IP-based communications solutions provider Level 3 Communications has increased the size of its existing senior secured credit facility through the creation of a new US$2bn term loan.
Via its subsidiary Level 3 Financing, the company will amend and…
IP-based communications solutions provider Level 3 Communications has increased the size of its existing senior secured credit facility through the creation of a new US$2bn term loan.
Via its subsidiary Level 3 Financing, the company will amend and restate its existing senior secured credit facility to include a new tranche B 2022 term loan, due 2022, which carries an interest of 350 bps over Libor and priced at 99.25.
Proceeds from the loan will be used to finance the cash portion of its US$5.7bn merger with TW Telecom, which it agreed to acquire in June, as well as to refinance some of TW’s US$1.6bn debt.
Merrill Lynch, Pierce, Fenner & Smith, Citigroup, Morgan Stanley, Barclays, Goldman Sachs, Jefferies Finance and JP Morgan acted as joint lead arrangers and joint bookrunning managers for the loan.
Level 3 expects to close the financing when it finalises TW’s acquisition, which anticipates doing by year-end 2014. The deal is still subject to the execution of definitive documents and customary closing conditions with shareholders are due to vote on the deal on 28 October.
As of 30 June 2014, Level 3 had approximately US$8.4bn of consolidated debt outstanding, representing a leverage of 4.7 times. Pro forma for the TW acquisition, the company is estimated to have around US$11.5bn of debt. However, it will benefit from an expected increase in EBITDA growth, free cash flow generation and cost synergies. As such, ratings agency Fitch expects the company’s leverage on a stand-alone basis to be about 4.5x by the end of 2014.
Level 3 owns networks and data centres in more than 60 countries and has significant global subsea networks. It provides local, national and global communications services to enterprise, government and carrier customers.
