Level 3 to price $500 million two-part note offering on Friday

By Paul A. Harris

St. Louis, Feb. 8 - Level 3 Financing, Inc. plans to price $500 million of senior notes (expected ratings B2/CCC-) in two tranches on Friday, according to an informed source.

The Broomfield, Colo., communications and information services company is offering eight-year floating-rate notes with two years of call protection. Price talk on the floating-rate notes is the Libor plus 375 basis points area.

Level 3 is also offering 10-year fixed-rate notes with five years of call protection. Price talk on the fixed-rate notes is 8¾% to 8 7/8%.

Tranche sizes remain to be determined.

Pricing is expected on Friday morning.

Merrill Lynch & Co. and Credit Suisse are joint bookrunners for the Rule 144A and Regulation S notes. Citigroup, Morgan Stanley and Wachovia Securities are co-managers.

The notes are guaranteed by Level 3 Communications Inc. and Level 3 Communications LLC and will have covenants substantially similar to Level 3 Financing's existing 9¼% notes.

Proceeds will be used to finance construction, installation, acquisition, lease, development or improvement of any assets to be used in the company's communications business, including the purchase price of completed and future acquisitions.

Level 3 is concurrently in the market with a $1 billion credit facility.

Level 3 Financing is a subsidiary of Level 3 Communications Inc.

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