By Susanna Moon
Chicago, Nov. 10 – Level 3 Communications, Inc. and Level 3 Financing, Inc. are soliciting consents to amend a number of note series in connection with a proposed acquisition of the company by CenturyLink, Inc.
Level 3 is asking to amend the notes to avoid making a change-of-control offer under the note terms, because the occurrence of a change of control and a ratings decline related to the buyout would require the company to make an offer to repurchase the notes at 101% of par plus accrued interest, according to a company announcement.
The company is asking for holder consents to amend Level 3's 5¾% senior notes due 2022, Level 3 Financing's 6 1/8% senior notes due 2021, 5 3/8% senior notes due 2022, 5 5/8% senior notes due 2023, 5 1/8% senior notes due 2023, 5 3/8% senior notes due 2024, 5 3/8% senior notes due 2025 and 5¼% senior notes due 2026.
The consent solicitation will remain open until 5 p.m. ET on Nov. 21. Holders must be of record as of 5 p.m. ET on Nov. 9.
The table below describes the credit ratings in effect for each series of notes on the issue date, the ratings required to trigger a decline, the ratings currently in effect and the number of notches by which the notes would need to be downgraded to qualify as a rating decline under the notes indenture.
Under the notes indenture, a rating decline will occur for the 2024 notes only if both Moody's Investors Service and S&P Global Ratings issue the downgrades; for the 2026 notes, only if Moody's, S&P and Fitch Ratings all issue the downgrades; and for the other series, if either Moody's or S&P issues the downgrade.
The 2026 notes also refer to a Fitch rating, which was BB on the issue date and is currently BB. The rating decline trigger for Fitch is BB-.
The notes indenture for each series defines rating decline to include any rating decline for some previously issued notes.
If the proposed amendments are adopted, the CenturyLink acquisition would not constitute a change of control under the notes indenture, a change-of-control triggering event would not occur as a result of the CenturyLink acquisition regardless of a rating decline and, accordingly, the company would not be required to make a change-of-control offer as a result of the CenturyLink acquisition.
If the proposal fails to go through, however, the company will only be required to make a change-of-control offer for a note series if there is a corresponding rating decline under the notes indenture for that series.
The cash consent payment will be $2.50 per $1,000 principal amount.
The solicitation agents are BofA Merrill Lynch at (888 292-0070 or 980 388-4813) and Morgan Stanley at (800 624-1808 or 212 761-1057). The information agent is Global Bondholder Services Corp. (866 794-2200, 212 430-3774, contact@gbsc-usa.com or gbsc-usa.com/Level3/).
Level 3 is a Broomfield, Colo.-based provider of communications services.
Ratings chart
| Issue date | Series | Issued rating | Rating decline | Current rating | Required notches
|
| trigger rating | from current rating
|
| for rating decline
|
| Moody's S&P | Moody's S&P | Moody's S&P | Moody's S&P
|
| Nov. 14, 2013 | 6 | 1/8% notes due 2021 | B3 | CCC | Caa1 | CCC- | B1 | B++ | 3 | 5
|
| Aug. 12, 2014 | 5 | 3/8% notes due 2022 | B3 | B | Caa1 | B- | B1 | B++ | 3 | 2
|
| Dec. 1, 2014 | 5¾% notes due 2022 | Caa1 | B | Caa2 | B- | B2 | B+ | 3 | 2
|
| Jan. 29, 2015 | 5 | 5/8% notes due 2023 | B3 | B | Caa1 | B- | B1 | B++ | 3 | 2
|
| April 28, 2015 | 5 | 1/8% notes due 2023 | B3 | B | Caa1 | B- | B1 | B++ | 3 | 2
|
| April 28, 2015 | 5 | 3/8% notes due 2025 | B3 | B | Caa1 | B- | B1 | B++ | 3 | 2
|
| Nov. 13, 2015 | 5 | 3/8% notes due 2024 | B1 | B | B2 | B- | B1 | B++ | 1 | 2
|
| March 22, 2016 | 5¼% notes due 2026 | B1 | B | B2 | B- | B1 | B++ | 1 | 2
|
© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere.
For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.
