business served approximately
319,000 customers in certain of our markets. At March 31, 2000, we provided
Internet access services to approximately 66,400 customers in over 350 markets
in 13 states. These 350 markets cover approximately 70% of the access lines
served by our LECs. For additional information on our new service offerings, see
"-- Recent Developments -- New Services."
RECENT DEVELOPMENTS
Pending Acquisitions. In mid-1999, we entered into definitive agreements to
purchase the following assets from affiliates of GTE Corporation:
- In June 1999, we agreed to purchase telephone access lines (which
numbered approximately 225,000 at December 31, 1999) and related local
exchange assets in Arkansas for approximately $845.8 million in cash.
- In July 1999, we acquired a 61.5% (56.9% fully diluted) interest in a
newly-organized joint venture company which has agreed to purchase
telephone access lines (which numbered approximately 121,000 at December
31, 1999) and related local exchange assets in Missouri for approximately
$290 million in cash. At closing, we have agreed to make a preferred
equity investment of approximately $55 million in the new entity and
anticipate loaning the new entity approximately $220 million.
- In August 1999, we acquired an 89% interest in a newly-organized joint
venture company which has agreed to purchase telephone access lines
(which numbered approximately 61,700 as of December 31, 1999) and related
local exchange assets in Wisconsin for approximately $170 million in
cash. At closing, we have agreed to make an equity investment in the new
entity of approximately $37.8 million and anticipate loaning the new
entity approximately $130 million.
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<PAGE> 48
- In October 1999, we agreed to purchase additional telephone access lines
(which numbered approximately 68,200 as of December 31, 1999) and related
local exchange assets in Wisconsin for approximately $195 million in
cash.
The purchase price under each of these GTE agreements is subject to
adjustments which are not expected to be material in the aggregate. These
transactions are anticipated to close by mid-year 2000, subject to regulatory
approvals, the absence of litigation and certain other closing conditions.
New Services. During 2000, we intend to initiate or further develop the
following services:
- In December 1999, we began offering in one of our select markets digital
subscriber line (DSL) Internet access services, a high-speed
premium-priced data service. During 2000, we plan to make this service
available in markets covering between 30% to 40% of the access lines
served by our LECs.
- During the second quarter of 2000, we plan to begin offering competitive
local exchange telephone services (coupled with long distance, wireless,
Internet access and other services) to small to medium-sized businesses
in Shreveport, Louisiana. We currently plan to offer similar services in
nine other initial new markets by year end 2000, and have budgeted $20
million of capital expenditures for 2000 to construct competitive local
exchange networks to be operated by our subsidiaries. We expect to incur
a consolidated operating loss in 2000 of approximately $4.0-$6.0 million
in connection with providing these services.
- In connection with our long-range plans to sell capacity to other
carriers in or near certain of our select markets, we expect to complete
construction later this year of a 650-mile fiber optic ring connecting
several communities in southern and central Michigan, plus an extension
spur connecting Chicago and Detroit. We expect to begin providing initial
network services by third quarter 2000 with respect to the 650-mile ring
and by fourth quarter 2000 with respect to the extension spur.
RECENT EVENTS AFFECTING THE COMMUNICATIONS INDUSTRY
The communications industry continues to undergo various fundamental
regulatory, competitive and technological changes that make it difficult to
determine the form or degree of future regulation and competition affecting our
telephone and wireless operations. These changes may have a significant impact
on the future financial performance of all communications companies.
In February 1996 the United States Congress enacted the Telecommunications
Act of 1996, which obligates LECs to permit competitors to interconnect their
facilities to the LEC's network and to take various other steps that are
designed to promote competition. Prior to and since the enactment of the
Telecommunications Act, the FCC and a number of state legislative and regulatory
bodies have taken additional steps to foster competition. Coincident with this
recent movement toward increased competition has been the gradual reduction of
regulatory oversight of LECs. These cumulative changes, coupled with the growth
in wireless telephone services and other technological changes, have led to the
continued growth of various companies providing services that compete with LECs'
services.
Several FCC initiatives over the past decade have resulted in the
allocation of additional frequency spectrum or the issuance of licenses for
wireless communications technologies that are competitive with our cellular and
telephone operations, including PCS, mobile satellite services and enhanced
specialized mobile radio service. Several of our wireless competitors have
substantially larger wireless networks and substantially greater financial and
marketing resources than CenturyTel.
FUTURE ACQUISITIONS
We continually evaluate the possibility of acquiring additional
telecommunications assets in exchange for cash, securities or both, and at any
given time may be engaged in discussions or negotiations regarding additional
acquisitions. We generally do not announce our acquisitions until we have
entered into a preliminary or definitive agreement. Over the past few years, the
number and size of communications
7
<PAGE> 49
properties on the market has increased substantially. Although our primary focus
will continue to be on acquiring telephone and wireless interests that are
proximate to our properties or that serve a customer base large enough for us to
operate efficiently, other communications interests may also be acquired and
these acquisitions could have a material impact upon CenturyTel.
USE OF PROCEEDS
Unless otherwise indicated in any prospectus supplement, the net proceeds
from the sale of securities offered by this prospectus will be used for
financing acquisitions, refinancing outstanding indebtedness or other general
corporate purposes, including funding new business initiatives, capital
expenditures or strategic investments. Upon any sale of securities offered by
this prospectus, we will describe the specific allocation of the net sales
proceeds in the prospectus supplement relating to that offering.
We expect to engage periodically in additional private or public financings
as market conditions warrant and as the need arises.
EARNINGS RATIOS
Our ratio of earnings to fixed charges and ratio of earnings to fixed
charges and preferred stock dividends were as follows for the periods indicated:
<TABLE>
<CAPTION>
THREE MONTHS
YEARS ENDED DECEMBER 31, ENDED
------------------------------------- MARCH 31,
1995 1996 1997 1998 1999 2000
----- ----- ----- ----- ----- ------------
<S> <C> <C> <C> <C> <C> <C>
Ratio of earnings(1) to fixed
charges(2)...................... 4.75x 5.13x 7.84x 3.25x 3.76x 3.38x
Ratio of earnings(1) to fixed
charges(2) and preferred stock
dividends(3).................... 4.74x 5.10x 7.80x 3.25x 3.75x 3.37x
</TABLE>
---------------
(1) Earnings consist of income before income taxes and fixed charges, with
adjustments primarily for earnings of and distributions from unconsolidated
subsidiaries.
(2) Fixed charges include interest expense, including amortized debt issuance
costs, and preferred stock dividend costs of subsidiaries.
(3) We have assumed that our preferred stock dividend requirements were equal to
the pre-tax earnings that would be required to cover those dividend
requirements. We computed those pre-tax earnings using actual tax rates for
each period.
DESCRIPTION OF SENIOR DEBT SECURITIES
We may periodically issue senior debt securities in one or more series. The
general terms of the senior debt securities are described below. The particular
terms of each series will be described in a prospectus supplement.
The senior debt securities will be issued under an Indenture, dated as of
March 31, 1994, between us and Regions Bank (successor-in-interest to First
American Bank & Trust of Louisiana and Regions Bank of Louisiana), as Trustee.
The particular terms of each series will be set forth in a resolution of a
committee of our board of directors specifically authorizing that series or in
one or more supplemental indentures. The following summary is not complete and
is subject to the provisions of, and is qualified in its entirety by express
reference to, the Indenture and the board resolution. A copy of the Indenture
and a form of the board resolution are each filed as exhibits to the
registration statement referred to on page 3.
Unless otherwise indicated, each reference italicized in parentheses below
or in any prospectus supplement applies to section numbers in the Indenture and
each capitalized term not otherwise defined herein has the meaning assigned to
it in the Indenture.
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<PAGE> 50
GENERAL
The senior debt securities will be general unsecured obligations of
CenturyTel and will rank prior to all of our subordinated debt and will have the
same rank as all of our other unsecured senior debt.
We are a holding company and derive substantially all of our income and
operating cash flow from our subsidiaries. As a result, we rely upon our
subsidiaries to generate the funds necessary to meet our obligations, including
the payment of principal and interest on any senior debt securities that may be
issued hereunder. Certain of our subsidiaries' loan agreements contain various
restrictions on the transfer of funds to us, including certain provisions that
restrict the amount of dividends that may be paid to us. At March 31, 2000, the
amount of retained earnings of our subsidiaries not subject to dividend
restrictions was approximately $750 million. Moreover, our rights to receive
assets of any subsidiary upon its liquidation or reorganization (and the ability
of holders of senior debt securities to benefit indirectly therefrom) are
subject to the prior claims of creditors of that subsidiary.
Unless we state otherwise below or in any prospectus supplement, neither
the Indenture nor the senior debt securities to be offered thereby (1) limit the
amount of secured or unsecured indebtedness that we or any of our subsidiaries
may issue or incur, (2) restrict our ability to pay dividends or sell or
transfer our assets or (3) contain provisions that would afford senior debt
holders protection in the event of a change in control, highly leveraged
transaction, recapitalization or similar transaction involving CenturyTel, any
of which could adversely affect the senior debt holders.
If we sell any series of senior debt securities hereunder, our related
prospectus supplement will describe the terms of the series, including some or
all of the following:
- the title and aggregate principal amount of the series
- our net proceeds from the sale thereof
- the price or prices at which the series will be issued
- the date or dates of maturity
- the rate or rates per annum, if any, at which the series will bear
interest or the method of determining the rate or rates
- the date or dates from which interest will accrue and the date or dates
at which interest will be payable
- the terms of any conversion or exchange rights
- the terms for redemption or early payment, if any, including any
mandatory or optional sinking fund or similar provisions
- any special United States federal income tax considerations applicable to
the series
- any special provisions relating to the defeasance of the series
- any special considerations, additional covenants or other specific
provisions applicable to the series.
The senior debt securities may bear interest at a fixed or floating rate.
Senior debt securities bearing no interest or interest at a rate that at the
time of issuance is below the prevailing market rate may be sold at a discount
below their stated principal amount.
The Indenture is, and the senior debt securities will be, governed by
Louisiana law. The Indenture is subject to and governed by the Trust Indenture
Act of 1939, as amended.
DENOMINATIONS, REGISTRATION AND TRANSFER
The senior debt securities will be issued only in fully registered form
and, unless we state otherwise in any prospectus supplement, in denominations of
$1,000 or any multiples thereof (Section 2.03). The Trustee
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<PAGE> 51
will act as the registrar of each series (Section 2.05). No service charge will
be made for any registration of transfer or exchange of senior debt securities,
or issue of new senior debt securities in the event of a partial redemption of
any series, but we may generally require payment of a sum sufficient to cover
any tax or other governmental charge payable in connection therewith (Section
2.05). The Trustee may appoint an authenticating agent for any series to act on
the Trustee's behalf in connection with authenticating senior debt securities of
that series issued upon the exchange, transfer or partial redemption thereof
(Section 2.10). The Trustee may at any time rescind the designation of any such
agent (Section 2.10).
We shall not be required to issue, register the transfer of or exchange the
senior debt securities of any series during a period beginning 15 days before
any selection of senior debt securities of that series to be redeemed and ending
at the close of business on the day of mailing of the relevant redemption notice
or to register the transfer of or exchange any senior debt securities of any
series, or portions thereof, called for redemption (Section 2.05).
GLOBAL SECURITIES
We may issue senior debt securities in whole or in part in the form of one
or more global registered securities that will be deposited with a depositary
identified in a prospectus supplement. We may issue global securities in either
temporary or permanent form. A prospectus supplement will contain additional
information about the depositary arrangements.
Registered global securities will be registered in the depositary's name or
in the name of its nominee. When we issue a global security, the depositary will
credit that amount of senior debt securities to the investors that have accounts
with the depositary or its nominee. The underwriters or the senior debt security
holders' agent will designate the accounts to be credited, unless the senior
debt securities are offered and sold directly by CenturyTel, in which case, we
will designate the appropriate accounts to be credited.
Institutions that have accounts with the depositary or its nominee are
referred to as "participants." Ownership of beneficial interests in a global
security will be limited to participants and to persons that may hold beneficial
interests through participants. The depositary will credit, on its book-entry
registration and transfer system, the respective principal amounts of senior
debt securities represented by the global security to the accounts of its
participants. Participants' beneficial interests in a global security will be
shown on and effected through records maintained by the depositary. Beneficial
interests held by investors through participants will be reflected in records
maintained by the participant.
As long as the depositary, or its nominee, is the registered owner of a
global security, the depositary or that nominee will be considered the sole
owner and holder of the senior debt securities represented by that global
security for all purposes under the Indenture. Except as set forth below,
beneficial owners of global securities held by a depositary will not be entitled
to:
- register the represented senior debt securities in their names
- receive physical delivery of the senior debt securities
- be recognized as the owners or holders of the global security under the
Indenture.
Accordingly, each person owning a beneficial interest in a registered global
security must rely on the procedures of the depositary for the registered global
security and, if the person is not a participant, on the procedures of a
participant through which the person owns its interest, to exercise any rights
of a holder under the Indenture.
We understand that, under existing industry practices, if we request any
action of holders or if an owner of a beneficial interest in a registered global
security desires to give or take any action that a holder is entitled to give or
take under the Indenture, the depositary for the registered global security
would authorize the participants holding the relevant beneficial interests to
give or take the action, and the participants would authorize beneficial owners
owning through the participants to give or take the action or would otherwise
act upon the instructions of beneficial owners holding through them.
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<PAGE> 52
Payments on senior debt securities registered in the name of a depositary
or its nominee will be made to the depositary or its nominee. Accordingly,
neither CenturyTel, the Trustee nor any paying agent will have any direct
responsibility to pay amounts due on the global securities to owners of
beneficial interests in such securities. When a depositary receives a payment,
it is typically obligated to immediately credit the participants' accounts in
amounts proportionate to the participants' interests in the global security.
Investors who hold their beneficial interest in a global security through a
participant should, and are expected to, establish standing instructions and
customary practices with their participant to ensure that payments can be made
with regard to securities beneficially held for them, much like securities held
for the accounts of customers in bearer form or registered in "street name."
A global security can only be transferred in whole by the depositary to a
nominee of such depositary, or to another nominee of a depositary. If a
depositary is unwilling or unable to continue as a depositary and we do not
appoint a successor depositary within 90 days, we will issue senior debt
securities in definitive form in exchange for all of the global securities held
by that depositary. In addition, we may eliminate all global securities at any
time and issue senior debt securities in definitive form in exchange for them.
Further, we may allow a depositary to surrender a global security in exchange
for senior debt securities in definitive form on any terms that are acceptable
to us and the depositary.
If any of these events occur, we will execute and the Trustee will
authenticate and deliver to the beneficial owners of the global security in
question a new registered security in and amount equal to and in exchange for
that person's beneficial interest in the exchanged global security. The
depositary will receive a new global security in an amount equal to the
difference, if any, between the amount of the surrendered global security and
the amount of senior debt securities delivered to the beneficial owners. Senior
debt securities issued in exchange for global securities will be registered in
the same names and in the same denominations as indicated by the depositary's
records and in accordance with the instructions from its direct and indirect
participants.
The laws of certain jurisdictions require some investors who purchase
securities to actually take physical possession of those securities in
definitive form. The limitations imposed by these laws may impair your ability
to transfer your beneficial interests in a global security.
PAYMENT AND PAYING AGENTS
Unless we state otherwise in the applicable prospectus supplement, payment
of principal of (and premium, if any) and interest on senior debt securities of
any series will be made in U.S. dollars at the principal office of our Paying
Agent or, at our option, by check in U.S. dollars mailed or delivered to the
person in whose name such senior debt security is registered. Unless we state
otherwise in the applicable prospectus supplement and subject to certain
exceptions provided for in the Indenture, payment of any installment of interest
on any series will be made to the person in whose name such senior debt security
is registered at the close of business on the record date established under the
Indenture for the payment of interest (Section 2.03).
Unless we state otherwise in the applicable prospectus supplement, the
Trustee will act as our sole Paying Agent and 1500 North 18th Street, Monroe,
Louisiana, will be designated as the agent's office for purposes of payments
with respect to senior debt securities. Any other Paying Agents initially
designated by us with respect to any series will be named in the related
prospectus supplement. We may at any time designate additional Paying Agents or
rescind the designation of any Paying Agents or approve a change in the office
through which any Paying Agent acts, except that we will be required to maintain
a Paying Agent in the Borough of Manhattan, City and State of New York, or
Monroe, Louisiana. (Sections 4.02 and 4.03).
Any money set aside by us for the payment of principal of (and premium, if
any) or interest on any senior debt securities that remains unclaimed two years
after such payment has become due and payable will be repaid to us on May 31
following the expiration of the two-year period and the holder of the senior
debt security may thereafter look only to us for payment thereof (Section
11.05).
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<PAGE> 53
CONVERSION OR EXCHANGE RIGHTS
The senior debt securities may be convertible into or exchangeable for
shares of common stock, preferred stock or other securities of CenturyTel or any
other issuer. The terms and conditions of exchange or conversion will be stated
in the applicable prospectus supplement. The terms will include, among other
things, the following:
- the type of security into which the senior debt securities are
convertible or exchangeable
- the conversion or exchange price or ratio (or manner of calculation
thereof)
- the conversion or exchange period
- provisions as to whether the conversion or exchange rights will be at the
option of the senior debt holders, CenturyTel, or both
- the events requiring an adjustment of the conversion or exchange price or
ratio
- any restrictions on conversion or exchange.
REDEMPTION AND SINKING FUND PROVISIONS
A series may be redeemed, in whole or in part, upon not less than 30 days'
and not more than 60 days' notice at the redemption prices and subject to the
terms and conditions (including those relating to any sinking fund established
with respect to such series) that may be set forth in a board resolution or
supplemental indenture and in the prospectus supplement relating to such series
(Sections 3.01 and 3.02). If less than all of the senior debt securities of the
series are to be redeemed, the Trustee shall select the senior debt securities
of such series, or portions thereof, to be redeemed pro rata, by lot or by any
other method the Trustee shall deem fair and reasonable (Section 3.02).
REPLACEMENT OF SECURITIES
We will replace any senior debt security that becomes mutilated, destroyed,
lost or stolen at the expense of the holder. The holder should deliver the
senior debt security or satisfactory evidence of the destruction, loss or theft
thereof to us and the Trustee. An indemnity satisfactory to us and the Trustee
may be required before a replacement security will be issued (Section 2.07).
EVENTS OF DEFAULT AND NOTICE THEREOF
Unless we state otherwise in the applicable prospectus supplement, the
terms and conditions set forth under this heading will govern defaults under the
Indenture. The Indenture provides that each of the following described events
constitute Events of Default with respect to each series of senior debt
securities:
- failure for 30 business days to pay interest on the senior debt
securities of that series when due
- failure to pay principal of (or premium, if any, on) the senior debt
securities of that series when due (whether at maturity, upon redemption,
by declaration or otherwise) or to make any sinking or analogous fund
payment with respect to that series unless caused solely by a wire
transfer malfunction or similar problem outside our control
- failure to observe or perform any other covenant of that series for 60
days after written notice with respect thereto
- certain events relating to bankruptcy, insolvency or reorganization
(Section 6.01).
If an Event of Default shall occur and be continuing with respect to any
series and if it is known to the Trustee, the Trustee is required to mail to
each holder of that series a notice of the Event of Default within 90 days of
such default (Section 6.07).
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<PAGE> 54
Upon an Event of Default, the Trustee or the holders of not less than 25%
in aggregate outstanding principal amount of any series, by notice in writing to
us (and to the Trustee if given by such holders), may declare the principal of
all senior debt securities of that series due and payable immediately, but the
holders of a majority in aggregate outstanding principal amount of such series
may rescind such declaration and waive the default if the default has been cured
and a sum sufficient to pay all matured installments of interest and principal
(and premium, if any) has been deposited with the Trustee before any judgment or
decree for such payment has been obtained or entered (Section 6.01).
Holders of senior debt securities may not enforce the Indenture except as
provided therein. Subject to the provisions of the Indenture relating to the
duties of the Trustee, if an Event of Default occurs and is continuing the
Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any holders of the affected
series, unless, among other things, the holders shall have offered the Trustee
indemnity reasonably satisfactory to it. Subject to the indemnification
provisions and certain limitations contained in the Indenture, the holders of a
majority in aggregate principal amount of the senior debt securities of such
series then outstanding will have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee. The holders of a
majority in aggregate principal amount of the then outstanding senior debt
securities of any series affected by a default may, in certain cases, waive such
default except a default in payment of principal of, or any premium, if any, or
interest on, the senior debt securities of that series or a call for redemption
of the senior debt securities of that series (Sections 6.04 and 6.06).
We will be required to furnish to the Trustee annually a statement
regarding our performance of certain of our obligations under the Indenture
(Section 5.03).
DISCHARGE AND DEFEASANCE
The Indenture provides that we may discharge the Indenture with respect to
any series, subject to certain exceptions, if at any time
(1) we deliver to the Trustee for cancellation all outstanding senior debt
securities of that series previously authenticated and for whose
payment money or U.S. Government Obligations have been deposited in
trust by us, or
(2) all outstanding senior debt securities of that series not previously
delivered to the Trustee for cancellation by us shall have become due
and payable or are to become due and payable or called for redemption
within one year and we have deposited with the Trustee the entire
amount in moneys or U.S. Government Obligations sufficient, without
reinvestment, to pay at maturity or upon redemption the outstanding
senior debt securities, including principal (and premium, if any) and
interest due or to become due to the date of maturity or redemption,
and if we shall also pay or cause to be paid all other sums payable
thereunder with respect to that series (Section 11.01).
Additionally, the Indenture provides that we may discharge all of our
obligations under the Indenture with respect to any series, subject to certain
exceptions, if at any time all outstanding senior debt securities of that series
not previously delivered to the Trustee for cancellation by us or which have not
become due and payable as described above shall have been paid by us by
depositing irrevocably with the Trustee moneys or U.S. Government Obligations
sufficient to pay at maturity or upon redemption the outstanding senior debt
securities, including principal (and premium, if any) and interest due or to
become due to the date of maturity or redemption, and if we shall also pay all
other sums payable thereunder with respect to that series (Section 11.02).
MERGER AND CONSOLIDATION
Nothing in the Indenture or any of the senior debt securities prevents us
from consolidating or merging with or into, or selling or otherwise disposing of
all or substantially all of our assets to, another corporation, provided that
(1) we agree to obtain a supplemental indenture pursuant to which the surviving
entity or transferee agrees to assume our obligations under all outstanding
senior debt securities and (2) the surviving
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<PAGE> 55
entity or transferee is organized under the laws of the United States, any state
thereof or the District of Columbia (Section 10.01).
MODIFICATION OF INDENTURE
The Indenture contains provisions permitting us, when authorized by a board
resolution, and the Trustee, with the consent of the holders of not less than a
majority in aggregate principal amount of the senior debt securities of any
series at the time outstanding and affected by such modification, to modify the
Indenture or any supplemental indenture affecting that series. However, no such
modification may:
(1) extend the fixed maturity of any senior debt securities of any series,
reduce the principal amount thereof, reduce the rate or extend the time
of payment of interest thereon or reduce any premium payable upon the
redemption thereof, without the consent of the holder of each senior
debt security so affected, or
(2) reduce the aforesaid percentage of senior debt securities, the holders
of which are required to consent to any such supplemental indenture,
without the consent of the holder of each senior debt security then
outstanding and affected thereby (Section 9.02).
CenturyTel and the Trustee may execute, without the consent of any holder
of senior debt securities, a supplemental indenture for certain other usual
purposes, including the following:
- creating a new series
- evidencing the assumption by any successor to CenturyTel of our
obligations under the Indenture
- adding covenants to the Indenture for the protection of the holders of
senior debt securities
- curing any ambiguity or inconsistency in the Indenture, or making other
provisions as shall not adversely affect the interests of the holders of
the senior debt securities of any series
- changing or eliminating any provisions of the Indenture provided that
there is no outstanding senior debt security of any series created prior
to such change which would benefit therefrom (Sections 2.01, 9.01 and
10.01).
LIMITATIONS ON LIENS
The Indenture provides that CenturyTel will not, while any of the senior
debt securities remain outstanding, create or suffer to exist any mortgage,
lien, pledge, security interest or other encumbrance (which we collectively
refer to below as liens) upon our property, whether now owned or hereafter
acquired, unless we shall secure the senior debt securities then outstanding by
such lien equally and ratably with all obligations and indebtedness thereby
secured so long as such obligations and indebtedness remain so secured.
Notwithstanding the foregoing, the Indenture will not restrict us from creating
or suffering to exist any of the following:
- liens upon property hereafter acquired by us or liens on such property at
the time of the acquisition thereof, or conditional sales agreements or
title retention agreements with respect to any such property
- liens on the stock of a corporation which, when such liens arise,
concurrently becomes our subsidiary, or liens on all or substantially all
of the assets of a corporation arising in connection with our purchase
thereof
- liens for taxes and similar levies, deposits to secure performance or
obligations under certain specified circumstances and laws, mechanics'
liens and similar liens arising in the ordinary course of business, liens
created by or resulting from legal proceedings being contested in good
faith, certain specified zoning restrictions and other restrictions on
the use of real property, interests of lessors in property subject to any
capitalized lease, and certain other similar liens generally arising in
the ordinary course of business
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<PAGE> 56
- liens existing on the date of the Indenture
- liens that replace, extend or renew any lien otherwise permitted under
the Indenture (Sections 4.05 and 4.06).
The restriction in the Indenture described above would not protect the
senior debt holders in the event of a highly leveraged transaction in which
unsecured indebtedness was incurred or in which the liens arising in connection
therewith were freely permitted under the Indenture, nor would it afford
protection in the event of one or more highly leveraged transactions in which
secured indebtedness was incurred by our subsidiaries. However, in the event of
one or more highly leveraged transactions in which we incurred secured
indebtedness, these provisions would require the senior debt securities to be
secured equally and ratably with such indebtedness, subject to the exceptions
described above.
CONCERNING THE TRUSTEE
The Trustee, prior to the occurrence of an Event of Default, undertakes to
perform only such duties as are specifically set forth in the Indenture and,
after the occurrence of an Event of Default, shall exercise the same degree of
care as a prudent person would exercise in the conduct of such person's own
affairs (Section 7.01). Subject to such provision, the Trustee is under no
obligation to exercise any of the rights or powers vested in it by the Indenture
at the request, order or direction of any senior debt holders, unless offered
reasonable security or indemnity by such holders against the costs, expenses and
liabilities which might be incurred thereby (Section 7.02). The Trustee is not
required to expend or risk its own funds or incur personal financial liability
in the performance of its duties if the Trustee reasonably believes that
repayment of such funds or liability or adequate indemnity is not reasonably
assured to it (Section 7.01). We will pay the Trustee reasonable compensation
and reimburse it for all reasonable expenses incurred in accordance with the
Indenture (Section 7.06).
The Trustee may resign with respect to one or more series and a successor
Trustee may be appointed to act with respect to such series (Section 7.10).
The Trustee also serves as trustee for certain of our employee benefit
plans and provides revolving credit and other traditional banking services to
CenturyTel. The following officers and directors of CenturyTel act as non-voting
regional advisory directors of the Trustee: Clarke M. Williams, Chairman of the
Board, Glen F. Post, III, President, Chief Executive Officer and Vice Chairman
of the Board, and William R. Boles, Jr., Director.
DESCRIPTION OF PREFERRED STOCK
We may issue preferred stock in one or more series. This general
description and the specific description of any particular series of preferred
stock in the related prospectus supplement will not be complete. You should
refer to the applicable provisions in our articles of incorporation and the
articles of amendment relating to each series of preferred stock that has been
or will be filed by us with the Securities and Exchange Commission.
GENERAL
Our articles of incorporation authorize the board of directors to issue
from time to time, without shareholder approval, up to 2,000,000 shares of
preferred stock, par value $25.00 per share, in one or more series. As of March
31, 2000, we had outstanding 319,000 shares of Series L preferred stock. The
rights, preferences, designations and size of each series will be described in
an amendment to our articles of incorporation. A prospectus supplement relating
to each series will specify the terms of the preferred stock as determined by
our board of directors, including the following:
- the specific designation, number of shares, rank and purchase price
- any per share liquidation preference
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<PAGE> 57
- any redemption, payment or sinking fund provisions
- any dividend rates (fixed or variable) and the dates on which any
dividends will be payable (or the method by which the rates or dates will
be determined)
- any voting rights
- the methods by which amounts payable in respect of the preferred stock
may be calculated
- whether the preferred stock is convertible or exchangeable and, if so, a
description of each of the following:
(1) the securities into which the preferred stock is convertible or
exchangeable
(2) the terms and conditions upon which conversions or exchanges will be
effected, including the initial conversion or exchange prices or
ratios
(3) the conversion or exchange period
(4) any other related provision
- a description of any material United States federal income tax
consequences relating to the series
- the place or places where dividends and other payments on the preferred
stock will be payable
- any additional voting, dividend, liquidation, redemption, sinking fund or
other rights, preferences, qualifications, limitations and restrictions.
Unless the applicable prospectus supplement states otherwise, the preferred
stock will not have preemptive rights and all shares of preferred stock will be
of equal rank, regardless of series. Neither the par value nor the liquidation
preference of the preferred stock is indicative of the price at which the
preferred stock may actually trade on or after the date of issuance. Unless the
applicable prospectus supplement states otherwise, there will be no restriction
on our ability to repurchase or redeem preferred stock while there is any
arrearage in payment of dividends or sinking fund installments.
Although it has no present intention to do so, our board of directors could
authorize us to issue preferred stock with voting, conversion and other rights
that could adversely affect the voting power and other rights of holders of our
common stock or other series of preferred stock. Also, the issuance of preferred
stock could have the effect of delaying, deferring or preventing a change in
control.
OUTSTANDING PREFERRED STOCK
As of March 31, 2000, we had outstanding 319,000 shares of 5% Cumulative
Convertible Series L Preferred Stock. Each share of Series L Preferred Stock
entitles the holder thereof to one vote on all matters duly submitted to a vote
of shareholders. The holder of each share of Series L Preferred Stock is
entitled to receive an annual cash dividend of $1.25, payable in quarterly
installments. Dividends on Series L Preferred Stock are cumulative and dividends
cannot be paid with respect to common stock unless all cumulative dividends on
all shares of Series L Preferred Stock shall have been paid. In the event we
liquidate, dissolve or wind up our affairs, the holders of Series L Preferred
Stock are entitled to receive, equally and ratably with all other holders of
preferred stock of equal rank, $25.00 per share plus accrued and unpaid
dividends, before any payment is made to holders of common stock. Each share of
Series L Preferred Stock is convertible, at the option of the holder, into the
number of shares of common stock derived by dividing $25.00 by the "Conversion
Price" (currently, approximately $18.33 following adjustments due to the
occurrence of certain specified Diluting Events).
We anticipate that any series of preferred stock issued hereunder will have
the same rank as the Series L Preferred Stock as to dividend payments and
liquidation distributions. However, if so indicated in a prospectus supplement,
the terms of any series issued hereunder may differ from the terms set forth
herein.
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<PAGE> 58
DESCRIPTION OF THE COMMON STOCK
Our articles of incorporation authorize us to issue 350,000,000 shares of
Common Stock, $1.00 par value per share. As of March 31, 2000, 140,229,175
shares of common stock were outstanding. The common stock is listed for trading
on the New York Stock Exchange.
GENERAL
Voting Rights. Under our articles of incorporation, each share of common
stock that has been beneficially owned by the same person or entity continuously
since May 30, 1987 generally entitles the holder to ten votes on all matters
duly submitted to a vote of shareholders. Otherwise, each share entitles the
holder thereof to one vote per share. Accordingly, each share issued in
connection with this prospectus will entitle the holder to one vote, and,
subject to limited exceptions, each other share of common stock issued by us in
the future will entitle the holder to one vote.
Holders of our common stock do not have cumulative voting rights. As a
result, the holders of more than 50% of the voting power may elect all of our
directors. Our board of directors is divided into three classes of directors,
with each class serving three-year terms. Each class is required to be as nearly
equal in number as possible.
As of March 13, 2000, Regions Bank, the trustee for two of our employee
benefit plans, was the record holder of common stock having approximately 28.5%
of the total voting power of all classes of our capital stock. The trustee votes
these shares in accordance with the instructions of our employees.
Other Rights. Holders of common stock are entitled to receive dividends
when, as and if declared by the board of directors, out of funds legally
available therefor, subject to the preferences applicable to any outstanding
preferred stock.
In the event we liquidate, dissolve or wind up our affairs, holders of
common stock are entitled to receive ratably all of our assets remaining after
satisfying the preferences of our creditors and the holders of any outstanding
preferred stock.
Our common stock is not redeemable and has no subscription, conversion or
preemptive rights. All of our outstanding shares of common stock have been fully
paid and are non-assessable.
PREFERENCE SHARE PURCHASE RIGHTS
We have adopted a Rights Agreement that provides for the issuance of one
preference share purchase right for each outstanding share of common stock. If
anyone acquires 15% or more of our outstanding common stock (which we refer to
as an Acquiring Person), each holder of a right, other than the Acquiring
Person, will be entitled to receive upon exercise of each right additional
shares of our common stock having a current market value of two times the
exercise price of $135. In addition, if we are acquired in a merger or other
business combination or 50% or more of our assets or earning power is sold after
there is an Acquiring Person, each holder of a right will be entitled to buy, at
the exercise price, common stock of the acquirer having a current market value
of two times the exercise price.
At any time before there is an Acquiring Person, we can redeem the rights
in whole, but not in part, for $.01 per right, or may amend the Rights Agreement
in any way without the consent of the holders of the rights. Prior to an
Acquiring Person acquiring 50% or more of our outstanding common stock, we may
exchange the rights, other than rights held by the Acquiring Person, for common
stock at an exchange ratio specified in the Rights Agreement.
Until a right is exercised, the holder thereof, as such, will have no
rights as a shareholder. The rights will expire on November 1, 2006, unless we
extend this date or redeem or exchange the rights.
The complete terms of the rights are contained in our Rights Agreement, as
amended, which is incorporated by reference as an exhibit to the registration
statement referred to on page 3. In addition, you should refer to our
registration statements, as amended and restated on Form 8-A/A, which are also
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incorporated by reference to the registration statement referred on page 3.
These registration statements on Form 8-A/A include more specific descriptions
of the terms of the rights and provisions of our articles of incorporation and
by-laws that could have an effect of delaying, deferring, discouraging or
preventing a change in control of our company.
DESCRIPTION OF WARRANTS
We may issue warrants for the purchase of senior debt securities, preferred
stock or common stock. Warrants may be issued independently or together with
other securities and may be attached to or separate from any offered securities.
Each series of warrants will be issued under a separate warrant agreement to be
entered into between us and a bank or trust company, as warrant agent. The
warrant agent will act solely as our agent in connection with the warrants and
will not assume any obligation or relationship of agency or trust for or with
any holders or beneficial owners of warrants. This summary of certain provisions
of the warrants is not complete. For the complete terms of the warrant
agreement, you should refer to the provisions of the warrant agreement that will
be filed by us with the Securities and Exchange Commission in connection with
the offering of such Warrants.
The prospectus supplement relating to any particular issue of warrants will
describe the terms of the warrants, including the following:
- the title and aggregate number of warrants
- the offering price for the warrants, if any
- the designation and terms of the securities that may be purchased upon
exercise of the warrants
- if applicable, the designation and terms of the securities with which the
warrants are issued and the number of warrants issued with each other
security
- if applicable, the date on and after which the warrants and the related
other securities issued therewith will be separately transferable
- the number of shares of common stock or preferred stock or the principal
amount of debt securities that may be purchased upon exercise of a
warrant and the price at which the securities may be purchased upon
exercise, which may be payable in cash, securities or other property
- the date on which the right to exercise the warrants begins and the date
on which the right expires
- if applicable, the minimum or maximum amount of warrants that may be
exercised at any one time
- whether the warrants represented by the warrant certificates or
securities that may be issued upon exercise of the warrants will be
issued in registered or bearer form
- information with respect to book-entry procedures, if any
- a discussion of any material United States federal income tax
considerations
- the anti-dilution provisions of the warrants, if any
- any applicable redemption or call provisions
- any other terms of the warrants, including terms, procedures and
limitations relating to the exchange and exercise of the warrants.
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<PAGE> 60
PLAN OF DISTRIBUTION
We may sell securities directly to one or more purchasers or to or through
underwriters, dealers or agents or through a combination of any such methods of
sale. Our prospectus supplement will set forth the terms of the offering,
including the name or names of any underwriters, the purchase price and proceeds
to us from such sale, any underwriting discounts and other items constituting
underwriters' compensation, the initial public offering price and any discounts
or concessions allowed, reallowed or paid to dealers, and any securities
exchanges on which the securities may be listed.
We may distribute our securities from time to time in one or more
transactions at fixed or variable prices, at prices equal or related to
prevailing market prices or at negotiated prices. We also may directly offer and
sell securities in exchange for, among other things, our outstanding debt or
equity securities.
If underwriters are used in the sale, the underwriters will acquire the
securities for their own account. The underwriters may resell the securities
periodically in one or more transactions, including negotiated transactions, at
a fixed public offering price or at varying prices determined at the time of
sale. Securities may be offered to the public through underwriting syndicates
represented by one or more managing underwriters or directly by one or more
underwriters without a syndicate. Unless otherwise set forth in the prospectus
supplement, the obligations of the underwriters to purchase securities will be
subject to certain conditions precedent, and the underwriters will be obligated
to purchase all securities offered if any are purchased. Any initial public
offering price and any discounts or concessions allowed, reallowed or paid to
dealers may be changed from time to time. We may grant underwriters who
participate in the distribution of securities an option to purchase additional
securities to cover any over-allotments in connection with the distribution.
If a dealer is used in an offering of securities, we may sell the
securities to the dealer, as principal. The dealer may then resell the
securities to the public at varying prices to be determined by the dealer at the
time of sale.
Commissions payable by us to any agent involved in the offer or sale of
securities, or the method by which such commissions may be determined, will be
set forth in a prospectus supplement. Unless otherwise indicated in the
prospectus supplement, the agent will be acting on a best efforts basis.
In connection with the sale of any securities, underwriters or agents may
be deemed to have received compensation from us in the form of underwriting
discounts or commissions and may also receive commissions from purchasers of
such securities for whom they may act as agents. Underwriters may sell any
securities to or through dealers. These dealers may receive compensation in the
form of discounts, concessions or commissions from the underwriters or
commissions from the purchasers for whom they may act as agent, or both.
Dealers and agents named in a prospectus supplement may be deemed to be
underwriters of the securities within the meaning of the Securities Act of 1933.
Underwriters, dealers and agents may be entitled under agreements entered into
with us to indemnification by us against certain civil liabilities, including
liabilities under the Securities Act, or to contribution with respect to
payments that the underwriters, dealers or agents may be required to make.
Underwriters, dealers and agents may be customers of, engage in transactions
with, or perform services for us in the ordinary course of business.
If so indicated in the prospectus supplement, we may authorize
underwriters, dealers or agents to solicit offers by certain specified
institutions to purchase securities pursuant to delayed delivery contracts
providing for payment and delivery on a specified date in the future. There may
be limitations on the minimum amount which may be purchased by an institution or
on the portion of the aggregate principal amount of the particular securities
that may be sold pursuant to these arrangements. The obligations of any
purchaser under a delayed delivery contract will not be subject to any
conditions except that any related sale of offered securities to underwriters
shall have occurred and the purchase by an institution of the securities covered
by its delayed delivery contract shall not at the time of delivery be prohibited
under the laws of any jurisdiction in the United States to which that
institution is subject. Underwriters will not have any responsibility in respect
of the validity of any delayed delivery contract or the performance by us or any
institution thereunder.
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Except for our common stock, none of the securities when first issued will
have an established trading market. Any underwriters, dealers or agents to or
through whom the securities are sold for public offering may make a market in
the securities. However, generally they will not be obligated to make a market
and may discontinue any market making at any time without notice. If the
securities are traded after their initial issuance, they may trade at a discount
from their initial public offering price, depending on general market
conditions, the market for similar securities, our performance and other
factors. Other than with respect to our common stock, which is currently traded
on the New York Stock Exchange, there can be no assurance that an active public
market for the securities will develop or be maintained.
LEGAL MATTERS
The validity of the securities will be passed upon for us by Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., New Orleans, Louisiana. Certain
legal matters relating to offerings of securities may be passed upon for the
underwriters, dealers or agents, if any, by Winthrop, Stimson, Putnam & Roberts,
New York, New York.
EXPERTS
The consolidated financial statements and related financial statement
schedules of CenturyTel, Inc. and subsidiaries as of December 31, 1999 and 1998,
and for each of the three years in the three-year period ended December 31,
1999, included in our Annual Report on Form 10-K for the fiscal year ended
December 31, 1999, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
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PRINCIPAL OFFICES OF CENTURYTEL, INC.
100 Century Park Drive
Monroe, Louisiana 71203
United States of America
TRUSTEE
REGIONS BANK
60 Commerce Street
Montgomery, Alabama 36104
United States of America
LUXEMBOURG PAYING AGENT AND
STOCK EXCHANGE LISTING AGENT
FOR THE SERIES H NOTES
CREDIT AGRICOLE INDOSUEZ LUXEMBOURG
39, Allee Scheffer
L-2520 Luxembourg
LEGAL ADVISORS
<TABLE>
<S> <C>
To CenturyTel, Inc. To the Underwriters
as to United States Law: as to United States Law:
JONES, WALKER, WAECHTER, POITEVENT, WINTHROP, STIMSON,
CARRERE & DENEGRE, L.L.P. PUTNAM & ROBERTS
201 St. Charles Avenue One Battery Park Plaza
New Orleans, Louisiana 70170 New York, New York 10004-1490
United States of America United States of America
</TABLE>
AUDITORS TO CENTURYTEL, INC.
KPMG LLP
333 Texas Street, Suite 1900
Shreveport, Louisiana 71101
United States of America
<PAGE> 63
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$
[CENTURYTEL LOGO]
$ % SENIOR NOTES, SERIES H, DUE
$ % REMARKETABLE SENIOR NOTES, SERIES I, DUE
$ % REMARKETABLE SENIOR NOTES, SERIES J, DUE
------------------------------
PROSPECTUS SUPPLEMENT
OCTOBER , 2000
------------------------------
Joint Book-Running Managers
BANC OF AMERICA SECURITIES LLC
SALOMON SMITH BARNEY
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