Lumen announces agreement with creditors to extend debt, obtain $1.2 billion of new financing

By Wendy Van Sickle

Columbus, Ohio, Oct. 31 – Lumen Technologies, Inc. entered on Tuesday into a transaction support agreement with Level 3 Financing, Inc., Qwest Corp. and some holders of its and Level 3’s debt, according to an 8-K filing with the Securities and Exchange Commission.

The creditors who were party to the transaction support agreement hold over $7 billion of outstanding debt of Lumen and its subsidiaries, according to a news release from the company.

The agreement defines the parties’ commitments to effect a series of transactions to provide Lumen and Level 3 with comprehensive maturity extensions while allowing them to maintain sufficient operating liquidity and financial flexibility. The transactions are subject to a number of closing conditions.

The support agreement contemplates:

• The incurrence by Level 3 of $1.2 billion in new money long-term senior secured first-lien indebtedness, the purchase of which will be backstopped by certain of the consenting parties;

• The extension of maturities, covenant modifications and rate increases of some secured and unsecured indebtedness at the company and Level 3 through a series of exchanges and other debt transactions with certain consenting parties;

• The provision by Qwest and one or more of its subsidiaries of an unsecured guarantee of some Lumen secured debt subject to receipt of any required regulatory approvals; and

• The repayment of some debt of Lumen and Qwest.

“After several months of constructive discussions, we are pleased to have reached this agreement. This transaction will position the company to better align our balance sheet with our current business needs,” said Kate Johnson, president and chief executive officer of Lumen, in the release. “As we move forward, we remain focused on executing our strategic transformation and delivering excellent value to our customers.”

Guggenheim Securities, LLC served as financial adviser, and Wachtell, Lipton, Rosen & Katz served as legal adviser to Lumen.

Lumen is a Denver-based telecommunications company.

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