Cogent isn't the only one seeing a window of opportunity in the debt markets. Level 3 Communications (NYSE:LVLT, news, filings) today announced its intention to raise $300M in senior notes due 2019 in a private offering. In parallel, the company reaffirmed its guidance for the fourth quarter of 2010, i.e. that free cash flow will be positive and that revenue and EBITDA will rise sequentially.
Unlike with Cogent, Level 3's purpose is clear enough. They want to refinance the 5.25% convertible notes that come due later this year, of which $196M is still outstanding. And another $100M on the books won't hurt any either, as it will bring their unrestricted cash and equivalents back up above $600M. And if they find eager buyers, I expect they will expand that $300M if possible. After all, there's another $300M or so in debt maturing next year.
I am curious what interest rate they will get on these bonds. Have the debt markets thawed up a bit more? Or is it just refinancing season for Level 3, since they seem to make such moves in January rather often. 2011's revenue growth will be closely watched, but I expect Level 3 to start the year with a conservative bias with respect to whatever guidance they give for Q1. It's hard to prove something if you over-promise, and you could hear that echoed in Crowe's presentation last week.
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