Level 3 Seeks to Raise $300M, Reaffirms Guidance

January 11th, 2011 by · 5 Comments

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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Categories: Financials · Internet Backbones

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5 Comments So Far


  • carlk says:

    “Revenue and ebitda will rise sequentially” without saying how much Lazarus will rise. Rise Lazarus, rise, and fix your “flash” based website which seems to be a mess this morning, while this news never made it there at least at this snapshot in time.

    No acquisition yak for “use of proceeds” this time.

    http://www.level3.com/index.cfm?pageID=251

  • A_Little_Bird says:

    The Netflix deal has put Level 3 on the radar of several other companies noteably one based in Bentonville, AR. If the trial goes well, look out…

  • Anonymous says:

    Nice reduction in rate, 12% paper. A far cry from financing charges of just a few moons ago plus no dilution. Smells like something has changed.

  • bance says:

    Enron or other,

    Why is LVLT borrowing at the holding Co. taken as better news than when using Level 3 financing? Can they use level 3 financing anymore or are they tapped out?

  • toddforthree says:

    they are basically tapped out at the finance level until ebitda grows again so they had to go to the holding company level.

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