CenturyLink, Inc. (NYSE:CTL) Files An 8-K Entry into a Material Definitive Agreement

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CenturyLink, Inc. (NYSE:CTL) Files An 8-K Entry into a Material Definitive Agreement

Item1.01. Entry into a Material Definitive Agreement.

A. New Senior Secured Credit Facilities.
In connection with the pending acquisition (the Acquisition) by
CenturyLink, Inc. (the Company) of Level 3 Communications, Inc.
(Level 3), on June19, 2017, CenturyLink Escrow, LLC (the Escrow
Borrower), a wholly-owned subsidiary of the Company, entered into
a credit agreement (the Credit Agreement) with, among others,
Bank of America, N.A., as administrative agent and collateral
agent, providing for $9.945 billion in senior secured credit
facilities (the New Senior Secured Credit Facilities), consisting
of a $2.0 billion revolving credit facility (the New Revolving
Credit Facility) and $7.945 billion of term loan facilities (the
New Term Loan Facilities). The New Term Loan Facilities consist
of a $1.575 billion Term Loan A tranche, a $0.370 billion Term
Loan A-1 tranche and a $6.0 billion Term Loan B tranche.

The Company intends to use the proceeds of borrowings under the
New Senior Secured Credit Facilities, together with other
available funds, to finance the cash portion of the consideration
payable in connection with the Acquisition, to refinance existing
indebtedness (as discussed further in Section B below), and for
other general corporate purposes. The New Revolving Credit
Facility and borrowings under the Term Loan A and A-1 facilities
will mature five years after the closing of the Acquisition.
Borrowings under the Term Loan B facility will mature on
January31, 2025.

The proceeds of the borrowings under the Term Loan B facility,
net of an original issue discount of 0.5%, have been deposited in
an escrow account and will be held in escrow prior to the closing
of the Acquisition. Once all applicable conditions with respect
to the Acquisition and the Credit Agreement have been met, the
Company (i)will assume the Escrow Borrowers rights and
obligations as the borrower under the New Senior Secured Credit
Facilities, (ii)will borrow funds under the Term Loan A and A-1
facilities and (iii)will have the ability to borrow funds under
the New Revolving Credit Facility, in each case on the terms and
conditions specified in the Credit Agreement.

Loans under the Term Loan A and A-1 facilities and the New
Revolving Credit Facility will bear interest at a rate equal to,
at the Companys option, the London Interbank Offered Rate (LIBOR)
or the alternative base rate (each as defined in the Credit
Agreement) plus an applicable margin between 2.25% to 3.00%per
annum for LIBOR loans and 1.25% to 2.00%per annum for alternative
base rate loans, depending on the Companys then current total
leverage ratio. Prior to consummation of the Acquisition,
borrowings under the Term Loan B facility will bear interest at
1.375%per annum through July18, 2017 and 2.75%per annum
thereafter. Upon consummation of the Acquisition, borrowings
under the Term Loan B facility will bear interest at LIBOR plus
2.75%per annum. After the closing of the Acquisition, loans under
the Term Loan A and A-1 facilities will require equal quarterly
amortization payments of 1.25% of the original principal amount
thereof, and borrowings under the Term Loan B facility will
require equal quarterly amortization payments of 0.25% of the
original principal amount thereof per annum, in each case with
all remaining principal due at maturity. The New Term Loan
Facilities also require mandatory prepayments in connection with
certain asset sales and debt issuances and out of excess cash
flow, among other things, and subject in each case to certain
significant exceptions. The Company will be permitted to make
voluntary prepayments of the loans under the Senior Secured
Credit Facilities without premium or penalty, subject to certain
exceptions, including with respect to certain specified
prepayments of Term Loan B debt prior to the first anniversary of
the closing of the Acquisition.


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Upon consummation of the Acquisition, all of the Companys
obligations under the New Senior Secured Credit Facilities are
expected to be guaranteed by certain of the Companys
subsidiaries. The guarantees by certain of those guarantors are
expected to be secured by a first priority security interest in
substantially all assets directly owned by them, subject to
certain exceptions and limitations.

As discussed further in Section B below, the New Revolving Credit
Facility is designed to replace the Companys current revolving
credit facility. A portion of the New Revolving Credit Facility
in an amount not to exceed $100 million will be available for
swingline loans and a portion in an amount not to exceed $400
million will be available for the issuance of letters of credit.
Upon consummation of the Acquisition, the Company will be
obligated to pay certain specified commitment and letter of
credit fees under the New Revolving Credit Facility.

With respect to the Term Loan A and A-1 facilities and the New
Revolving Credit Facility, the Credit Agreement requires the
Company to maintain (i)a maximum total leverage ratio of not more
than 5.00 to 1.00 between the closing date of the Acquisition and
the second anniversary thereof and 4.75 to 1.00 thereafter and
(ii)a minimum consolidated interest coverage ratio of at least
2.00 to 1.00, with such ratios being determined and calculated in
the manner described in the Credit Agreement.

The New Senior Secured Credit Facilities contain various
representations and warranties, and affirmative and negative
covenants that apply, in certain circumstances, before and after
the closing of the Acquisition. Such covenants include, among
other things and subject to certain significant exceptions,
restrictions on the Companys ability to declare or pay dividends,
repurchase stock, repay certain other indebtedness, create liens,
incur additional indebtedness, make investments, engage in
transactions with its affiliates, dispose of assets and merge or
consolidate with any other person. The Credit Agreement also
includes various events of default, including, among others,
breaches of representations, warranties and covenants in the
Credit Agreement and defaults of obligations under certain other
debt. The occurrence of any of those events of default would
permit the lenders to, among other things, declare the principal,
accrued interest and other obligations of the Company to be
immediately due and payable.

The Company will be permitted under the Credit Agreement to
request certain incremental term loan borrowings, subject to the
satisfaction of various conditions and to certain quantitative
and other limitations.

The Company continues to expect to close the Acquisition by the
end of the third quarter of 2017, subject to various closing
conditions. The obligations of the lenders to extend credit under
the Term Loan A and A-1 facilities and the New Revolving Credit
Facility are subject to the completion of the Acquisition and
various other conditions.

The Company is obligated to pay customary fees to the lenders and
agents under the Credit Agreement with respect to arranging and
maintaining the New Senior Secured Credit Facilities. Certain of
the lenders and the agents (or their respective subsidiaries or
affiliates)


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under the Credit Agreement have in the past provided, and may in
the future provide, investment banking, underwriting, lending,
commercial banking, trust or other advisory services to the
Company or its subsidiaries. These parties have received, and may
in the future receive, customary compensation from the Company or
its subsidiaries for such services.

The foregoing description of the New Senior Secured Credit
Facilities is not intended to be complete and is qualified in its
entirety by reference to the Credit Agreement, a copy of which is
attached hereto as Exhibit 10.1, and is incorporated herein by
reference.

B. Refinancing and Termination of Current Debt
Facilities
. Upon the closing of the Acquisition and
the Companys receipt of funding under the New Term Loan
Facilities, the Credit Agreement contemplates the refinancing of
certain outstanding consolidated indebtedness of the Company,
including the repayment and termination of the credit agreement
dated April6, 2012, as amended, among the Company, the lenders
named therein and Wells Fargo Bank, National Association, as
administrative agent, and the credit agreement dated as of
April18, 2012, as amended, between the Company and CoBank, ACB,
as administrative agent and lender thereunder.

C. Other Information. In reviewing the
Credit Agreement included as an exhibit to this report, please
note that it is included to provide you with information
regarding the terms of the New Senior Secured Credit Facilities
and is not intended to provide any other factual or disclosure
information about the Company or the other parties thereto. The
Credit Agreement contains representations and warranties by one
or more of the parties thereto. These representations and
warranties have been made solely for the benefit of the other
parties to the Credit Agreement and:

should not in any instance be treated as categorical
statements of fact, but rather as a way of allocating the
risk to one of the parties if those statements prove to be
inaccurate;

may have been qualified by disclosures that were made to the
other parties in connection with the negotiation of the
agreement, which disclosures are not necessarily reflected in
the agreement filed herewith;

may apply standards of materiality in a way that is different
from what may be viewed as material to you or other
investors; and

were made only as of the date of the agreement or such other
date or dates as may be specified therein and are subject to
more recent developments.

Accordingly, these representations and warranties may not
describe the actual state of affairs as of the date they were
made or at any other time.

Subject to limited expectations, all of Level 3s current
indebtedness is expected to remain outstanding immediately
following the closing of the Acquisition. For additional
information on the Acquisition, the Company and its anticipated
financial position following the Acquisition, see the Companys
other filings with the U.S. Securities and Exchange Commission
(the SEC), including those referred to below.


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This communication does not constitute an offer to sell or the
solicitation of an offer to buy any securities, nor shall there
be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful.

Item2.03. Creation of a Direct Financial Obligation or an
Obligation under an Off-Balance Sheet Arrangement of a
Registrant.

The information set forth under Section A of Item1.01 above is
incorporated by reference into this Item2.03.

Forward Looking Statements

Except for the historical and factual information contained
herein, the matters set forth in this report, including
statements regarding the expected timing, terms and benefits of
the proposed transactions referenced above and other statements
identified by words such as will, estimates, anticipates,
believes, expects, projects, plans, intends, may, should, could,
seeks and similar expressions, are forward-looking statements
within the meaning of the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These forward-looking
statements are subject to a number of risks, uncertainties and
assumptions, many of which are beyond our control. These
forward-looking statements, and the assumptions upon which they
are based, (i)are not guarantees of future results, (ii)are
inherently speculative and (iii)are subject to a number of risks
and uncertainties. Actual events and results may differ
materially from those anticipated, estimated, projected or
implied in those statements if one or more of these risks or
uncertainties materialize, or if underlying assumptions prove
incorrect. Factors that could affect actual results include but
are not limited to: the ability of the parties to timely and
successfully receive the required approvals for the Level 3
combination from regulatory agencies free of conditions
materially adverse to the parties; the risk that the conditions
to obtaining the proceeds of the Term Loan A and A-1 facilities
and New Revolving Credit Facility discussed above and releasing
from escrow the proceeds of the Term Loan B facility are not met
timely or at all; uncertainties as to the timing of the
combination or its financing; the possibility that the
anticipated benefits from the proposed transaction cannot be
fully realized or may take longer to realize than expected; the
possibility that costs, difficulties or disruptions related to
the integration of Level 3s operations with those of CenturyLink
will be greater than expected; the ability of the combined
company to retain and hire key personnel; the effects of
competition from a wide variety of competitive providers,
including lower demand for CenturyLinks legacy offerings; the
effects of new, emerging or competing technologies, including
those that could make the combined companys products less
desirable or obsolete; the effects of ongoing changes in the
regulation of the communications industry, including the outcome
of regulatory or judicial proceedings relating to intercarrier
compensation, interconnection obligations, access charges,
universal service, broadband deployment, data protection and net
neutrality; adverse changes in CenturyLinks or the combined
companys access to credit markets on favorable terms, whether
caused by changes in its financial position, lower debt credit
ratings, unstable markets or otherwise; the combined companys
ability to effectively adjust to changes in the communications
industry, and changes in the composition of its markets and
product mix; possible changes in the demand for, or pricing of,
the combined companys products and services, including the
combined companys ability to effectively


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respond to increased demand for high-speed broadband service;
changes in the operating plans, capital allocation plans or
corporate strategies of the combined company, whether based on
changes in market conditions, changes in the cash flows or
financial position of the combined company, or otherwise; the
combined companys ability to successfully maintain the quality
and profitability of its existing product and service offerings
and to introduce new offerings on a timely and cost-effective
basis; the adverse impact on the combined companys business and
network from possible equipment failures, service outages,
security breaches or similar events impacting its network; the
combined companys ability to maintain favorable relations with
key business partners, suppliers, vendors, landlords and
financial institutions; the ability of the combined company to
utilize net operating losses in amounts projected; changes in the
future cash requirements of the combined company; and other risk
factors and cautionary statements as detailed from time to time
in each of CenturyLinks and Level 3s reports filed with the SEC.
Due to these risks and uncertainties, there can be no assurance
that the proposed combination, the financing arrangements
described above or any other transaction described above will in
fact be completed in the manner described or at all. You should
be aware that new factors may emerge from time to time and it is
not possible for us to identify all such factors nor can we
predict the impact of each such factor on the proposed
combination or the combined company. You should not place undue
reliance on these forward-looking statements, which speak only as
of the date of this communication. Unless legally required,
CenturyLink and Level 3 undertake no obligation and each
expressly disclaim any such obligation, to update publicly any
forward-looking statements, whether as a result of new
information, future events, changed events or otherwise.

Additional Information

In connection with the proposed combination, CenturyLink
filed a registration statement on Form S-4 with the SEC
(Registration Statement No.333-215121) which was declared
effective by the SEC on February13, 2017. CenturyLink and Level 3
have filed a joint proxy statement/prospectus and will file other
relevant documents concerning the proposed transaction with the
SEC. The definitive joint proxy statement/prospectus, dated as of
February13, 2017, contains important information about
CenturyLink, Level 3, the proposed combination and related
matters. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE
DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND ANY OTHER
RELEVANT DOCUMENTS FILED WITH THE SEC IN CONNECTION WITH THE
PROPOSED COMBINATION OR INCORPORATED BY REFERENCE IN THE
DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS CAREFULLY BECAUSE
THEY CONTAIN IMPORTANT INFORMATION. Investors and security
holders may obtain the definitive joint proxy
statement/prospectus and the filings that are incorporated by
reference in the definitive joint proxy statement/prospectus, as
well as other filings containing information about CenturyLink
and Level 3, free of charge, at the website maintained by the SEC
at www.sec.gov. Investors and security holders may also obtain
these documents free of charge by directing a request to
CenturyLink, 100 CenturyLink Drive, Monroe, Louisiana 71203,
Attention: Corporate Secretary, or to Level 3, 1025 Eldorado
Boulevard, Broomfield, Colorado 80021, Attention: Investor
Relations.


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Item9.01. Financial Statements and Exhibits.

(d) The exhibit to this current report on Form 8-K is listed in
the Exhibit Index, which appears at the end of, and is
incorporated by reference into, this report.


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CENTURYLINK, INC Exhibit
EX-10.1 2 d414013dex101.htm EX-10.1 EX-10.1 Exhibit 10.1 EXECUTION VERSION       Published CUSIP Numbers: Deal: 15670BAA0 Term B Facility: 15670BAB8 CREDIT AGREEMENT,…
To view the full exhibit click here
About CenturyLink, Inc. (NYSE:CTL)

CenturyLink, Inc. is a United States-based integrated communications company, which is engaged in providing a range of communications services to its residential and business customers. The Company operates through two segments: Business, which includes provision of strategic, legacy and data integration products and services to small, medium and enterprise business, wholesale and governmental customers, including other communication providers, and Consumer, which includes provision of strategic and legacy products and services to residential customers. The Business segment includes strategic products and services, such as Ethernet, colocation, hosting and broadband; legacy services, such as local and long-distance voice, and data integration offerings, which include sale of telecommunications equipment located on customers’ premises. The Consumer segment includes strategic products and services, such as broadband and video, and legacy services, such as local and long-distance voice.

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