US telco and ISP Level 3 Communications has completed its US$3bn acquisition of IP solutions provider Global Crossing.
Level 3 said that it will now be transferring its stock listing from the Nasdaq to the NYSE. It will also conduct a 1-for-15 reverse…
US telco and ISP Level 3 Communications has completed its US$3bn acquisition of IP solutions provider Global Crossing.
Level 3 said that it will now be transferring its stock listing from the Nasdaq to the NYSE. It will also conduct a 1-for-15 reverse stock split, a move which has already been approved by shareholders.
The combined business had pro forma 2010 revenues of US$6.2bn and expects total synergies of up to US$300m of run-rate EBITDA.
The transaction will reduce its financial leverage from 6.8x net debt to adjusted pro forma EBITDA to 4.4x, the company said.
As a part of the deal, Level 3 will be redeeming and discharging US$1.35bn of Global Crossing’s outstanding debt. US$430m of senior secured notes due 2014 from Global Crossing’s UK subsidiary will be redeemed on 3 November.
Level 3 CFO Sunit Patel said: “As a result of potential revenue growth and synergies, over the longer term, we expect to have significant Free Cash Flow available for investment in high-return opportunities, including U.S. and international network expansions.”
Under the terms of the agreement originally announced in April, Global Crossing shareholders are receiving 16 Level 3 shares for each of their Global Crossing shares.
The deal was valued at US$3bn, including US$1.1bn of Global Crossing’s debt.
Level 3’s advisers for the deal were BoA Merrill Lynch, Citigroup and Morgan Stanley, while Rothschild also offered a fairness opinion.
Level 3’s legal adviser was Wilkie Farr & Gallagher.
Global Crossing’s financial adviser was Goldman Sachs. Its legal adviser was Latham & Watkins.
In order to secure the acquisition, Level 3 received US$1.75bn of committed financing from BoA Merrill Lynch and Citigroup, which included a US$1.1bn bridge loan.
Level 3 subsequently made a US$1.2bn bond offering in order to refinance this bridge loan. The proceeds from this offering had been placed in an escrow account until the completion of the deal.
Bookrunners for the bond offering were BoA Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank and Morgan Stanley.
