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): May 28, 1998
LEVEL 3 COMMUNICATIONS, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-15658 47-0210602
(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification Number)
3555 Farnam Street
Omaha, NE 68131
(Address of principal executive offices and zip code)
Registrant's telephone number, including area code: (402) 536-3624
(Former name or former address, if changed from last report)
ITEM 5. OTHER EVENTS
On May 28, 1998, the Board of Directors of Level 3
Communications, Inc. (the "Company") declared a dividend
distribution of one Right for each outstanding share of common
stock, par value $.01 per share (the "Common Stock"), of the
Company. The dividend is payable to stockholders of record at
the close of business on June 10, 1998 (the "Record Date") and
with respect to the Common Stock issued thereafter until the
Distribution Date (defined below) and, in certain circumstances,
with respect to the Common Stock issued after the Distribution
Date. Except as set forth below, each Right, when it becomes
exercisable, entitles the registered holder to purchase from the
Company a unit consisting initially of one one-thousandth of a
share (a "Unit") of Series A Junior Participating Preferred
Stock, par value $.01 per share (the "Preferred Stock"), of the
Company, at a Purchase Price of $490 per Unit, subject to
adjustment (the "Purchase Price"). The description and terms
of the Rights are set forth in a Rights Agreement (the "Rights
Agreement"), dated as of May 29, 1998, between the Company and
Norwest Bank Minnesota, N.A., as Rights Agent.
Initially, the Rights will be attached to all certificates
representing shares of Common Stock then outstanding, and no
separate certificates evidencing the Rights ("Rights
Certificates") will be distributed. The Rights will separate
from the Common Stock and a Distribution Date will occur upon the
earlier of (i) ten (10) days (or such later date as the Board of
Directors shall determine) following public disclosure that a
person or group of affiliated or associated persons has become an
"Acquiring Person" (as defined below), or (ii) ten (10)
business days (or such later date as the Board shall determine)
following the commencement of a tender offer or exchange offer
that would result in a person or group becoming an "Acquiring
Person". Except as set forth below, an "Acquiring Person" is
a person or group of affiliated or associated persons who has
acquired beneficial ownership of 15% or more of the outstanding
shares of Common Stock. The term "Acquiring Person" excludes
(i) the Company, (ii) any subsidiary of the Company, (iii) any
employee benefit plan of the Company or any subsidiary of the
Company, and (iv) any person or entity organized, appointed or
established by the Company for or pursuant to the terms of any
such plan.
Until the occurrence of the Distribution Date, (i) the
Rights will be evidenced by the Common Stock certificates and
will be transferred with and only with such Common Stock
certificates, (ii) new Common Stock certificates issued after the
Record Date will contain a notation incorporating the Rights
Agreement by reference, and (iii) the surrender for transfer of
any certificates for Common Stock outstanding will also
constitute the transfer of the Rights associated with the Common
Stock represented by such certificate. Pursuant to the Rights
Agreement, the Company reserves the right to require prior to the
occurrence of a Triggering Event (as defined below) that, upon
any exercise of Rights, a number of Rights be exercised so that
only whole shares of Preferred Stock will be issued.
As soon as practicable after the occurrence of the
Distribution Date, Rights Certificates will be mailed to holders
of record of the Common Stock as of the close of business on the
Distribution Date and, thereafter, the separate Rights
Certificates alone will represent the Rights. Except in certain
circumstances specified in the Rights Agreement or as otherwise
determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.
The Rights are not exercisable until the occurrence of the
Distribution Date and until the Rights no longer are redeemable.
The Rights will expire at the close of business on June 10, 2008,
unless extended or earlier redeemed by the Company as described
below.
In the event that, at any time following the Distribution
Date, a person becomes the beneficial owner of more than 15% of
the then outstanding shares of Common Stock (except pursuant to
an offer for all outstanding shares of Common Stock at a price
and on terms determined to be fair to, and in the best interests
of, the stockholders by at least a majority of the Continuing
Directors (as defined below)), becomes an Acquiring Person, each
holder of a Right will thereafter have the right to receive, upon
exercise of the Right, Common Stock (or, in certain
circumstances, cash, property or other securities of the Company)
having a value equal to two times the exercise price of the
Right. A "Continuing Director" is a member of the Board of
Directors who is not an Acquiring Person, an affiliate or
associate of an Acquiring Person or a representative or nominee
of an Acquiring Person. Notwithstanding any of the foregoing,
following the occurrence of the event set forth in this
paragraph, all Rights that are, or (under certain circumstances
specified in the Rights Agreement) were, beneficially owned by
any Acquiring Person will be null and void and nontransferable
and any holder of any such right (including any purported
transferee or subsequent holder) will be unable to exercise or
transfer any such right. For example, at an exercise price of
$490 per Right, each Right not owned by an Acquiring Person (or
by certain related parties) following an event set forth in the
preceding paragraph would entitle its holder to purchase $980
worth of Common Stock (or other consideration, as noted above)
for $490. Assuming that the Common Stock had a per share value
of $70 at such time, the holder of each valid Right would be
entitled to purchase fourteen (14) shares of Common Stock for
$490.
In the event that, at any time following the date on which
there has been public disclosure that, or of facts indicating
that, a person has become an Acquiring Person (the "Stock
Acquisition Date"), (i) the Company is acquired in a merger or
other business combination transaction in which the Company is
not the surviving corporation (other than a merger which follows
an offer described in the preceding paragraph), or (ii) 50% or
more of the Company's assets or earning power is sold, mortgaged
or transferred, each holder of a Right (except Rights which
previously have been voided as set forth above) shall thereafter
have the right to receive, upon exercise, common stock of the
acquiring company having a value equal to two times the exercise
price of the Right. There is an exception for a merger that is
approved by the Continuing Directors at a price which is fair to,
and otherwise in the best interests of, the stockholders and in
which all stockholders of the Company receive equal
consideration. The events set forth in this paragraph and in the
preceding paragraph are referred to as the "Triggering Events."
The Purchase Price payable, and the number of Units of
Preferred Stock or other securities or property issuable, upon
exercise of the Rights are subject to adjustment from time to
time to prevent dilution (i) in the event of a stock dividend on,
or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) if holders of the Preferred Stock are
granted certain rights or warrants to subscribe for Preferred
Stock or convertible securities at less than the current market
price of the Preferred Stock, or (iii) upon the distribution to
holders of the Preferred Stock of evidences of indebtedness or
assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to
above).
With certain exceptions, no adjustment in the Purchase Price
will be required until cumulative adjustments amount to at least
1% of the Purchase Price. No fractional Units will be issued
and, in lieu thereof, an adjustment in cash will be made based on
the market price of the Preferred Stock on the last trading date
prior to the date of exercise.
Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one one-
thousandth interest in a share of Preferred Stock purchasable
upon exercise of each Right should approximate the value of one
share of Common Stock. Shares of Preferred Stock purchasable
upon exercise of the Rights will not be redeemable. Each share
of Preferred Stock will be entitled to a quarterly dividend
payment of 1000 times the dividend declared per share of Common
Stock. In the event of liquidation, each share of Preferred
Stock will be entitled to an aggregate payment of 1000 times the
aggregate payment made per share of Common Stock. Each share of
Preferred Stock will have 1000 votes, voting together with the
shares of Common Stock. These rights are protected by customary
antidilution provisions.
At any time until ten days following the Stock Acquisition
Date, the Company may redeem the Rights in whole, but not in
part, at a price (the "Redemption Price") of $.01 per Right
(payable in cash, Common Stock or other consideration deemed
appropriate by the Board of Directors) by resolution of the Board
of Directors (provided that following a Stock Acquisition Date
such resolution is approved by a majority of the Continuing
Directors and only if the Continuing Directors constitute a
majority of the directors then in office). The redemption of the
Rights may be made effective at such time on such basis with such
conditions as the Board of Directors in its sole discretion may
establish. Immediately upon such action of the Board of
Directors ordering redemption of the Rights, the Rights will
terminate and the only right of the holders of Rights will be to
receive the Redemption Price.
Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including,
without limitation, the right to vote or to receive dividends.
While the distribution of the Rights will not be taxable to
stockholders or to the Company, stockholders may, depending upon
the circumstances, recognize taxable income in the event that the
Rights become exercisable for Common Stock (or other
consideration) of the Company or for common stock of the
acquiring company as set forth above.
Other than those provisions relating to the principal
economic terms of the Rights, any of the provisions of the Rights
Agreement may be amended by resolution of the Company's Board of
Directors (provided that following a Stock Acquisition Date such
resolution is approved by a majority of the Continuing Directors
and only if the Continuing Directors constitute a majority of the
directors then in office) prior to the Distribution Date. After
the Distribution Date, the provisions of the Rights Agreement may
be amended by resolution of the Company's Board of Directors
(provided that following a Stock Acquisition Date such resolution
is approved by a majority of the Continuing Directors and only if
the Continuing Directors constitute a majority of the directors
then in office) in order to cure any ambiguity, to make changes
which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person or its
affiliates or associates), or to shorten or lengthen any time
period under the Rights Agreement; provided, however, that no
amendment to adjust the time period governing redemption shall be
made at such time as the Rights are not redeemable.
The Rights Agreement, which includes as Exhibit B the form
of Rights Certificate, is filed as Exhibit 4.1 hereto. This
summary description of the Rights is qualified in its entirety by
reference to the Rights Agreement, which is incorporated herein
by reference.
On May 29, 1998, Level 3 issued a press release relating to
the adoption of the Rights Agreement. This press release is
filed as Exhibit 99.1 to this Current Report and incorporated
herein by reference as if set forth in full.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of business acquired
None.
(b) Pro forma financial information
None.
(c) Exhibits
4.1 Rights Agreement, dated as of May 29, 1998, between
Level 3 Communications, Inc. and Norwest Bank
Minnesota, N.A., as Rights Agent, which includes the
Form of Certificate of Designation, Preferences and
Rights of Series A Junior Participating Preferred Stock
of Level 3 Communications, Inc., as Exhibit A, the Form
of Rights Certificate, as Exhibit B and the Summary of
Rights to Purchase Preferred Stock, as Exhibit C.
(Incorporated by reference to Exhibit 1 to the
Registrant's Registration Statement on Form 8-A filed
with respect to the Rights to Purchase Series A Junior
Participating Preferred Stock, par value $.01 per
share).
99.1 Press Release, dated May 29, 1998 related to the
adoption of the Rights Agreement.
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 hereunto duly authorized.
/s/ NEIL J. ECKSTEIN
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Vice President
June 9, 1998