LEVEL 3 COMMUNICATIONS GIVES NOTICE OF FORCED CONVERSION OF CLASS R CONVERTIBLE STOCK INTO LEVEL 3 COMMON STOCK
Approximately 2.5 Million Shares of Level 3 Common Stock Will Be Issued
OMAHA, NEBRASKA, May 5, 1998 – Level 3 Communications, Inc. today announced that the Company has sent the attached letter to its stockholders.
May 4, 1998
Dear Class R Stockholder:
The Board of Directors of Level 3 Communications, Inc. has determined to force conversion of all shares of the Company's Class R Convertible Stock into Common Stock of the Company, effective May 15, 1998. The Class R Stock will be converted into Level 3 Common Stock in accordance with the formula set forth in the Certificate of Incorporation of the Company. The formula provides for a conversion ratio equal to $25, divided by the average of the midpoints between the high and low sales prices for Level 3 Common Stock on each of the fifteen trading days during the period beginning April 9 and ending April 30. That average for that period was $64.28125. Accordingly, each holder of Class R Stock will receive .3889 of a share of Level 3 Common Stock for each share of Class R Stock held. Each holder will receive cash in lieu of any fractional shares resulting from the conversion. The conversion will be recorded on the books and records of the Company as of May 15, 1998. On that date, all of your rights with respect to Class R Stock will terminate, and be converted solely into the right to receive Level 3 Common Stock.
As promptly as practicable after May 15, Norwest Shareowner Services, the transfer agent for the Company, will mail you a single certificate for the Level 3 Common Stock issued in the conversion. You should receive a check for the cash payment in lieu of any fractional shares resulting from the forced conversion before June 30, 1998.
If you have any questions about the conversion, please call Julie Stangl, our Vice President, Investor Relations, at 402-943-1310. Very truly yours, James Q. Crowe President Chief Executive Officer Background: Issuance of Class R Stock Prior to the March 31, 1998 separation of Level 3 Communications and the construction subsidiary of Peter Kiewit Sons', Inc. (PKS), PKS had outstanding Class C Common Stock, which tracked the performance of its construction subsidiary. These shares were owned by employees of that subsidiary and were not publicly traded. PKS's Certificate of Incorporation gave stockholders the right to exchange their Class C Stock for PKS's Class D Stock under a set conversion formula. That right was eliminated as a result of the separation of Level 3 and the Kiewit construction subsidiary, when the Class D Stock became the Common Stock of Level 3.
To replace the conversion right, Class C stockholders received shares of a new Level 3 Class R Stock, which was convertible into shares of Level 3 Common Stock in accordance with terms ratified by stockholders in a vote held in late 1997. On March 18, 1998 the PKS Board of Directors approved in principle a plan to force conversion of all 6,538,231 shares of Class R Stock outstanding. Due to certain provisions of the Class R Stock, conversion could not be forced prior to May 1998.
About Level 3 Communications
Level 3 Communications, Inc. (NASDAQ: LVLT), an international communications company, operates one of the largest Internet backbones in the world, connecting 180 markets in 18 countries. The company serves a broad range of wholesale, enterprise and content customers with a comprehensive suite of services including: Internet Protocol (IP) services, broadband transport and infrastructure services, colocation services, voice and voice over IP services, content delivery and media distribution services. These services provide the building blocks to enable Level 3’s customers to meet their growing demands for advanced communications solutions. The company’s Web address is www.Level3.com.
"Level 3 Communications,” "Level 3," the red 3D brackets and the Level 3 Communications logo are registered service marks of Level 3 Communications, LLC in the United States and/or other countries. Level 3 services are provided by wholly owned subsidiaries of Level 3 Communications, Inc. Any other service, product or company names recited herein may be trademarks or service marks of their respective owners.
Forward-Looking Statement
Some of the statements that we make in this press release are forward looking in nature. These statements are based on management’s current expectations or beliefs. These forward looking statements are not a guarantee of performance and are subject to a number of uncertainties and other factors, many of which are outside our control, which could cause actual events to differ materially from those expressed or implied by the statements. The most important factors that could prevent us from achieving our stated goals include, but are not limited to our ability to: successfully integrate acquisitions; increase the volume of traffic on our network; defend our intellectual property and proprietary rights; develop new products and services that meet customer demands and generate acceptable margins; successfully complete commercial testing of new technology and information systems to support new products and services; attract and retain qualified management and other personnel; and meet all of the terms and conditions of our debt obligations. Additional information concerning these and other important factors can be found within Level 3’s filings with the Securities and Exchange Commission. Statements in this press release should be evaluated in light of these important factors. Level 3 is under no obligation to, and expressly disclaims any such obligation to, update or alter its forward-looking statements, whether as a result of new information, future events, or otherwise.
