Level 3 Communications has increased the size of its latest senior bond issue from US$600m to US$1bn and priced the notes at par.
The Colorado-based ISP and telco said the eight-year notes will carry a 5.375% coupon and that it had agreed to sell them…
Level 3 Communications has increased the size of its latest senior bond issue from US$600m to US$1bn and priced the notes at par.
The Colorado-based ISP and telco said the eight-year notes will carry a 5.375% coupon and that it had agreed to sell them to qualified institutional buyers through a private offering.
It will use the proceeds to part-fund the cash portion of its US$5.7bn merger with TW Telecom, and to refinance some of TW’s US$1.6bn debt pile.
The ISP announced the TW deal in mid-June and revealed that it had secured a US$3bn bridge commitment from unnamed banks. The new bond offering will reduce that facility.
Once the bond has closed it will place the proceeds from the issuance into an escrow account until the closing conditions of the TW acquisition are satisfied. If the deal is not closed before June 2015, Level 3 will be obliged to redeem the new US$1bn notes. Level 3 expects the merger to close no later than January 2015.
Level 3 is offering TW shareholders US$10 in cash and 0.7 of Level 3 common stock for each of their shares in TW, which equates to US$40.86 per share – a 12.4% premium on TW’s last closing price of US$36.34.
There is no collar on the deal and Level 3 said TW Telecom shareholders will end up with approximately 29% of the combined business.
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.
TW offers managed services, including business ethernet, converged and IP VPN solutions for enterprises throughout the US and across the globe.
