Also Seeking $450 Million Senior Secured Term Loan
BROOMFIELD, Colo., November 12, 2004 – Level 3 Communications, Inc. (Nasdaq: LVLT) today announced that it plans to offer $200 million aggregate principal amount of a new series of its Convertible Senior Notes due 2011 (the “Notes”) in a private offering to “qualified institutional buyers” as defined in Rule 144A under the Securities Act of 1933. The Notes will be convertible into the company’s common stock at a conversion price to be determined. Level 3 intends to grant the initial purchasers a 30-day option to purchase up to $40 million aggregate principal amount of additional Notes.
Level 3 intends to use a portion of the net proceeds from the offering of the Notes, together with borrowings under a $450 million senior secured term loan that is expected to be entered into by its subsidiary, Level 3 Financing, Inc., to fund the purchase of certain debt securities due 2008 pursuant to Level 3’s currently pending debt tender offers.
In addition, Level 3 Communications, Inc. intends to use a portion of the net proceeds from the offering of the Notes to enter into bond hedge and warrant transactions with respect to its common stock. The transactions are designed to enable the company to limit dilution from the conversion of the Notes. The transactions as currently contemplated would effectively increase the anticipated conversion premium to approximately 70% to 100%. The cost of the bond hedge and warrant transactions is estimated to be between approximately 14% and 19% of the gross proceeds from the offering of the Notes.
The company expects to use remaining net proceeds from the offering of the Notes to repurchase, repay or refinance existing debt, from time to time, and for general corporate purposes, including working capital, capital expenditures and acquisitions.
The Notes will not be registered under the Securities Act of 1933, as amended or any state securities laws and, unless so registered, may not be offered or sold except pursuant to an applicable exemption from the registration requirements of the Securities Act of 1933 and applicable state securities laws.
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.
