Fitch ups Level 3 outlook to positive

Fitch Ratings said it revised the outlook on Level 3 Communications Inc. and Level 3 Financing Inc. to positive from stable and affirmed the CCC issuer default rating, Level 3's CCC- senior unsecured debt and CC subordinated debt ratings and Level 3 Financing's B senior secured term loan and senior unsecured debt ratings.

The positive outlook reflects Fitch's belief that the improved operating leverage from the recent acquisitions, particularly the announced acquisition agreement of TelCove Inc, will allow the company to materially improve financial metrics as the integration of each is completed. The agency predicted that the company's debt to EBITDA ratio will fall below 8x by the end of 2007.

The ratings of Level 3 continue to be constrained by the company's high leverage, large amount of negative free cash flow, large cash maturities starting in 2010, as well as the execution risk associated with the integration of its various acquisitions and a changing revenue mix, the agency said.

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