Level 3 Communications is seeking to refinance a US$2bn senior secured term loan.
Subsidiary Level 3 Financing has started marketing the proposed refinancing of its Tranche B 2022 Term Loan, the NYSE-listed parent company said in a statement. No further…
Level 3 Communications is seeking to refinance a US$2bn senior secured term loan.
Subsidiary Level 3 Financing has started marketing the proposed refinancing of its Tranche B 2022 Term Loan, the NYSE-listed parent company said in a statement. No further details were given.
Level 3 added the Tranche B 2022 loan to an existing senior secured credit facility last October. Merrill Lynch, Pierce, Fenner & Smith, Citigroup, Morgan Stanley, Barclays, Goldman Sachs, Jefferies Finance and JP Morgan acted as joint lead arrangers and bookrunning managers for the loan, which has an interest rate of 350 bps over Libor. Proceeds were used to finance the cash portion of the company’s US$5.7bn merger with TW Telecom and to refinance some of TW’s US$1.6bn in debt.
Fitch Ratings said it would maintain its BB+/RR1 issue rating on the proposed senior secured term loan, noting that the terms, including the security and guarantee structure, are expected to be similar to those of the Tranche B 2022 loan. The new loan is expected to have a reduced interest rate.
Explaining its rationale for the rating, Fitch said Level 3, which had about US$11.5bn of consolidated debt outstanding on 31 March, remains committed to maintaining its 3x to 5x leverage target. The company’s enlarged scale and ability to generate meaningful free cash flow as a result of its TW takeover, which created a B2B operator with a total enterprise value of US$25bn, was another key rating driver.
“The TW acquisition increases Level 3’s scale and focus on high-margin enterprise account revenues while increasing the company’s overall competitive position and ability to capture incremental market share,” Fitch said.
The agency said it believes Level 3’s liquidity position is adequate given the rating and that its positive free cash flow generation improves its financial flexibility.
Earlier this week, Level 3 completed a US$1.5m private placement: US$700m of 5.125% senior notes due 2023 and US$800m of 5.375% senior notes due 2025. It will use the proceeds to redeem outstanding senior notes due 2019.
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.