IP-based communications solutions provider Level 3 Communications has returned to the syndicated loan markets after just over a month’s hiatus with a proposed US$1.2bn refinancing.
The company, via subsidiary Level 3 Financing, is seeking to replace…
IP-based communications solutions provider Level 3 Communications has returned to the syndicated loan markets after just over a month’s hiatus with a proposed US$1.2bn refinancing.
The company, via subsidiary Level 3 Financing, is seeking to replace its US$1.2bn senior secured tranche B-II term loan due 2019 with a new tranche B-II loan due 2020.
The terms of the new credit facility, including the security and guarantee structure, are expected to be substantially similar to the existing 2019 loan. The main difference alongside the extended maturity date is a reduction in the interest expense.
Level 3 last tapped the capital markets in mid-August with a similar refinancing transaction. In that deal it replaced its US$815m term loan B due 2019 with a new term loan B-III facility that was largely the same but had a lower margin of 300bp over Libor. Level 3 said that this would save it US$10m of cash interest expense per year.
Indeed, the company’s debt strategy over the past couple of years has been to make frequent trips to the capital markets in order to secure better terms on its debt. The 2019 tranche B-II loan was raised in September 2012 and was itself a refinancing of two loans that were secured in August 2011, a US$650m tranche B-II term loan and US$550m tranche B-III term loan.
Overall, Level 3 has approximately US$8.5bn of outstanding debt, of which around US$2.6bn is in loans. The company, which does not maintain a revolver, has approximately US$596m of cash on its balance sheet and a leverage of 5.2 times net debt to adjusted EBITDA.
This latest financing is expected to price on 27 September and close on 4 October. Relationship banks BofA Merrill Lynch and Citigroup are believed to be the mandated lead arrangers on the facility.
