Exhibit 99.1
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Level 3 Communications, Inc.
1025 Eldorado Boulevard
Broomfield, CO 80021
www.Level3.com
NEWS RELEASE
FOR IMMEDIATE RELEASE
Level 3 Contacts:
Media: Josh Howell Investors: Robin Grey
720/888-2517 720/888-2518
Level 3 Completes Amendment to
Senior Secured Credit Facility
Improves Company's Ability to Pursue Acquisition Opportunities
And Modifies Covenants For Additional Flexibility
BROOMFIELD, Colo., August 23, 2002 - Level 3 Communications, Inc. (Nasdaq:LVLT)
today announced that it has amended the terms of its existing Senior Secured
Credit Facility.
The Credit Facility was originally signed in September 1999 and increased to
$1.775 billion in March 2001. The Credit Facility previously consisted of $1.125
billion in term loans and a $650 million undrawn revolving credit facility. The
Credit Facility contained certain financial covenants, including two
revenue-based covenants.
Modifications to the Credit Facility, per the terms of the amendment, include
the following:
o Increased ability for the company to pursue acquisitions for cash
consideration;
o Removal of the two revenue-based financial covenants; and
o Modification of an Adjusted EBITDA-based covenant in accordance with the
company's current business plan.
In return for these modifications, the company has agreed to the following:
o Reduction of the $650 million undrawn revolving credit facility by $500
million to $150 million, with restrictions on availability;
o Maintenance of a minimum cash balance, generally equal to $525 million; and
o Increase of 0.5% per year to the cost of borrowing.
"Our bank agreement previously contained certain restrictions that might have
inhibited our ability to capitalize fully on consolidation opportunities," said
Sureel Choksi, CFO of Level 3. "While this amendment was not necessary, it
provides Level 3 with additional operating and financial flexibility, while
preserving our cash position and fully funded business plan. We are particularly
pleased that we were able to achieve this outcome and that we have the support
of our bank group in pursuing industry consolidation opportunities."
Financial Covenants The Minimum Telecom Revenue covenant and the Total Debt to
Telecom Revenue covenant from the original credit facility were removed.
Additionally, the remaining covenants are now calculated on a consolidated
basis, excluding the company's toll road operations. Certain modifications were
also made to the Total Leverage Ratio covenant (Total Debt to Adjusted EBITDA)
in accordance with the company's current business plan. The covenant will now be
tested on a twelve month trailing basis beginning on June 30, 2004, with a
maximum allowable level of 11.5x, versus the original credit facility, which had
a maximum allowable level of 6.0x beginning on December 31, 2004. Certain other
covenants have also been modified.
Liquidity
As part of the amendment, the company agreed to reduce the amount of its undrawn
revolving facility from $650 million to $150 million. Of the $150 million, $50
million is available immediately for letters of credit and the remaining $100
million becomes available at the end of one year, subject to the company
satisfying certain financial criteria. As previously stated, the company is and
remains fully funded through free cash flow breakeven, excluding the $650
million revolving facility.
The company has agreed to maintain minimum consolidated cash balances generally
equal to $525 million throughout the life of the Credit Facility. The company
had $1.55 billion in cash at the end of the second quarter; pro forma for the
$500 million in junior convertible subordinated notes it sold in July 2002. No
pay down of outstanding loan amounts was required under the amendment.
Other
Other changes made to the Credit Facility include, but are not limited to,
increasing the amount of collateral pledged to the senior secured lenders,
certain limitations on the company's ability to repurchase debt for cash and the
ability to incur certain types of other indebtedness and liens.
The amended and restated credit facility will be filed with the SEC on a Current
Report on Form 8-K.
About Level 3 Communications
Level 3 (Nasdaq:LVLT) is an international communications and information
services company offering a wide selection of services including IP services,
broadband transport, colocation services and the industry's first Softswitch
based services. Its Web address is www.level3.com.
The company offers information services through its wholly-owned subsidiaries
(i)Structure and Software Spectrum. (i)Structure is an Application
Infrastructure Provider that provides managed IT infrastructure services and
enables businesses to outsource IT operations. Its Web address is
www.i-structure.com.
Software Spectrum is a global business-to-business software services provider
specializing in enterprise software management, licensing and support. Its web
address is www.softwarespectrum.com.
Forward Looking Statement
Some of the statements made by Level 3 in this press release are forward-looking
in nature. Actual results may differ materially from those projected in
forward-looking statements. Level 3 believes that its primary risk factors
include, but are not limited to: changes in the overall economy relating to,
among other things, the September 11 attacks and subsequent events, substantial
capital requirements; development of effective internal processes and systems;
the ability to attract and retain high quality employees; technology; the number
and size of competitors in its markets; law and regulatory policy; and the mix
of products and services offered in the company's target markets. Additional
information concerning these and other important factors can be found within
Level 3's filings with the Securities and Exchange Commission. Statements in
this release should be evaluated in light of these important factors.