SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): January 25, 2006
Level 3 Communications, Inc.
(Exact name of Registrant as specified in its charter)
Delaware 47-0210602
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1025 Eldorado Blvd., Broomfield, Colorado 80021
(Address of principal executive offices) (Zip code)
720-888-1000
(Registrant's telephone number including area code)
Not applicable
(Former name and former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions (see General Instruction A.2. below):
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17
CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement
Item 3.02. Unregistered Sales of Equity Securities
Purchase Agreement
On January 25, 2006, Level 3 Communications, LLC ("Level 3
Communications"), entered into a purchase agreement (the "Purchase Agreement")
with PT Holding Company LLC ("PT Holding") and solely for purposes of certain
portions of the Purchase Agreement, Progress Telecommunications Corporation,
EPIK Communications Incorporated, Florida Progress Corporation, Odyssey
Telecorp, Inc. and Level 3 Communications, Inc. ("Level 3"), pursuant to which
Level 3 Communications would purchase from PT Holding all of the membership
interests in Progress Telecom, LLC ("Telecom"), excluding certain specified
assets and liabilities of Telecom. Telecom is jointly owned (indirectly through
PT Holding) by Progress Energy, Inc. and Odyssey Telecorp, Inc. Closing of the
transaction is subject to customary closing conditions including the receipt of
federal and state regulatory approvals.
Under the terms of the agreement, Level 3 Communications expects to pay
total consideration of $137 million, consisting of $68.5 million in unregistered
shares of Level 3 common stock and $68.5 million in cash, subject to adjustments
based on working capital and other matters. The number of shares of Level 3
common stock to be delivered will be determined by the result of dividing $68.5
million by the simple arithmetic average of the share price of Level 3 common
stock for each of the ten (10) consecutive trading days on the Nasdaq National
Market ending the third business day immediately preceding the closing date. The
Purchase Agreement also gives Level 3 Communications a cash substitution right
that allows it to pay additional cash consideration instead of shares of Level 3
common stock.
As specified in the Purchase Agreement, on or prior to the closing, Telecom
will transfer certain excluded assets to PT Holding and PT Holding will assume
certain excluded liabilities. The excluded assets include the wireless tower
attachment business and its interests in affiliates focused on providing
distributed antennae systems and tower backhaul services to wireless providers.
The Purchase Agreement contains customary representations, warranties,
covenants and indemnities.
The Purchase Agreement is filed as Exhibit 10.1 to this Form 8-K and
incorporated herein by reference. The descriptions of the material terms of the
Purchase Agreement are qualified in their entirety by reference to such exhibit.
The shares of Level 3 common stock issued, if any, will be sold to PT
Holding pursuant to the exemption from registration contained in Section 4(2) of
the Securities Act of 1933, as amended.
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Registration Rights Agreement
Level 3, PT Holding, Progress Telecommunications Corporation, Caronet, Inc.
and EPIK Communications Incorporated (Progress Telecommunications Corporation,
Caronet, Inc. and EPIK Communications Incorporated are collectively referred to
as the "Seller Owners") intend to enter into a registration rights agreement on
the closing of the transaction contemplated by the Purchase Agreement (the
"Registration Rights Agreement") with respect to any shares of Level 3 common
stock to be issued to PT Holding. Pursuant to the Registration Rights Agreement
and upon the later of five business days following the closing of the
transaction contemplated by the Purchase Agreement and March 1, 2006, Level 3
will be required to file a registration statement covering the shares of Level 3
common stock issued to PT Holding under the Purchase Agreement. The Level 3
common stock will also be subject to a transfer restriction that limits the
number of shares PT Holding can sell (with certain exceptions) on any given day.
This transfer restriction expires 180 days from the effective date of the
registration statement (the "Effective Date"). In addition, pursuant to the
Registration Rights Agreement (with certain exceptions), (i) at any time after
the Effective Date and prior to June 30, 2006, PT Holding and Seller Owners
shall not, and shall not permit any of their affiliates to knowingly make any
direct transfer of the Level 3 common stock in a negotiated transaction to one
or more persons that would result in the acquirer holding economic or voting
ownership in excess of five percent (5%) or more of the Level 3 common stock and
(ii) at any time after the Effective Date, PT Holding and the Seller Owners
shall not knowingly and shall not knowingly permit any of their affiliates to
knowingly make any direct transfer of the Level 3 common stock in a negotiated
transaction to one or more persons that would result in the acquirer holding
economic or voting ownership in excess of ten percent (10%) or more of the Level
3 common stock.
The Registration Rights Agreement is filed as Exhibit 10.2 to this Form 8-K
and incorporated herein by reference. The descriptions of the material terms of
the Registration Rights Agreement are qualified in their entirety by reference
to such exhibit.
Item 8.01. Other Events
On January 26, 2006, Level 3 issued a press release announcing that it has
signed a definitive agreement to acquire all of the membership interests of
Progress Telecom LLC, a regional wholesale network services company based in St.
Petersburg, Florida.
The press release is filed as Exhibit 99.1 to this Form 8-K and
incorporated herein by reference.
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Item 9.01 Financial Statements and Exhibits
(a) Financial Statements of business acquired
None
(b) Pro forma financial information
None
(c) Shell company transactions
None
(d) Exhibits
10.1 Purchase Agreement by and among Level 3 Communications, LLC, PT Holding
Company LLC, Progress Telecommunications Corporation, EPIK Communications
Incorporated, Florida Progress Corporation, Odyssey Telecorp, Inc. and
Level 3 Communications, Inc. dated as of January 25, 2006.
10.2 Form of Registration Rights and Transfer Restriction Agreement by and among
Level 3 Communications, Inc., PT Holding Company LLC, Progress
Telecommunications Corporation, Caronet, Inc., and EPIK Communications
Incorporated to be entered into on the closing of the transaction
contemplated by the Purchase Agreement.
99.1 Press Release, dated January 26, 2006, of Level 3 Communications, Inc.
relating to the signing of a definitive agreement to acquire all of the
membership interests of Progress Telecom LLC.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Level 3 Communications, Inc.
January 30, 2006 By: /s/ Neil J. Eckstein
Date Neil J. Eckstein, Senior Vice President
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