Lumen, creditors, banks happy with new transaction support agreement

By Devika Patel

Knoxville, Tenn., Feb. 7 – Lumen Technologies, Inc. expects that its new agreement with creditors will provide management with enough flexibility and time to execute on its business turnaround.

The company announced an amended transaction support agreement with a broadened group of creditors in January, which, when completed, will address approximately $9 billion of debt maturities, including more than 77% of debt maturing through 2027.

“As we announced in late January, we entered into an agreement with a significant number of our creditors that clears the path for our turnaround,” president and chief executive officer Kate Johnson said on the company’s fourth quarter and year ended Dec. 31 earnings conference call on Tuesday.

“The deal extends most of our debt maturities to 2029 and beyond, injects $1.325 billion of net new financing into the business and gives us access to a new approximately $1 billion revolving credit facility to support our operations,” she said.

The company’s banks and creditors support this agreement, expected to close this quarter, and management expects the agreement will provide sufficient runway to turn the company around.

“The amended TSA has support from a broadened group of creditors and, when finalized, will address approximately $9 billion of outstanding indebtedness, including more than 77% of debt maturing through 2027,” executive vice president and chief financial officer Chris Stansbury added on the call.

“This agreement and the broad support for it speaks to the confidence our banks and creditors have in our plan and provides Lumen ample runway to execute on our business turnaround.

“In short, our capital structure is no longer a limiting factor in our transformation.

“We expect to complete the transactions contemplated by the TSA in the first quarter,” Stansbury said.

Free cash flow was $50 million for the fourth quarter 2023, compared to $126 million for the fourth quarter 2022.

Free cash flow was negative $878 million for the full year 2023, compared to $2.26 billion for the full year 2022.

The company generated $1.099 billion of adjusted EBITDA for the fourth quarter 2023, compared to $1.393 billion for the fourth quarter 2022.

Lumen generated $4.628 billion of adjusted EBITDA for the full year 2023, compared to $6.858 billion for the full year 2022.

Cash and cash equivalents were $2,234,000,000 as of Dec. 31, 2023, compared to $1,251,000,000 as of Dec. 31, 2022.

Long-term debt was $19,831,000,000 as of Dec. 31, 2023, compared to $20,418,000,000 as of Dec. 31, 2022.

Current maturities of long-term debt were $157 million as of Dec. 31, 2023, compared to $154 million as of Dec. 31, 2022.

Lumen is a Denver-based telecommunications company.

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