Level 3 to issue shares for $490 million 10% notes

By Jennifer Chiou

New York, Jan. 11 - Level 3 Communications, Inc. announced that Southeastern Asset Management and Legg Mason Opportunity Trust have agreed to exchange $490 million of Level 3's 10% convertible senior notes due 2011 for a total of 160.1 million Level 3 shares.

The rate amounts to 326.78 shares per $1,000 note as well as the payment of accrued interest.

The notes are currently convertible into shares of Level 3 stock at a rate of 277.77 shares per $1,000 note.

The Broomfield, Colo., communications and information services company said that as a result of the exchange, it expects to reduce its 2007 cash interest expense by about $47 million.

The notes are callable by the company on May 1, 2009.

"This transaction is positive for our company as it helps us delever and reduce interest expense," chief financial officer Sunit S. Patel said in a news release.

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