Exhibit 99.1
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1025 Eldorado Boulevard
Broomfield, Colorado 80021
www.Level3.com
NEWS RELEASE
Level 3 contacts:
Media: Josh Howell Investors: Robin Grey
720-888-2517 720-888-2518
Arthur Hodges Karen King
720-888-6184 720-888-2503
Longleaf Partners Funds, Berkshire Hathaway, Legg Mason Convert 9% Notes Into
Level 3 Common Stock
Level 3's Long-Term Debt Reduced by $457 Million
Notes Converted Into 161 Million Shares
BROOMFIELD, Colo., June 19, 2003 - Level 3 Communications, Inc.
(Nasdaq:LVLT) announced today that Longleaf Partners Funds, Berkshire Hathaway
Inc., and Legg Mason, Inc. have converted all of their outstanding 9% junior
convertible subordinated notes due 2012 into shares of Level 3 common stock.
Level 3 raised $500 million from the three institutional investors last year, in
part to pursue acquisition opportunities in the communications industry.
The conversion reduces Level 3's long-term debt by $457 million and
generates cash interest savings for the company of approximately $41 million per
year. In connection with the conversion, Level 3 is issuing approximately 161
million shares of Level 3 common stock in aggregate to the three investors. Of
the original $500 million, $43 million had previously been converted.
"The investment in Level 3 by Longleaf Partners, Berkshire Hathaway and
Legg Mason has helped position us as a high quality, financially stable partner
to our customers," said James Q. Crowe, Level 3's chief executive officer. "We
are pleased they have agreed to convert these debt holdings into Level 3 equity,
and look forward to our continuing relationship."
O. Mason Hawkins, chairman and chief executive officer of Southeastern
Asset Management, adviser to Longleaf Partners Funds, said, "We continue to
believe Level 3 is well positioned to take advantage of consolidation
opportunities in the telecommunications arena. The company continues to
strengthen its balance sheet and position itself as a leader in the
communication industry."
Level 3 announced the original investment on July 8, 2002. Longleaf
Partners Funds purchased $300 million of the junior convertible subordinated
notes; Berkshire Hathaway purchased $100 million; and Legg Mason purchased $100
million. The notes, which would have matured in 2012 and were non-callable until
2007, paid 9% cash interest. The notes were convertible at the option of the
holders into approximately 147 million shares of Level 3 common stock at any
time at a conversion price of $3.41, subject to certain adjustments.
As previously disclosed, $43 million of the notes were converted into
approximately 13 million shares prior to today's transaction. The 161 million
shares being issued under the transaction announced today includes a premium of
27 million shares to induce the conversion of the notes at this time.
"This transaction is consistent with our previously announced financial
strategies," said Sunit S. Patel, Level 3's chief financial officer. "It allows
us to further de-leverage our balance sheet and reduce interest payments, while
increasing the equity capitalization of the company."
At March 31, 2003, Level 3 had $6.3 billion of long-term indebtedness,
which included the current portion of long-term debt. On a pro-forma basis for
this conversion, Level 3 had long-term indebtedness of approximately $5.8
billion and approximately 623 million outstanding shares of common stock.
About Level 3 Communications Level 3 (Nasdaq:LVLT) is an international
communications and information services company. The company operates one of the
largest Internet backbones in the world, is one of the largest providers of
wholesale dial-up service to ISPs in North America and is the primary provider
of Internet connectivity for millions of broadband subscribers, through its
cable and DSL partners. The company offers a wide range of communications
services over its 20,000-mile broadband fiber optic network including Internet
Protocol (IP) services, broadband transport, colocation services, Genuity
managed services, and
patented Softswitch-based managed modem and voice services. Its Web address is
www.Level3.com. The company offers information services through its
subsidiaries, (i)Structure and Software Spectrum. For additional information,
visit their respective web sites at www.softwarespectrum.com, and
www.i-structure.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, the challenges of integration, 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.