Level 3 Communications, the US IP-based voice and internet services provider, has raised US$550m through a new seven-year term loan B III.
The loan, which was completed on 10 November, is an expansion to the company’s existing senior secured credit…
Level 3 Communications, the US IP-based voice and internet services provider, has raised US$550m through a new seven-year term loan B III.
The loan, which was completed on 10 November, is an expansion to the company’s existing senior secured credit facility and pays 425bp over Libor, with a Libor floor of 1.5%. The loan priced at 95% of par.
Proceeds will be used to refinance 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.
Following the refinancing, the balance under Level 3’s senior secured credit facility will be US$2.6bn. The company has approximately US$8.55bn of total debt, including the US$1.2bn bond that was used to help fund the acquisition of IP solutions provider Global Crossing.
The US$274m convertible bond is Level 3’s only debt maturing in 2012, with approximately US$272m of maturities in 2013. Ratings agency Fitch said that the company’s next significant maturity tower is in 2014 when approximately US$2.5bn of debt is due.
In its ratings review, Fitch stated: “The company does not maintain a revolver and relies on capital market access to replenish cash reserves, which when combined with the lack of positive free cash flow generation limits the company’s financial flexibility in Fitch’s opinion.”
However, Fitch adds that the acquisition of Global Crossing has had a significant de-leveraging affect, from around 8.4 times to 6.3 times for the 12 months to 30 September 2011.
BoA Merrill Lynch and Citigroup, which also provided US$1.75bn of committed bridge financing for the Global Crossing deal, were the joint lead arrangers and joint bookrunning managers on the transaction, with Credit Suisse, Deutsche Bank, Morgan Stanley and Wells Fargo as joint bookrunning managers.
Level 3’s counsel was Willkie Farr & Gallagher. The counsel to joint lead arrangers was Cravath Swaine & Moore LLP.
