Level 3 Communications has continued where it left off in late 2011, tapping the capital markets for further financing. The IP-based communications solutions firm has raised US$900m in 8.625% senior notes, due 2020.
The notes, which were sold in a…
Level 3 Communications has continued where it left off in late 2011, tapping the capital markets for further financing. The IP-based communications solutions firm has raised US$900m in 8.625% senior notes, due 2020.
The notes, which were sold in a private placement, priced at par and are guaranteed on an unsecured basis by the parent company. Level 3 had initially planned to sell US$350m of its senior notes, but the size of the offering was subsequently increased following strong investor demand.
As with previous offerings, Citigroup and BoA Merrill Lynch were bookrunning managers on the financing.
The baulk of the proceeds from the offering will be used to redeem all of Level 3 Financing’s US$807m outstanding 9.25% senior notes, due 2014. The remaining US$93m will constitute purchase money indebtedness under the existing indentures of the company and will be used solely to fund the costs of any of its telecommunications / internet services assets, including the cash purchase price of any past, pending or future acquisitions.
Since it completed its US$3bn acquisition of IP solutions provider Global Crossing in September 2011, Level 3 has been a frequent visitor to the debt markets as it seeks to refinance a large portion of its US$8.55bn of total debt and push out the maturities.
The company moved quickly to replace the US$1.1bn bridge loan that was provided by BoA Merrill Lynch and Citigroup as part of the financing for the Global Crossing deal, replacing it with US$1.2bn of senior notes.
In mid-November, Level 3 netted US$550m through a new seven-year term loan B III. This debt was used to replace the company’s an existing US$280m loan B under Level 3’s senior secured credit facility and US$274m of the company’s 3.5% convertible senior notes maturing in 2012.
The convertible bond is Level 3’s only debt maturing in 2012, while it has approximately US$272m of maturities in 2013. The company’s next significant maturity tower is in 2014 when approximately US$2.5bn of debt is due, hence this latest bond offering.
