Level 3 $150 million six-year convertibles talked at 3.25%-3.75%, up 17.5%-22.5%

By Kenneth Lim

Boston, May 30 - Level 3 Communications Inc. plans to offer $150 million of six-year convertible senior notes with price talk for a coupon of 3.25% to 3.75% and an initial conversion premium of 17.5% to 22.5%, market sources said.

Syndicate sources declined to comment on price talk, but confirmed that pricing is expected the week of June 5.

There is an over-allotment option for a further $22.5 million.

Level 3 will concurrently offer 125 million shares in an off-the-shelf offering, with an over-allotment option of a further 18.75 million shares.

Merrill Lynch is the bookrunner of the registered convertible and stock deals.

The convertibles will be non-callable for the first four years, market sources said.

Level 3 plans to use the net proceeds to redeem or repurchase its 9.125% senior notes due 2008 and 10.5% senior discount notes due 2008. The remaining proceeds will be used to buy back, pay out or refinance other existing debts.

Level 3 is a Broomfield, Colo.-based internet backbone services provider.

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