Level 3 downsizes; Katanga eyes $265.3 million bridge; ECO2 settles deal; Music Copyright plans offering

By Kenneth Lim

Boston, Dec. 24 - Level 3 Communications, Inc. downsized a convertible note placement to $373.8 million, with plans to use the proceeds to refinance existing debt.

Katanga Mining Ltd. plans to place $265.3 million of convertibles as a bridge loan to fund its mining operations.

ECO2 Plastics, Inc. settled a $3.4 million convertible bridge loan to raise working capital.

Music Copyright Solutions plc plans to raise up to £1.25 million through a convertible placement with an existing shareholder.

Level 3 closes offering

Level 3 Communications completed a $373.8 million direct placement of 15% convertible senior notes due Jan. 15, 2013. The deal priced Nov. 17 for $400 million and was revised to include an additional investor on Nov. 18.

The notes will initially be convertible into common shares at $1.80 per share. Level 3 common stock (Nasdaq: LVLT) closed unchanged at $0.67 on Wednesday.

Proceeds will be used to repurchase Level 3's 2.875% convertible senior notes due 2010, its 6% convertible subordinated notes due 2010 and its 6% convertible subordinated notes due 2009.

Level 3 is a Broomfield, Colo.-based provider of internet protocol services, broadband transport and infrastructure services, collocation services and voice-over-internet-protocol services.

Katanga to raise $265.3 million

Katanga Mining plans to raise $265.3 million in a two-year mandatorily convertible loan facility.

The placement comprises $100 million of new borrowings and an amendment and restatement of an existing $150 million facility, which amounts to about $165.3 million when interest is accrued.

The loan will bear interest at Libor plus 300 bps and is initially convertible into common shares at $0.2783 per share. Katanga common stock (TSX: KAT) closed at C$0.355 on Wednesday, up by 1.43% or $0.005. The company's market capitalization was C$73.16 million.

The financing is expected to meet the company's requirements through the first quarter of 2009. Katanga will need to raise an additional $250 million during the first six months of 2009, and it will mandatorily convert the new loan once that financing is obtained.

Proceeds will be used for the ongoing rehabilitation, redevelopment and operation of the company's mines and related assets held by its Democratic Republic of Congo joint-venture subsidiaries and for general working capital purposes.

Katanga is a Toronto-based mineral exploration company.

ECO2 gets $3.4 million

ECO2 Plastics wrapped up a $3.4 million placement of three-year, 8% convertible secured promissory notes.

The convertibles have an initial conversion price of $0.015 per share. Investors also received warrants for about 113.33 million common shares, exercisable at $0.015 until April 14, 2015.

ECO2 common stock (OTCBB: EOPI) closed at $0.021 on Wednesday, lower by 16% or $0.004.

Proceeds will be used for working capital.

ECO2, based in San Francisco, has developed a system that cleans post-consumer plastics, without the use of water, at cost savings versus traditional methods within a closed-loop system.

The investors included Peninsula Packaging, LLC, which took about $1.5 million of the notes; Trident Capital, which took about $1.45 million; ECO2 director Tom Hutton, who took $54,258; and ECO2 chief executive Rodney Rougelot. Trident also has a representative on ECO2's board of directors.

Music Copyright offers convertibles

Music Copyright Solutions will place £1.25 million of convertibles with existing shareholder Polymer Holdings Ltd.

The convertibles will be sold in three tranches, with the initial two to be drawn down immediately and the third slated to be drawn down in March 2009.

The first tranche comprises £275,000 of 0% notes that are initially convertible at 1.5p per share within one year.

The second tranche comprises £475,000 of Libor plus 250 bps notes convertible within two years at 6p per share. The coupon on the second tranche is capped at 5%.

The final tranche will be worth £500,000 and consists of Libor plus 250 bps notes convertible within three years at 12p per share. The coupon on the third tranche is also capped at 5%.

Music Copyright common stock (LSE: MCS) rose 22.22% or 0.5p to close at 2.75p on Wednesday. The company has a market capitalization of £1.65 million.

Proceeds will be used to finance recoupable advances payable on new administration contracts in the film and TV music arena, as well as for some limited working capital purposes.

Music Copyright is a London-based music publishing company.

Polymer Holdings held about 7% of Music Copyright's shares before the deal.

"I am delighted that Polymer Holdings recognize the potential of MCS' business model in collecting film and TV royalties," Music Copyright chief executive Justin Sherry said in a statement.

"Since my appointment as CEO, I have reduced our overheads considerably without reducing the efficiency of the business to register, collect and account for royalties. Furthermore, we have moved into the secondary rights collection for cross border transmissions, blank tape and other levies.

"The economic downturn actually presents opportunity for MCS to gain clients as companies look to reduce their overhead and outsource their rights collection. The majority of our income comes via the various performing rights societies around the world. These societies have long term agreements with broadcasters so the level of income remains steady. MCS has limited exposure to mechanical rights income generated through the sale of records which has been hard hit by free downloading of music."

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