Level 3 plans $3 billion new financing for tw telecom acquisition

By Sara Rosenberg

New York, June 16 – Level 3 Communications Inc. has received a commitment for $3 billion of financing to help fund its purchase of tw telecom, company officials said in a conference call on Monday.

The transaction is deleveraging with pro forma net debt to adjusted EBITDA of 4.5 times after synergies.

The company went on to say that it is firmly committed to the lower end of its target leverage ratio of 3 times to 5 times.

Under the agreement, tw telecom is being bought for $10 cash and 0.7 shares of Level 3 common stock for each share of tw telecom common stock that is owned at closing. The stock-and-cash transaction is valued at $40.86 per share, or about $7.3 billion, including the assumption of roughly $1.6 billion of net debt as of March 31.

For the 12 months ended March 31, the combined company had pro forma revenue of $7.9 billion and adjusted EBITDA of $2.2 billion before synergies and $2.4 billion including expected run-rate expense synergies.

Closing is expected in the fourth quarter, subject to regulatory approvals, stockholder approvals at both companies and customary conditions.

Citi and BofA Merrill Lynch acted as financial advisors to Level 3.

Level 3 is a Broomfield, Colo.-based fiber-based communications services. tw telecom is a Littleton, Colo.-based provider of managed data, internet and voice networking solutions to businesses and large organizations.

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