New Issue: Level 3 sells upsized $320 million convertible at 5.25%, up 20%

Nashville, Nov. 18 - Level 3 Communications Inc. sold an upsized $320 million of seven-year convertible notes at par to yield 5.25% with a 20% initial conversion premium via bookrunner Merrill Lynch & Co.

The Rule 144A deal, upped from $200 million, priced at the middle of guidance for a 5.0% to 5.5% coupon and 17.5% to 22.5% initial conversion premium.

The Broomfield, Colo.-based internet access provider plans to use a portion of proceeds, along with borrowings under a $730 million senior secured term loan, to fund the tender offers for $1.1 billion of debt. Also, Level 3 used 17.8% of proceeds to enter into bond hedge and stock warrant transactions to limit dilution from the conversion of the notes by boosting the conversion premium to 80.7%.

Issuer:	Level 3 Communications Inc.
Issue:	Convertible senior notes
Bookrunner:	Merrill Lynch & Co.
Amount:	$320 million, up from $200 million
Greenshoe:	$25 million, down from $40 million
Maturity:	November 2011
Coupon:	5.25%
Price:	Par
Yield:	5.25%
Conversion premium:	20%
Conversion price:	$3.984
Conversion ratio:	251.004
Contingent conversion:	No
Contingent payment:	No
Dividend protection:	Yes
Takeover protection:	Yes
Call:	Non-callable for 4 years
Price talk:	5.0-5.5%, up 17.5-22.5%
Pricing date:	Nov. 17, after market close
Settlement date:	Dec. 2
Distribution:	Rule 144A

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