Level 3 Reaffirms, Seeks to Sell Another $300M

July 14th, 2011 by · 3 Comments

The debt markets continue to be favorable, and so Level 3 Communications (NYSE:LVLT, news, filings) is looking to add to its cash supply in advance of its purchase of glbc.  They announced today a proposed private offering of another $300M in 8.125% senior notes due 2019, adding to the $600M they raised a month ago.  These would also go into escrow, waiting for the time when they would be used to refinance Global Crossing's debt.  If, like last month, they raise $100M more than originally offered, they'll have raised $1B toward the purchase - much of what they need.

To help that debt sale along, Level 3 also reaffirmed the guidance it has offered for 2011.  That guidance was never heavy on the numbers, but features strengthening sequential Core Network Services revenue growth in Q2, low double digit Adjusted EBITDA growth for the full year, and roughly breakeven free cash flow over the last three quarters.  The company has been perking up lately, showing signs of sustained growth after several rather difficult years.  The scale and synergies expected from the Global Crossing deal have helped energize investors, as their stock price has surged.

Categories: Financials · Internet Backbones · Mergers and Acquisitions

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3 Comments So Far


  • Carlk says:

    The Capital Markets are very comfortable accepting these combined entities will be a good AMALGAMATION once done. It’s good to make bondholders happy in the big scheme of Wall Street deals. Regulators take copious notes.

    New Issue-Level 3 Escrow adds $600 mln in notes 07/14 12:41 PM

    July 14 (Reuters) – Level 3 Escrow Inc, a subsidiary of
    Level 3 Communications Inc (LVLT:$2.30,00$-0.14,00-5.74%) , on Thursday added $600
    million to an existing issue in the 144a private placement
    market, said IFR, a Thomson Reuters service.
    The size of the deal was increased from an originally
    planned $300 million.
    Citigroup, Bank of America, Deutsche Bank, Morgan Stanley
    and Credit Suisse were the joint bookrunning managers for the
    sale.
    BORROWER: LEVEL 3 ESCROW INC
    AMT $600 MLN COUPON 8.125 PCT MATURITY 7/1/2019
    TYPE SR NTS ISS PRICE 98.545 FIRST PAY 1/1/2012
    MOODY’S Caa1 YIELD 8.375 PCT SETTLEMENT 7/28/2011
    S&P TRIPLE-C SPREAD 599 BPS PAY FREQ SEMI-ANNUAL
    FITCH N/A MORE THAN TREAS NON-CALLABLE 4 YRS*
    * MAKE-WHOLE CALL 50 BPS

  • Anthony says:

    I would like to understand why GC´s share price went from 25 us/share when deal was done to almost 42 one week ago
    what do you believe are the reasons for that?
    thanks

  • Carlk says:

    Actually, GC’s share price has risen more dramatically as I have pointed out beginning at $14.80 here:

    http://finance.yahoo.com/q/hp?s=GLBC&a=03&b=10&c=2011&d=03&e=11&f=2011&g=d

    Have you noticed these two companies are reporting their Q2 numbers on the exact same day, with the consolidator, Level 3, having their conference call one hour after Global’s?

    The reason for the rise remains the anticipation and expectation of this combined chemical concoction as part of The Amalgamation.

    One could speculate that, Global is rising on a percentage basis a great deal more in advance of the merger because, revenues and ebitda from their enterprise on (3)’s backbone, will now be worth a great deal more.

    For example, right now both market caps combined are trading at approx. 1X P/S of the two companies revenues together. As a whole, GC will be bringing approx. 30 percent less aggregate revenues than (3) once melded.

    In the big scheme of a long term, sustainable, cost effective, quality internet, this Amalgamation is important for all global citizens in the form of future jobs, and especially taxes which will be garnered in the U.S. as well as elsewhere in the form of taxes; payroll, corporate, enhanced and/or new value creating internet based industries, capital gains.

    Before I get spammed about the short term disruption of old line monopolies who had been poorly serving their citizens up until today without addressing how they have prevented this change from accelerating for longer than necessary, notice I said “long term.”

    It is long term planning resulting from vision that incorporates proper planning and strategy from which regulators and their agencies must be constantly focusing upon in serving their citizens’ best interests.

    When you think about India, and their strength in numbers for adapting to technology over the past thirty years, you will understand vision and foresight.

    When you think about the U.S., and their financial weakness as a result of overspending without proper incentives during the past fifty years, you will understand the lack of foresight and vision.

    Let’s hope our U.S. regulating bodies get it right this time when pondering the value of this Amalgamation towards the promise of the internet moving ahead, because nothing will be as important as supplying the right capacity, at the right time, for those who need it at a price that is economically viable, at the same time reasonable for all citizens.

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