Level 3 Communications,Inc. (NYSE:LVLT) Files An 8-K Entry into a Material Definitive Agreement
Item 1.01. Entry into a Material Definitive Agreement
On February22, 2017, Level 3 Financing,Inc. (Level 3 Financing),
a Delaware corporation and a wholly owned subsidiary of Level 3
Communications,Inc. (the Company or Level 3), entered into a
twelfth amendment agreement (the Twelfth Amendment Agreement) to
the Existing Credit Agreement (as defined below) to incur
$4,610,500,000 in aggregate borrowings under the Existing Credit
Agreement through a new Tranche B 2024 Term Loan (the Tranche B
2024 Term Loan). The net proceeds of the Tranche B 2024 Term Loan
were used to pre-pay Level 3 Financings $815,000,000 Tranche
B-III 2019 Term Loan, $1,795,500,000 Tranche B 2020 Term Loan and
$2,000,000,000 Tranche B-II 2022 Term Loan under the Existing
Credit Agreement (as defined below). As a result of the
incurrence of the Tranche B 2024 Term Loan and the pre-payment of
the Tranche B-III 2019 Term Loan, Tranche B 2020 Term Loan and
Tranche B-II 2022 Term Loan, the total aggregate principal amount
of the loans under the Restated Credit Agreement (as defined
below) remains $4,610,500,000. The Tranche B 2024 Term Loan
matures on February22, 2024.The Tranche B 2024 Term Loan was
priced to lenders at par, with the payment to the lenders of an
upfront 25 basis point fee at closing.
The Tranche B 2024 Term Loan has an interest rate, in the case of
any ABR Borrowing (as defined in the Restated Credit Agreement,
as defined below), equal to (a)the greater of (i)the Prime Rate
(as defined in the Restated Credit Agreement) in effect on such
day, (ii)the Federal Funds Effective Rate (as defined in the
Restated Credit Agreement) in effect on such day plus of 1% and
(iii)the sum of (A)the LIBO Rate (as defined in the Restated
Credit Agreement) for a one month interest period on such day
(which LIBO Rate will in no event be less than 0%) plus (B)1.0%,
plus (b)1.25% per annum. In the case of any Eurodollar Borrowing
(as defined in the Restated Credit Agreement), the Tranche B 2024
Term Loan bears interest at the LIBO Rate for the interest period
for such borrowing (which LIBO Rate will in no event be less than
0%) plus 2.25% per annum.
In connection with the Twelfth Amendment Agreement,Level 3
Financing agreed that certain prepayments or repricings of the
Tranche B 2024 Term Loan from the closing date of the Twelfth
Amendment Agreement until the date that is the later of
(a)August22, 2017 and (b)the date that is the earlier of (i)the
six-month anniversary of the closing of the previously disclosed
proposed acquisition of the Company by CenturyLink,Inc., a
Louisiana corporation (CenturyLink), to that certain Agreement
and Plan of Merger, dated as of October31, 2016 (the CenturyLink
Merger Agreement), by and among, inter alia, the Company and
CenturyLink and (ii)the termination of the CenturyLink Merger
Agreement in accordance with its terms, will, in each case, be
subject to a 1.00% premium.
The Company, as guarantor, Level 3 Financing, as borrower,
Merrill Lynch Capital Corporation, as Administrative Agent and
Collateral Agent, and certain other agents and certain lenders
are party to that certain Credit Agreement, dated as of March13,
2007, as amended and restated by that certain Tenth Amendment
Agreement, dated as of May8, 2015, and as further amended by the
Eleventh Amendment Agreement, dated as of November22, 2016 (the
Existing Credit Agreement). The Existing Credit Agreement as
further amended and restated by the Twelfth Amendment Agreement
is referred to as the Restated Credit Agreement.
Level 3 Financings obligations under the Tranche B 2024 Term Loan
are, subject to certain exceptions, secured by certain of the
assets of (i)the Company and (ii)certain of the Companys material
domestic subsidiaries which are engaged in the telecommunications
business and which were able to grant a lien on their assets
without regulatory approval. The Company and certain of its
subsidiaries have also guaranteed the obligations of Level 3
Financing under the Tranche B 2024 Term Loan. Upon obtaining
regulatory approvals, Level 3 Communications, LLC, an indirect,
wholly owned subsidiary of the Company (Level 3 LLC), and its
material domestic subsidiaries will guarantee and, subject to
certain exceptions, pledge certain of their assets to secure the
obligations under the Tranche B 2024 Term Loan.
The Twelfth Amendment Agreement effected certain amendments to
the Restated Credit Agreement to, among other things, increase
basket capacity under the restrictive covenants set forth therein
and
increase certain dollar thresholds in respect of potential
liabilities prior to the occurrence of an event of default. The
terms of the Restated Credit Agreement are otherwise
substantially the same as those in the Existing Credit
Agreement.
The foregoing description of the Twelfth Amendment Agreement
does not purport to be complete and is qualified in its
entirety by reference to the Twelfth Amendment Agreement and
the accompanying Restated Credit Agreement, a copy of which is
attached as Exhibit10.1 to this Current Report on Form8-K and
is incorporated herein by reference.
In addition to the Twelfth Amendment Agreement, in connection
with the incurrence of the Tranche B 2024 Term Loan and the
lending of the proceeds thereof by Level 3 Financing to Level 3
LLC, Level 3 Financing and Level 3 LLC entered into an Amended
and Restated Loan Proceeds Note with an initial principal
amount of $9,221,000,000, a copy of which is attached as
Exhibit10.2 to this Current Report on Form8-K and is
incorporated herein by reference. In connection with the
pre-payment of the Tranche B-III 2019 Term Loan, Tranche B 2020
and Tranche B-II 2022 Term Loan and the corresponding partial
pre-payment by Level 3 LLC of the Exhibit10.2 loan proceeds
note, Level 3 Financing and Level 3 LLC entered into a
subsequent Amended and Restated Loan Proceeds Note with an
initial principal amount of $4,610,500,000, a copy of which is
attached as Exhibit10.3 to this Current Report on Form8-K and
is incorporated herein by reference.
In accordance with the CenturyLink Merger Agreement,
CenturyLink consented to the Twelfth Amendment Agreement and
the transactions contemplated thereby.
Forward Looking Statements
Except for the historical and factual information contained
herein, the matters set forth in this communication, including
statements regarding the expected timing and benefits of the
proposed transaction, such as efficiencies, cost savings,
enhanced revenues, growth potential, market profile and
financial strength, and the competitive ability and position of
the combined company, 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 combination
from regulatory agencies free of conditions materially adverse
to the parties and from their respective shareholders; 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 Level3s 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 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 U.S. Securities and Exchange Commission (the SEC). Due to
these risks and uncertainties, there can be no assurance that
the proposed combination 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 Level3 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 FormS-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.
CenturyLink and Level 3 began mailing the definitive joint
proxy statement/prospectus to their respective security holders
on or about February13, 2017. 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.
Participants in the Solicitation
CenturyLink, Level 3, their respective directors and executive
officers and other persons may be deemed to be participants in
the solicitation of proxies from CenturyLink and Level 3
security holders in respect of the proposed transaction.
Information regarding the interests of persons who may, under
the rulesof the SEC, be deemed participants in the solicitation
of CenturyLink and Level 3 stockholders in connection with the
proposed transaction is set forth in the definitive joint proxy
statement/prospectus, which was filed with the SEC on
February13, 2017. More detailed information regarding
CenturyLinks directors and executive officers is available in
its proxy statement filed with the SEC by CenturyLink on
April5, 2016, and information regarding Level 3s directors and
executive officers is available in its proxy statement filed
with the SEC by Level 3 on April7, 2016. These documents can be
obtained free of charge from the sources indicated above. This
communication is not intended to and does not constitute an
offer to sell or the solicitation of 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 prior to
registration or qualification under the securities laws of any
such jurisdiction. No offer of securities shall be made except
by means of a prospectus meeting the requirements of Section10
of the Securities Act of 1933, as amended.
Item 2.03. Creation of a Direct Financial Obligation or
an Obligation Under an Off-Balance Sheet Arrangement of the
Registrant
The information contained in Item 1.01 of this Current Report
on Form8-K is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits
(d)List of Exhibits
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10.1 |
Twelfth Amendment Agreement to the Amended and Restated |
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10.2 |
Amended and Restated Loan Proceeds Note, dated as of |
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10.3 |
Amended and Restated Loan Proceeds Note, dated as of |
About Level 3 Communications, Inc. (NYSE:LVLT)
Level 3 Communications, Inc. is a provider of a range of integrated communications services. The Company’s operating segments include North America, EMEA and Latin America. The North America includes operations in Atlanta, Georgia; Littleton, Colorado; Miami, Florida; Montreal, Canada; New York, New York; Phoenix, Arizona; Pittsburgh, Pennsylvania; Southfield, Michigan, and Tulsa, Oklahoma. The Europe segment includes operations in Basingstoke, England; Crewe, England; Dublin, Ireland; London, England; Naarden, The Netherlands, and Paris, France. The Latin America includes operations in Bogota, Colombia; Buenos Aires, Argentina; Caracas, Venezuela; Lima, Peru; Quito, Ecuador; Santiago, Chile, and Sao Paulo, Brazil. The communications services include transport and fiber services, colocation and data center services, Internet Protocol (IP) and data services, security services and voice services. Its wholesale voice services include voice termination and toll free service. Level 3 Communications, Inc. (NYSE:LVLT) Recent Trading Information
Level 3 Communications, Inc. (NYSE:LVLT) closed its last trading session down -0.07 at 57.54 with 2,668,662 shares trading hands.
